Envy

It’s important to point out to economics students that a lot of policy is driven by envy.

There’s a great example of irrational envy in the episode “Kafkaesque” of Breaking Bad.

In it, Jesse realizes that even though he is being paid $1.5 million to make crystal meth, the street value of the product to the wholesaler who pays him is $96 million.

Walt points out that it’s odd to be unhappy when someone makes you a millionaire, but Jesse doesn’t buy it.

This is related to a common classroom experiment with the ultimatum game. Here’s how it goes. Two players play. A pot of money is set out. The first player is asked to divide it: part for them and part for the second player. If the second player agrees to the division, they both keep the money; if the second player doesn’t agree, neither gets the money.

The rational thing for the first player to do is to divide the money into two unequal piles, and offer the smaller one to the second player.

The rational thing for the second player to do is accept anything offered by the first player: after all, anything they receive is tantamount to a gift.

The thing is, this is exactly what people don’t do. It turns out that once the split gets worse than 40/60, there’s a rapid increase in the unwillingness of the second player to accept the offer of free money.

We see this in current debates about how much of our welfare state “the rich” fund through their taxes. Even though “the rich” currently pay a far higher share of their income as taxes, a fair sized chunk of the population is unhappy with this gift.

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Comments

[Kit Lloyd]

And now the roles are reversed, with Walt wanting more and more, and Jesse just trying to get out. Obviously the point of the show is to chronicle the complete transformation of a person, but it's still amazing to see how Jesse has actually ended up as the better person, when Walt started off as a jaded, but still naive and innocent school teacher. It's really illustrated in the "Say My Name" episode of season 5 where Walt tries to guilt-trip Jesse into continuing to cook by playing to his greed and calling it all "blood money."

[David Tufte]

Interesting. I never thought of it as a role reversal story arc. I see it now that you say it, but I interpreted Jesse as an antihero from the beginning ... which I think fits too.

[Stuhlmann]

I am not familiar with "Breaking Bad", but I don't think that envy has anything to do with this, especially with the classroom experiments. People (and even some animals) seek to be treated fairly. They punish those who treat them unfairly, even at a cost to themselves. This is normal human behavior, whether or not it is rational.

[Dave Tufte]

Perhaps envy is a poor choice of title.

On the other hand, what are we to call the behavior of the second person, whose internal perception of fairness extends to 1) the initial pot of money over which they have no claim, and 2) the divided pot over which their claim is conditional?