“I would say,” said Akihiro Nishi, an associate research scientist at Yale, “‘If you are watching others’ wealth, watch out.’”
This is in response to a study conducted by Nishi and other researchers from the Yale Institute for Network Science (YINS). They found that when people didn’t know their neighbors’ financial status, they cooperated and interacted much better with each other. But when people were able to see a significant gap in wealth between themselves and their neighbors, the social fabric began to unravel — and the gap in wealth became wider than when the economic inequality was invisible.
“In our experiments, making wealth visible was a very corrosive force;” said Nicholas A. Christakis, director of YINS and senior author of the study, published in the journal Nature, “doing so reduced cooperation and widened economic inequality. It resulted in the rich exploiting the poor.”
“Our results suggest that, surprisingly, the visibility of others’ wealth may have more of a social impact than the actual inequality of wealth,” Christakis said.
The experiment showed other negative effects of visible wealth, as well. As the chasm between rich and poor grew more pronounced, social networks saw lower levels of interconnection, cooperation, and overall wealth. The same was not true in social networks where individual wealth remained hidden.
It seems to me that this research might have implications for entrepreneurs. It is often taught that when you are selling wealth-building products, it is a good idea to show your own “rags to riches” story. When most people do this, they end up showing pictures of themselves driving fancy cars, living in luxurious homes and the like. This might work very well if your target audience is already moneyed. But what if your target market is not? This research implies that your sales would go down because your money-strapped potential buyers would be less inclined to want to work with you.
This is another case of be very aware of your target audience and how they think. In some cases showing off your success too much might actually backfire.