A New York Times article [via Instapundit] titled, “In Silicon Valley, Millionaires Who Don’t Feel Rich” explores why many people with assets and sometimes incomes in the millions who live in Silicon Valley don’t feel particularly rich. One paragraph gets to what I consider the heart of the effect.
But many such accomplished and ambitious members of the digital elite still do not think of themselves as particularly fortunate, in part because they are surrounded by people with more wealth — often a lot more.
Unfortunately for our happiness, we humans lust after status. Throughout history, we sacrificed vast amounts of resources on the tokens and expressions of status. I have written before about how gold became a universal trade good and eventually universal money purely due to people in every human culture using gold to fulfill the universal desire to demonstrate status. In contemporary America, we use houses, cars, vacations and organic food to signal our status but the overall level of consumption status remains high.
Yet, why do people like the hardworking millionaires of the article keep running on the exercise wheel of status when they already stand at the top 1%-2% of the status hierarchy of the developed world and stand even further up on the hierarchy of the entire world? I think the explanation is disturbingly simple.
Our lust for status comes from deep in our genes. Unfortunately, our sense of status evolved when humans lived in small groups of a few dozen at most. As a result, we key our sense of status not off the greater, but emotionally abstract, society but off our immediate peer group, the people we see and work with every day.
Absolute measures of material wealth count for nothing. If an individual has a net worth of one million dollars but all his peers have a net worth of two million, that individuals will feel as if they have a low status. Status is, after all, a purely relative measure. As a relative measure, it defines a zero-sum game in which a gain by one player means a loss by another. Material goods likewise lose their absolute significance and we judge them only in relation to the material goods of our immediate peers.
It never stops. The kings and emperors of old stood at the pinnacle of status for their societies and yet still they obsessed. They compared themselves to other contemporary rulers or, worse, they compared themselves to historical figures. They built great monuments to themselves merely so that future generations would know the great degree of their status. If those who held sway over the lives of millions still obsessed over status, what hope do the rest of us have?
Psychologists have actually found that individuals who live in communities where most people make less money than they do report higher levels of happiness regardless of their degrees of absolute wealth. So the richest person on the block in the ghetto derives more status satisfaction than the poorest millionaire at a country club.
Now we know why rich people in Silicon Valley don’t feel rich. Being rich isn’t about absolute wealth but rather relative status. If you have a solid gold bathtub but everyone else in the neighborhood has two, your bathtub won’t bring you much pleasure.
Classical philosophers, early Christianity and Buddhism all place great emphasis on the dangers of lusting for status. I think western civilization lost that warning somewhere along the line. We seem largely unconscious of the degree to which the desire for status determines our behavior. We become like rats, genetically programmed machines who run and run but never understand why.