Success Depends on Others Failing

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Reward mechanisms in the brain depend on how well you think other people are doing, a new neurological study suggests. The findings, published in the Nov. 23 issue of the journal Science are the first to lend physiological proof to a longstanding theory among contemporary economists: that people are affected not only by their own achievements and income, but also by how they stack up against their neighbors.

The study, by cognition experts and economists at the University of Bonn in Germany, looks at the brain regions that process reward. Nineteen pairs of subjects performed a series of tasks, estimating the number of dots on a screen, while their brains were scanned. Each time a subject answered correctly, he or she won a cash prize but the prizes were not always the same. Players could see whether their opponents had answered correctly, and how the prize money was distributed.

The researchers were especially interested in the set of outcomes where both players answered correctly. For any given prize value, the brain's reward response was bigger if the other player earned less. Players on average were more pleased with a 60 euro prize when the other player got just 30 euros, for example, than they were if both players earned 60 euros, or if the other player got more.

"In a sense it goes back to Aristotle," says the paper's senior author, Armin Falk, an economist. "The fact that we are social beings is a well-known fact." But the idea that rewards are context-dependent challenges a key assumption behind most traditional of economic theories: the premise that humans are essentially self-interested, that they care about their own work, income, achievements, and purchases, and that whatever other people do is, if not irrelevant, at least not going to have a consistent or predictable effect on decision-making.

Instead, the brain scans from this study support a mountain of survey data collected by modern economists and psychologists that suggests people care very much about keeping up with the Joneses. In the past, researchers have often struggled to work out how much they could trust that data, not sure whether survey-takers might be changing their response consciously or unconsciously based on what they thought was socially acceptable. The Science findings give further empirical evidence that people compare their gains to others'. "If you look at the brain reaction, it's a relatively immediate physiological reaction," says Falk. "It shows on a deeper level, in the brain, these things really matter."

The practical implications? Many scholars believe that social comparison helps to explain why, even as much of the world gets ever richer, people today don't report being happier than people did 50 years ago. We might not be happy now if we had to give up the amenities of the last half-century computers, air conditioners, a bedroom for every child, and more — but back when no one else had them either, life was okay.

There's also a lesson here for company managers, says Falk. A wage scale should reflect job and performance differences fairly, or else firms risk alienating their staff. "It's extremely important for companies to understand it's not just a matter of justice, but it's also a matter of efficiency," he says. It turns out the negative response to earning less is usually stronger than the positive response to earning more or as Falk says, "The pain of having less is much stronger than the joy of having more." Workers who discover they're earning more for the same work may be happy, but those who earn less can quickly feel slighted, killing motivation and often the quality of their output. It doesn't take a brain specialist to understand how that affects a business.