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The use of experimental techniques in economics in recent years has uncovered evidence about the decision of the people, who are guided not only for its own sake but also for the material gains that may have other individuals in their social network. Out of envy, in short.

But in this research framework was still a challenge: to discover the evolutionary origin of envy in theory and test the possible effects of the same in business. And that is what has sought to make the Professor of the Department of Economics UC3M, Antonio Cabrales, a new study, published recently in series, the journal of the Spanish Economic Association.

The concept of envy as used in this study is known technically as “inequity aversion.” That is, individuals are willing to spend all kinds of resources (money, effort, etc) in order to reduce the prosperity gap material to other individuals.

The result of a competition for limited resources?

This article presents scientific envy as something that is a result of competition for limited resources. “What is shown in the article is that there are powerful evolutionary reasons for us to be envious and, therefore, that we coded in the genes,” said Professor Antonio Cabrales.

Under this scenario, the envy may be due to the fact that the resources obtained in the workplace, for example, are used after some kind of interpersonal conflict, as in getting the best partner or dominance the herd. In these cases, it is important to have accumulated more resources than the opposite, so that victory would depend not only have much, but have more than anyone else.

“For this – continues the economist – it is important that education and training corrected some trends potentially disastrous consequences for the individual and the group, as we do from the biblical Ten Commandments to Shakespeare’s Othello,” he recalls.

The thickest part of this study is theoretical techniques have been used in game theory applied to problems of interpersonal and intertemporal decision raised. On the other hand, has also conducted an experimental part to analyze the effects of envy in real subjects.

To do this, put a group of undergraduate students in a computer lab to make decisions that have specific monetary impact on themselves and on others simultaneously. Finally, research has deepened the analysis of data on labor markets, trying to discern how it affects different variables envy contractual wage movements between companies, etc.

One of the things that point in the study is that many labor market phenomena that are easier to understand once one considers envy. For example, internal promotions or workers’ wage fans are more compressed in companies would be expected if they simply consider the productivity of individuals.

“The effects of envy – indicates Cabrales – can be seen in the compression of wage scales in promotions slower than it would be advisable for reasons of efficiency and that the drop in the company of people of higher skills can have serious in those who remain, “he concludes.

One of the main characteristics of the global economy when the crisis began in the summer of 2007 was the existence of large external deficits in some countries like the U.S., together with the corresponding surpluses in others, like China. These global imbalances are the result of several factors, one of the major exchange rates.

That concludes the UC3M professor, Juan Antonio Cerón, in a study that will be published shortly in the Journal of Global Economy – published by the Society of Global Economy – with the title ‘Economic Crisis: What role is there for coins and exchange rates? “and has won the 2nd Prize in the Second Edition of the Jose Luis Sampedro, who is also given society.

There have always been external imbalances, but never in history with the magnitude of recent years, says the researcher from the Department of Business Economics from the University of Madrid. “So – points – on the evolution of exchange rates, the price of foreign exchange will determine the resolution of global economic imbalances and to a large extent, the recovery of production in each country and its most important consequence, which is job creation, “said Ceron.

Before the crisis, one of the recurring themes among economists who study international affairs was the exchange rate, says the study, which indicates that the extreme aggressiveness of it has set the exchange rate issues in the background . “Upon moving into the political crisis, some issues become more value than others,” explained the expert. Thus, the subprime mortgage situation at first, the need to shore up banks and other financial sector institutions and then, finally, the impact on the real economy – especially by the rise in unemployment – have grabbed . “Other elements of a more technical and more difficult to treat in front of the public, although they have not lost their importance, have been in the back, a little apart, despite being part of the basic framework of the crisis . The exchange rates – concluded – is one of them. ”

The role of major currencies

The paper published by the economist seeks to deal with the relations between exchange rates, the economic role of the major currencies and the way it is managing the crisis, incorporating the latest contributions in this respect in academia.

The expert points out that the dollar plays a central role in global finance, not only because of U.S. economic strength, but by its use as a vehicle currency in most transactions worldwide, although emphasizing the role that in recent years has acquired the renminbi, China’s currency. “The great economic strength of this country, based so far on exports, has placed its currency in an important position, especially because, unlike with many other currencies, the renminbi exchange rate is set by the government” says Professor Cerón.

When the crisis began, Spain was one of the countries with a greater imbalance in its external accounts. “It happens, however, that the exchange rate of our currency does not depend only on us, but of all euro area countries, with what little we can do for our country to change it,” says professor UC3M, which also indicates that the impact of exchange rates in our economy is not as important as other since most of our foreign trade is precisely countries with the euro as currency.

Any other possible solutions to correct external imbalances? “Save more, something that we’re doing if you look at the latest statistics, and at the same time improving the competitiveness of our products abroad, in order to increase sales,” he says.