The reality of my existence is that it is judged not based on what I have, but what I have relative to you. Vice versa, what you care about is owning nicer stuff than me.
We each think about our position in life not by where we sit on the overall spectrum but by how we are doing compared to those we know intimately. If you’re reading this you are almost certainly in the top 10% richest people in the world (or on that trajectory), probably top 5% and some of you will be in the top 1% – but if you are anything like me I bet you don’t think about it that way. I bet you are thinking about how you compare to your sister or your best friends or your work peers.
A more extreme example to emphasise the point: I know an investment banker. This banker is one of the youngest Managing Directors in his bank’s history, no less. He makes seven figures, comfortably. Top 0.1%. I’ve never met someone so insecure about his finances. He worries about losing his job. He worries about paying the nanny, the cook and the school fees. He worries about the mortgage on his house in a lovely part of London. He is now committed to a lifestyle that matches his income so he cannot leave his job. The question is why did he commit to that lifestyle? It is because it is what his peers did. It is what you do, what you feel you have to do, if you make that much money. The Joneses are your friends, and they have a Benz.
In fact, my friend (and each of us) is looking up the ladder, not down. He sees hedge fund managers making eight or even nine figures. That is his reference point. The system tells him that he has not done enough. He does not see the 99.9% below him, only the last few steps that he has not taken. If only he could work a little harder…
Because of this instinct, he is never satisfied (and we are never satisfied). We know happiness does not lie in comparison, yet we do it all the same.
The point is also illustrated in how we see pay rises. Traditional economics dictates that homo economicus would prefer a 10% pay increase over a 5% pay increase – a no-brainer, right? With slightly muddier waters, something happens: Experiments suggest that homo economicus would really prefer a 5% pay increase if everyone else at the firm was getting 3% rather than a 10% increase if everyone else was getting 12%. Funny old world – we are happy to cut off our noses to spite our face for some version of justice and the Joneses.
Back to me for a moment, if you’ll indulge me. I’ve made decisions that have made me economically worse off than my friends and peers in banking and consulting. I knew I was making decisions that were not economically motivated and so I knew I’d be economically worse off, but I still sometimes have a tinge of envy. Of anyone, I should not have this problem. In many ways, I’ve managed to burst the bubble I used to live in. I’ve met and worked with people from across the economic spectrum. I’ve seen how difficult life can be (from an economic perspective) in rural Asia and in economically challenged parts of the UK. I have moments when I’m thankful, but I certainly have moments when I forget to be thankful. These latter moments are usually when I’m thinking about the Joneses.
I don’t regret my decisions – I’ve done some fun, interesting and some might say valuable* things since I left my commercially focused career.
I do, however, sometimes wonder ‘what if?’. And therein lies the real challenge. The challenge, the real question here, is about what I’m living for.
Is it for economic comfort for me and my family? Is it for fun? Is it for impact, for making the world a better place? Is it for ego? At the moment, if I am honest with myself, it is a little of all of these and, as a result, probably achieving none. A vortex of confusion clouds the big decisions I need to make. I am being pulled this way and that, not quite here and not quite there.
As I’ve grown up, I’ve convinced myself that the way to live is to have a mission and to have clear principles that are based on making the whole world, rather than just my own world, better. The worst part of my instinct is to think about myself relatively. The resulting envy, fear, impulse for security and eye I cast over the Joneses and their fancy new self-cleaning oven holds me back from fully delivering on any mission. At least it did. The question is, can I break free?
*Whether the things I’ve done are valuable is a discussion worth having. Let’s grab a beer and talk about it.