Posted by Jay Livingston
|Which world would you rather live in, A or B|
World A: You have 2 weeks of vacation; others have 1 week.
World B: You have 4 weeks of vacation; others have 8 weeks.
It’s a no-brainer, right? Four weeks vacation is better than two. No surprise that 85-90% of us choose World B. Now try this one.
|World A: You earn $110,000 per year, others earn $200,000|
World B: You earn $100,000 per year, others earn $85,000
The income figures represent real purchasing power. Thus your higher income in World A would enable you to purchase a house that is 10 percent larger than the house you would be able to afford in World B, 10 percent more restaurant meals, and so on. Faced with a once-for-all choice between these two worlds, which would you choose? (From Frank and Sunstein, here.)
This question doesn’t get the same kind of consensus. Somewhere between a third and a half of us choose the lower income, $100,000 rather than $110,000. Why leave $10,000 on the table?
Apparently, how much your income is worth depends on its position in relation to others. Income is a “positional good.” I’ll let Sheldon Cooper explain.
How you feel about your $100,000 income depends on how much others are making. When it comes to things that employers or governments can provide, income is a positional good. But vacation time is non-positional. Four weeks good, two weeks bad (or at least not as good) regardless of anyone else’s deal. Robert Frank and Cass Sunstein, who have written extensively on the topic, identify other non-positional goods: “health care, safety, parental leave, and leisure time, are largely or primarily nonpositional goods, valued for their own sake and more independently of what others have.”
This distinction closely parallels the research on happiness, which says to spend your money on experiences rather than objects. The happiness that a new gadget or piece of jewelry brings fades more quickly than what you would get from travel or a concert. That’s probably because as your phone or couch or sneakers grow a bit older, you start thinking about newer ones, comparing objects in the same way that people compare their incomes with those of others. We’re especially likely to compare upwards, keeping our eyes on the next and more expensive object or the higher income. But with experiences, we’re less likely use other people’s as a baseline for evaluating our own.
Besides, experiences are unique to the individual. You really can’t compare them on some universalistic scale in the same way that money allows us to compare Apples and Androids. That’s the point of all those MasterCard commercials. It’s the things that you can’t put a price on that are most important. They are also non-positional.
So love and relationships should be non-positional. The joke in the “Big Bang Theory” video is that some people can turn even love, or at least a girlfriend, into a positional good. The excerpt is funny because Howard admits to making the comparison downward, admitting that Raj’s being alone and miserable is “a perk.”
Comparison upwards is less funny – the Have-nots comparing themselves to the Haves and, like Raj, feeling miserable. It’s also probably more common. Think of the people who were unpaired last week on Valentine’s day. Or go to Google Images and search for “single on Valentines,” and you’ll see many variations on the alone-and-miserable theme, most of them a transparent, defensive denial. They make the same positional point: These people would not have felt so bad if it weren’t for knowing that so many others were coupled up in the world of roses and chocolates; and that positional goods (car parts!) are a poor substitute for personal, non-positional relationships.