By Imlisanen Jamir
In 1995, two researchers at the Harvard School of Public Health handed a survey to 257 of their colleagues, students, and staff. Sara Solnick and David Hemenway wanted to know which of two worlds a person would prefer to live in. World A: your income is fifty thousand rupees, everyone else earns twenty-five thousand. World B: your income is one lakh, everyone else earns two lakh. Prices are the same in both worlds. World B makes you richer in every material sense, better food, better housing, better medicine. And yet when the results came back, nearly half the respondents had chosen World A. They preferred to be poorer in fact so long as they were richer by comparison. The study was published in 1998 in the Journal of Economic Behavior and Organization under the title “Is More Always Better? A Survey on Positional Concerns,” and it has been discussed ever since because it captures something about human behaviour that most economic policy continues to pretend is not there.
Solnick and Hemenway did not stop at income. Their survey covered twelve categories including education, attractiveness, supervisor’s praise, and vacation time. The vacation question produced a strikingly different result. Asked whether they would prefer two weeks of holiday while others got one, or four weeks while others got six, respondents stopped playing the comparison game almost entirely. They wanted the four weeks. What their colleagues were doing with their leave did not enter into it. A follow-up paper in the American Economic Review in 2005 confirmed the pattern. Income is what economists call a positional good, its value bound up with the fact that others have less of it. Leisure is largely non-positional. The pleasure of a holiday does not depend on anyone else being denied one.
This is not merely an interesting finding about human psychology. It is a description of a structural problem that labour policy has been slow to take seriously. Because income functions as a status marker rather than just a source of material comfort, the competition for it has no natural ceiling. A worker who accepts longer hours in exchange for higher pay raises the benchmark against which colleagues measure themselves, which pressures them to do the same. The individual choice is rational. The collective outcome is that everyone works more, rests less, and ends up in roughly the same relative position as before, only more exhausted.
The policy argument that follows is not complicated. If workers negotiating individually will voluntarily sacrifice leisure to compete for positional income gains that largely cancel each other out, the market is producing a collective loss that no individual worker has the means to correct alone. The mechanism for correcting it is regulation, meaning mandated minimum paid leave, enforceable limits on working hours, and overtime rules with enough teeth to matter. Most developed economies have some version of these on the books. The problem is that where they exist they are frequently undermined by workplace cultures that treat long hours as a proxy for commitment.
India’s record on this is not encouraging. The Code on Wages and various state-level labour laws provide for paid leave and regulate working hours in principle. In practice, enforcement is uneven, the informal economy operates largely outside these protections, and recent amendments in several states have moved toward extending permissible working hours rather than restricting them. Workers do not need to be irrational to end up in a collectively irrational outcome. They only need to be responding sensibly to the incentives in front of them, which is precisely what the survey respondents were doing when they chose World A.
Mandatory paid leave does not ask anyone to stop caring about their relative position. It simply makes it harder to surrender the holiday in pursuit of it. That is a modest intervention. Given what the survey found, it is also a necessary one.
Comments can be sent to imlisanenjamir@gmail.com
