Question1:
Would you rather earn £50,000 a year while other people make £25,000, or would you rather earn £100,000 a year while other people get £250,000? Assume for the moment that prices of goods and services will stay the same.
Question 2:
Mr A is waiting in line at a cinema. When he gets to the ticket window, he is told that as he is the 100,000th customer of the cinema, he has just won £100.
Mr B is waiting in line at a different cinema. The man in front of him wins £1,000 for being the 1-millionth customer of the theatre. Mr. B wins £150.
Would you prefer to be Mr A with £100 or Mr B with £150?
Apparently we have evolved to believe weird things about money and we are not rational, self-maximizing or efficient in making economic choices.
The common answers to the questions along with a fascinating experiment with monkeys and economics can be found in this article from a few years ago in the L.A. Times.
This story reminded me of a couple of things;
A friend got 5 numbers on the Lottery but only got a few hundred and was gutted as that week a lot of others also got the same and the sum was shared. Instead of feeling fortunate he felt unlucky and I really believe that he would have felt better if he had not won anything.
I was listening to a radio program recently about poverty within families in the UK. As expected, some people contacted the show saying the usual "Things were a lot worse in my day". However the poverty expert who was getting interviewed said it was about relative poverty. A kid going to school today may have shoes on their feet, enough food to eat and more that one set of good clothes but if all the other kids have so much more then they are still impoverished relative to them and will still be disadvantaged.
It seems to be in our nature not to get in a position where we will be disadvantaged compared to others and apparently evolution accounts for a lot of it.
It seems to be in our nature not to get in a position where we will be disadvantaged compared to others and apparently evolution accounts for a lot of it.
Im old enough and ugly enough to know that money isn't important it's social status that matters. We live in the 4th richest country in the world (by some measure) but there is still poverty around, without poverty who would do the washing up ? The real value in money is not that it will buy you stuff but that it's a very persuasive tool to get other people to do what you want. That's my two cents worth , anyhow.
ReplyDeleteI would have to agree with you. Money is just a token of status. Even though this research suggests that we don't like the idea of people getting above us I have seen other research that shows we, ie apes, have an innate sense of fairness too.
ReplyDelete