Success Depends on Others Failing

eward 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.
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"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.
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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.