Tolerance for inequality: Hirschman's tunnel effect revisited

Abstract

Along the path of economic development, advancement of some groups naturally generates economic disparity in society. The concurrent presence of both winners and losers invariably give rise to the psychologically economic question of how the losers perceive and respond to the benefits of development. The ‘tunnel effect’ proposed by Hirschman provides valuable insights for understanding the changing tolerance of economic inequality in the process of economic development. This paper critically discusses this proposition, reviews the related literature, and provides possible extensions. Show more