Albert O. Hirschman (1915-2012) was a renowned economist and political philosopher who made significant contributions to the fields of development economics, international political economy, and political ideology. He was known for his belief in the importance of unbalanced growth and the value of encouraging industries with many linkages to other firms in developing countries. Hirschman also developed the concepts of "exit, voice, and loyalty" and the "rhetoric of reaction" in his later work on political economy. In addition to his academic achievements, Hirschman played a vital role in rescuing refugees during World War II in occupied France. He was also involved in the founding of the Latin American Program's Academic Council at the Wilson Center, where he helped establish a space for critical inquiry and open debate on issues related to Latin America and its relationships with the United States and the global economy.

The Tunnel Effect

Source: Hirschman, A.O., Rorhschild, M. (1973), The Changing Tolerance for Income Inequality in the Course of Economic Development, in: The Quarterly Journal of Economics, vol. 87, no. 4, pp. 544-566)

The Tunnel Effect refers to the idea that people are more likely to tolerate income inequality when they believe that it will eventually reduce or disappear. This concept is analogous to a situation in which a person is stuck in a traffic jam on one lane of a tunnel, but sees the other lane moving forward. The anticipation of eventually moving forward can make the person more tolerable of the current situation, even though they are still stationary. If only one lane continues to move forward while the other remains stationary, the people stuck in the stationary lane may become angry and attempt to challenge the perceived unfairness of the situation.

In countries experiencing strong economic development, the Tunnel Effect can lead people to feel like they are benefiting from the growth, even if their own income has not increased. This is because they believe that the growth will eventually lead to improved conditions for everyone. This concept was studied by Stouffer and his colleagues in the United States after World War II, and has been observed in other countries as well. For example, a survey conducted in the slums of Rio de Janeiro found that nearly half of the respondents believed their situation had worsened in the past five years, but they did not feel disillusioned because they believed that the country's industrial growth would eventually improve their own circumstances. This optimism can persist even in the face of persistent inequality, as long as people believe that the gap is closing or will close eventually.

However, history has shown that the situation is more complex. Tocqueville observed that people who are able to rise in social status may not necessarily support the current social order, and may instead be discontent and potentially subversive. This is because social mobility is often partial and limited, with individuals encountering barriers and discrimination that prevent them from fully integrating into the traditional elite. This can lead to a sense of frustration and a belief that the road to success is ultimately blocked. However, these feelings of discontent may eventually dissipate as the traditional class system erodes. There may also be a dynamic at play among the newly upwardly mobile, where social justice becomes more important to them as they rise in status and encounter discrimination from the established elite. This dynamic may be in opposition to the Tunnel Effect, where people are willing to tolerate income inequality as long as they believe it will eventually improve.

So, the tunnel effect - individuals who are experiencing upward social mobility may not perceive or acknowledge the existence of inequality or injustice in their society – originates in their focus on their own progress and their feeling that they are benefiting from the economic growth and development occurring in their country. The tunnel effect can also occur in countries that are experiencing a strong period of economic growth, as long as the effect persists and individuals continue to feel that they are getting richer. The concept was first studied in the context of American soldiers during World War II, and has since been observed in other countries as well. Various factors can influence the strength of the tunnel effect, including social, historical, cultural, and institutional factors. For example, the tunnel effect is more likely to occur in societies that are relatively homogenous and have relatively permeable class boundaries, rather than those that are highly segmented and have rigid class boundaries. The tunnel effect is also more likely to occur in cultures where success is attributed to luck or merit rather than to unfair practices like nepotism or favoritism. Family structures and social networks can play a role in the strength of the tunnel effect, as can the perception of how much social mobility is actually possible within a given society.

Social, historical, cultural, and institutional determinants can impact the strength of the tunnel effect. For the tunnel effect to occur or have an impact, the non-ascending group must be able to identify with the ascending group and there must not be insurmountable barriers separating the two groups. The difference between relatively homogenous and highly segmented societies is also important, as the tunnel effect is more likely to occur in the former. Expectations have impact on the tunnel effect. Institutionalized envy and the potential for social conflict can be a result of the tunnel effect.