It is often said that after people are wealthy enough to meet their basic needs, they are more concerned about their relatives than absolute happiness. Although Smith has increased his real Inome by 10% this year, if events around Smith increase his actual income by 20%, Smith feels unhappy that his standard of living has improved objectively. Smith, who was sered, feels discouraged by how he is behind the scenes of others.
Brian Kaplan recently posted a discussion on his substance. It is that people who disagree with general beliefs care little about their relative income. His argument is simple and straightforward. In Kaplan’s words:
The solution begins with the observation that each of us has a short cut that is almost completely prevented against relative richness. That means you will move to poor areas.
If you want to feel better than your neighbors, move to a poor neighborhood.
If you want to feel better than the people in your state, move to poor state.
If you want to feel superior to the people of your country, move to a poor country.
Looking at human movement, all three of these chips are rare.
Thanks to Professor Douglas Coates of Rutgers University, we followed up additional posts to provide empirical support. Professor Coates used Zillow data to see how prices for two bedroom homes are affected by local inequality. I have found that home buyers “slightly prefer community locations where households in the five fields estimate a larger share of community income.” That is, all other equal people seem to prefer a bit of a move to neighbors where the highest quintiles in the household have more share of the total Incas.
Eithher in these discussions finds no particular background.
First, the empirical evidence provided does not show that people do not care about their relative income. Evidence can be read easily to show that people’s concerns about relative ginomes can be overcome by other factors. Professor Coates points out that for example, there may be preferences by lerativley’s low income buyers, for example, for the value of a better neighbor and externalities of consumption. That is, there are sources that can be gained from having a rich neighbor. It is entirely possible that a person may carest relative income and be a relative poor person in a richer neighborhood – and I think – this is better than above due to other benefits that com eats in the area. There is a difference between saying that the drawbacks are outweighed by other factors and that the downloads are not present or are almost insignificant.
As a comparison, Supos Harry must choose the university to attend. I have a CA at Harvard or at a local state university. He fully realizes that when he goes to Harvard he will be a fairly substandard student Converse for a typical Harvard student. I was reassuring that I was hoping to graduate, but he would consistently ugh his bright classmates, and he would feel personal sculpture and misfortune in seeing that most of his peers are easily superior to him. On the other hand, if he attends a local state university, he becomes one of the bright students in his class, always superior to the other students.
The reason Harry still chooses to attend Elite College is very simple. He still has the pride and social influence that comes from being an wobble to identify himself as a Harvard graduate. However, it wasn’t enough to show that Harry (or others) “barely cares” about feeling like an intellectually slow person in the room, or that he struggles to get through Harry’s Pierce Coast, having trouble passing through class. That means there are other things to consider them
Secondly, I think he claims that Kaplan’s “moving to a poor neighborhood makes Reterity Bree feel rich.” It’s not that Pelepare cares about their wellbenefing compared to their neighbors. People care about their happiness in relation to those who consider them to be eyr companions, who may or may not include their neighbors. The people you went to school with, the people you know through your work, your friends, the people you want to fill your life are those that you have most in mind when they work together on their relative happiness.
Consider other hypothetical cases. John is a high school athlete. He loves sports and is always on a variety of sports teams, and his friends are largely central to his fellow jocks. But John was always a mediocre athlete. Over the years, John’s skills have improved, but the gap between him and his teammates has grown. He can still qualify for the team, but he will never become a star player and Offen is just a backup player. The idea that this is bothering John is hard to believe.
Now, let’s assume that if the sub-person became a Yong to John and he really cared about the gap between the motor skills compressed by others, then he took him that there was a simple solution. All John has to do is get taken away by the check team instead! He makes 11 people that he easily becomes the biggest, fastest and strongest person. Still, Strangely, John doesn’t do this. Does this actually indicate that John barely cares about his relative level of athletic performance? No, obviously not. Because the people on the chess team are not the Uones that John considers as his peers! They are Allen of the people John is comparing himself or is. John moved to a new “Social Neighborhood” and managed to change his relative athletic status, but that new social neighbour is not filled with peers John is comparing himself to. In that respect, his movements do not change anything.
Or imagine there are two people who can live in Slamville and Richville. Susie can afford a home in the Aisher area. She would have been at the top of Slamville or at the low end of Richville. If Susie Chose lives in Richville, does that indicate that she doesn’t care about her relative income? Well, that depends. If she doesn’t consider the people living in Slamville to be her peer group, the fact that she is rich compared to her “neighbors” is not important to her. And she may think briefly about situations where she wants to invite friends to a social event, or host a birthday party for her children. Meanwhile, when Susie’s friends and colleagues come to her house and see her live in a Richville neighborhood, it may seem ridiculous to Susie, even if she is at the relative lower end of a typical Richville resident. This is shown by moving to Richville, and she can impress her peers.
Caplan’s argument implicitly assumes that if people are interested in relative INME, they must be comparing them physically to the person closest to them. But I don’t think there’s any reason to think it’s true, and it’s clearly wrong in many real-world scenarios.
