Things have been a bit crazy lately. It’s a bit hard to update regularly when you’re keeping 14-hour days. But I’m hoping it won’t carry on for too long and I’m sure I’ll be able to come up with a workable routine for this blog. Ancora Imparo. Anyway, here’s something that I know well enough that I don’t have to spend too much research on.
That fount of wisdom, H.L. Mencken, once defined wealth as “any income that is at least one hundred dollars more per year than the income of one’s wife’s sister’s husband.”
That seemingly frivolous quip is in fact a particularly astute observation that many economists tend to ignore. People are more concerned with their relative standing in the world rather than their absolute standing. Think about it, in those pensive moments when you’re asking yourself if you’re actually doing well, how do you go about it? You compare yourself to how other people you know are doing; you don’t compare yourself to strangers.
A classic experiment conducted at Harvard University highlights this phenomenon. Respondents were given two options as to which companies to work for:
- Your salary is $33,000; others earn $30,000
- Your salary is $35,000; others earn $38,000
Even though their absolute income is less in the first scenario, most people believed that they’ll be much happier working there than in the second. This proves a fact about human nature that I’m sure we’ve always suspected – people are envious.
Here’s a more recent report by the LA Times highlighting the same issues.
I don’t think there’s much that we can do about that, since it addresses an underlying characteristic inherent in most of us. It’s just something that’s nice to be aware of the next time a similar situation crops up. Are we settling for a less-than-optimal situation just because we’re envious? How much are we actually willing to pay for regret therapy?