Money burning, envy and development: An experimental case study in Ethiopia

Research in social sciences has increasingly highlighted the importance of envy and related social preferences (such as fairness, reciprocity and inequality aversion) in economic activities. Satisfaction from a certain level of income will be lowered if individuals are strongly envious of richer people. Negative social preferences can also arrest innovation.While anthropologists/sociologists have done significant research, economic research on envy and development is almost non-existent. This proposed research attempts to contribute towards filling this gap by using experimental games, sociological surveys, focus group discussions and already collected household survey data. Newly collected data will be combined with existing panel household survey data covering the period 1994-2004. In addition to examining the degree of envy among different ethnic groups, the study will also analyse whether it has significantly affected technological innovations in rural Ethiopia. The fieldwork will be conducted in four rural villages of Ethiopia. Using experimental data and real world decisions in relation to the same subjects, the project will examine the extent of envy in each sampled community and the corresponding differences amongst them. The effect of envy on the degree and rate of technological adoption will also be analysed.