Transparent or opaque?

Transparency, especially when it concerns people’s incomes, may not be as desirable as we think

Relativity is widely associated with Albert Einstein (even though many people have, at best, only a vague idea of what the special and general theories of relativity actually entail). But in fact, relativity is a concept that is deeply rooted in the human psyche since well before Einstein’s theories. We cannot handle the absolute very well, and almost always rely on the relative. Is a car’s fuel consumption high, a shirt cheap, a travel destination distant, a building tall, and so on? We can only answer such questions by comparing the relevant quantity with something else that is relevant. A particular case is what we — and others — earn. Whether we judge our pay acceptably high depends (a lot!) on what we think other people are paid. Yet, our income is something that most of us tend to keep really quite secret. How come, and would more transparency not lead to more fairness?

The double-edged sword of transparency

We tend to believe that we are better than average (this is considered “one of the most robust of all self-enhancement phenomena”). We would therefore expect our wage to reflect that by also being above average. Disclosing our pay would allow other people to…