What causes societies to fail? One possibility is that they enter a zero sum death spiral. Here’s the basic problem:
1. Zero sum thinking causes bad economic policies.
2. Bad economic policies cause a poor economic outcome.
3. A poor economic outcome causes zero sum thinking.
Rinse and repeat.
I’ve always been aware of the first two points, but hadn’t given much thought to the third point. An excellent recent article in the Financial Times (by John Burn-Murdoch) has some data on this question:
If someone’s formative years were spent against a backdrop of abundance, growth and upward mobility, they tend to have a more positive-sum mindset, believing it is possible to grow the pie rather than just redistribute portions of it. People who grew up in tougher economic conditions tend to be more zero-sum and sceptical of the idea that hard work brings success. These attitudes are perfectly rational.
The pattern holds whether you look at people who grew up at the same time but in countries with varying economic fortunes, or different generations who grew up in the same places but against a shifting economic backdrop.
The article provides some interesting graphs that illustrate the relationship:
In recent years, economic growth has slowed in many countries, including the US. This has been associated with a rise in identity politics:
You wouldn’t typically think of affirmative action advocates and anti-immigration nativists as being bedfellows. The former group skews young and is composed overwhelmingly of progressives, and the latter skews old and conservative. But according to a fascinating new study out of Harvard University, they have one significant thing in common: a predilection for zero-sum thinking, or the belief that for one group to gain, another must lose.
The same way of thinking crops up on all manner of issues that cut across traditional political divides. Roughly equal numbers of US Democrats and Republicans agree that “in trade, if one country makes more money, then another country makes less money”. And while Democrats are more likely to say “if one income group becomes wealthier, this comes at the expense of other groups”, a third of Republicans agree.
Not surprisingly, Obama-Trump voters are especially likely to engage in zero sum thinking:
Populism, conspiracy theories and nativism are all rooted in the belief that one group gains at the expense of others, and all these have risen of late. Self-identified Democrats who voted for Donald Trump in 2016 scored very high on zero-sum beliefs.
Some people argue that economic growth makes us happier. I’m skeptical of that claim, at least beyond a certain income level. But if growth leads to less zero sum thinking, and that leads to more market-oriented polices, then growth may indirectly lead to greater happiness. Not because more money makes us happier, rather because economic freedom makes us happier.
READER COMMENTS
Richard Fulmer
Oct 1 2023 at 8:56pm
That makes sense if, as the FT article claims, low or negative growth turns individuals and groups of individuals against each other. Relatively high growth, then, would tend to reduce conflict, which (one might expect) would result in more happiness (or, at least, less unhappiness).
Mactoul
Oct 1 2023 at 9:14pm
So positive-sum mindset is to be found in China, India, Indonesia etc?
And not in Europe and America?
Irrespective of the fact that the Western countries have a longer tradition of liberalism?
Scott Sumner
Oct 2 2023 at 12:00am
Not sure what point you are trying to make.
Mactoul
Oct 2 2023 at 2:38am
Well, the article itself is paywalled so i don’t know if currently fast growing countries like China or India are included or not.
More likely the association is got from Western countries. Including China/India or other fast growing Third World country would likely spoil the association. It is not likely that there are more believers in positive-sum in Third World than in the West.
Scott Sumner
Oct 2 2023 at 2:56pm
It’s likely you’d have to do a multivariate analysis, with some cultural variables thrown in.
Mark Z
Oct 2 2023 at 8:00pm
Growth is faster in poor countries than rich ones, since they have more catching up to do, e.g. in adopting more advanced technology that’s already in use in rich countries. It’s ridiculous to try to infer quality of economic policy from growth rate without controlling for current wealth.
nobody.really
Oct 1 2023 at 9:19pm
I’d often had this thought: (Traditional) Republican policies accelerate the economy. Rich people consume more of every normal good. Compassion is a normal good. People promoting compassion become Democrats. Democratic policies slow the economy.
But I’d never seen any data behind the thought before. Nice.
Scott Sumner
Oct 1 2023 at 11:59pm
Haven’t 10 of the past 11 recessions occurred under GOP presidents? I think that was mostly coincidence, but it doesn’t exactly support your point.
Brandon Berg
Oct 1 2023 at 9:55pm
Bad housing policy creates a zero-sum environment in many cities today. In Seattle, for example, there is a great deal of resentment against tech companies and workers, whose high salaries allow them to bid up the price of housing. In a sane world, this would lead to the building of more housing and higher standards of living all around, but limitations on building turn it into a zero-sum game, where high salaries for some make housing less affordable for others.
Kenneth Duda
Oct 2 2023 at 7:20am
I had the same exact thought. It makes sense that zero-sum thinking leads to NIMBYism — “I want to preserve what I have” — whereas a positive-sum mindset tends to lead to YIMBYism — “we can all have more if we choose to.” And, NIMBY/YIMBY cuts across party lines, like zero-sum thinking.
Kevin Erdmann
Oct 2 2023 at 11:33pm
I came here to say this.
In fact, the closed access cities are a classic Malthusian context. Instead of the “least fit” 1% of the population dying each year, they move away. But it’s a version of the same context.
I think it is understating the damage to just refer to it as zero sum thinking and poor economic policies. A context where an extra birth mechanically must lead to an extra death is extremely ethically toxic. You could say the miracle of capitalism was that growth exceeded our ability reproduce long enough to break us free to a higher ethical plane – a plane where shared permanent progress is possible.
It is common to hear the complaint that Silicon Valley employers attract workers to the city and pay them well. This is not a perspective that anyone with our privilege – living in a time of progress and hope – can comprehend. Yet it is already among us.
Peter
Oct 2 2023 at 3:42am
Jon Murphy
Oct 2 2023 at 8:10am
Well, that is demonstrably false.
Matthias
Oct 2 2023 at 7:14pm
Indeed, this is very silly.
I hope it’s very easy to see how eg you can grow household production without harming anyone else. Eg by wasting less when you bake a cake, or by paying more attention and baking a nicer cake.
Similarly, it should be rather obvious that companies can increase quality, eg by having fewert defects in their products, without harming anyone else.
MarkW
Oct 2 2023 at 7:23am
Not because more money makes us happier, rather because economic freedom makes us happier.
I don’t think it’s more money per se that makes people happier, but rather the sense that people and society are getting wealthier and that the future will be better than they past. This makes people feel optimistic and open minded. It makes them less likely to be zero-sum thinkers. It makes them want to make them want to have children whose lives they believe will be better than their own (as perhaps theirs have been compared to their parents’ were). So citizens of a country or a region (or even a family) that is wealthier but stagnating or declining are often less happy than those living in a place or family that is poorer but is growing and improving. The absolute level of wealth may be less important for happiness than the trajectory. Continued economic growth seems to matter more than wealth.
Growth seems more important for happiness, too, than economic freedom (except insofar as economic freedom promotes growth) — most people aren’t entrepreneurial and don’t have much use for economic freedom directly. But they are affected by the growth that economic freedom produces. If only more people could make the mental connection between the two!
The problem with making that mental connection is that sustained economic growth is relatively recent phenomenon in human history. For nearly all of human history, prosperity has been a function of territory and resources which are inherently zero-sum. So a zero-sum, us-vs-them mindset seems to come more naturally than a growth mindset — it doesn’t surprise me to see people easily fall back into this way of thinking. And if they don’t do it on their own, some politicians will always seek to take advantage by rallying supporters to their sides with zero-sum slogans (e.g. ‘the people vs the powerful, etc, etc).
Scott Sumner
Oct 2 2023 at 3:00pm
“I don’t think it’s more money per se that makes people happier, but rather the sense that people and society are getting wealthier and that the future will be better than they past.”
Good point. I notice this in my personal life. Happiness comes from an upward trajectory (expected to continue) not a high plateau. But I’d also argue that economic freedom leads to faster growth and also better interpersonal relations.
MarkW
Oct 2 2023 at 6:31pm
Yes , I agree. I wonder — has The Moral Consequences of Economic Growth been generally forgotten already?
Jose Pablo
Oct 2 2023 at 6:22pm
I don’t think it’s more money per se that makes people happier, but rather the sense that people and society are getting wealthier and that the future will be better than they past.
Actually, what makes people happier is the sense that they are getting wealthier than their family and friends. That’s one of the reasons why we shouldn’t be paying so much attention to what people want or to what makes them happy. Most of us are just a morally faulty bunch of apes.
Somebody said, I can’t remember who, that “happiness is earning more money than your wife’s sister’s husband”. He was right.
MarkW
Oct 2 2023 at 6:34pm
I believe the evidence is that people are less envious and less worried about outdoing the Joneses (or their in-laws) when their own lives are steadily improving, when they feel much better off as adults than they remember their family being when they were kids.
Jose Pablo
Oct 2 2023 at 8:03pm
I don’t know, maybe. All I can say is that Thanksgiving is the happiest day of the year for me, mainly because I have been out-earning my wife’s sister’s husband and my wife’s brother consistently for the last 20 years.
And I put a significant amount of intellectual effort in making very difficult for them to find solace in the fact that they are not doing too bad themselves.
But maybe this is just anecdotal evidence.
Neil S
Oct 3 2023 at 10:36am
Jose,
I think this anecdote says much more about you than if does about society was a whole.
Jeff
Oct 2 2023 at 11:48am
How is this relationship affected by real vs nominal GDP growth?
Scott Sumner
Oct 2 2023 at 3:01pm
This is one area where real GDP is more important. Venezuela has fast NGDP growth.
TGGP
Oct 2 2023 at 6:46pm
Bryan Caplan wrote about this back in 2004 (approaching 20 years ago), calling it The Idea Trap.
Scott Sumner
Oct 2 2023 at 10:52pm
Thanks, that’s a very good post.
Jose Pablo
Oct 2 2023 at 10:04pm
There is a “place” where you can find lots of zero (or even negative) sum games which is “government interventions” (for instance “transfer payments” ).
If “government interventions” (or perceived government interventions) increase in “weaker economic conditions”, then people will be more exposed to zero sum games “sold” by government agents as positive
The “spiral” would then be:
A poor economic output causes government to intervene more
Government interventions are for the most part zero sum games sold as positive to the general public
The general public will then tend to believe that “zero sum games” are positive (that’s what they have been told)
So, they asked for more zero sum games that cause a worsening economic output
Back to square one
This would be compatible with Burn-Murdoch findings and would explain the evolution of communist countries too.
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