I was recently reading about a study done in 1995 by the Harvard School of Public Health. In the study they surveyed students and faculty with a simple question:
- Would you prefer to make $50,000 a year while everyone around you was making $25,000?
- Or would you prefer to make $100,000 a year while those around you are making $200,000?
The researchers were careful to indicate that the cost of living would be identical in both cases. So very literally the second option would provide you with twice the buying power of the first.
What do you suppose the results were? You might logically expect that most people would choose to have twice the amount of income to enjoy, even if it meant those around them were doing well also. Surprisingly though, 50% of the respondents chose the 1st option. They preferred to have half the income and be better off than those around them even though it would probably mean living a substantially lower lifestyle.
So is this a surprising result? I’m not sure that it is. I think it is very reflective of a society that is often obsessed with keeping up with the Joneses. And if you think the problem is reflective of our current materialistic society, I would suggest that this issue is nothing new.
You shall not covet your neighbor’s house. You shall not covet your neighbor’s wife, or his male or female servant, his ox or donkey, or anything that belongs to your neighbor. Exodus 20:17
The 10th of the 10 Commandments basically related to not being jealous of your neighbor’s possessions. Hmmm. Looks like this problem has been around for a long time.
A heart issue
The real issue is contentment. Contentment does not mean I never desire for something better for myself or my family, and it certainly doesn’t mean it’s bad to have nice stuff.
But if I am constantly comparing myself and what I have to those around me, I will find contentment an elusive target.
I think many people fool themselves into thinking they need that one more thing to be happy. If only, I had a car like my neighbor. If only, I had a house like my buddy at work. If only, I had that TV, that necklace, that boat, that living room furniture, took that vacation…. If only.
We think if we had just that one more thing then we would be happy. But the truth is there will always be one more thing. You’ll never quite get there chasing stuff. You can buy some temporary fun, but you can never buy happiness.
Very often the day-to-day decisions we make really have little to do with math. Relationships and emotions drive our decisions far more than numbers.
Dave Ramsey often says that personal finance is 80% behavior and only about 20% head knowledge. I don’t think this is far from the truth. Success in financial matters rarely stems from the ability to define the attributes of a variable annuity or to explain the difference between term and whole life insurance. Personal finance success or failure is almost always driven by our emotions, our pride, our habits.
In reality, I’m not that surprised that many people might choose half the income if it meant they were better off than their neighbors. There is an old saying, “Better to be the big fish in a little pond, than the small fish in a large pond.” Certainly this can be true of our views towards finances as we see in this study.
Ultimately, though if you are in a constant chase to stay one step ahead of those around you, you will find it very hard to achieve financial success. And more importantly, while you may think that “stuff” will provide happiness, you will never find true happiness there. True happiness and contentment do not come from things with a price tag.