It’s said that when chased by a bear, you don’t need to outrun the bear; you just need to outrun your friend. Similarly, to win a championship, a promotion, or a date, you need only to beat the immediate competition, whether a team, a colleague, or a fellow suitor.
No wonder we constantly measure ourselves against our peers. In a survey of faculty, students, and staff at the Harvard School of Public Health, nearly half of the respondents said they’d prefer to live in a world where the average salary was $25,000 and they earned $50,000 than one where they earned $100,000 but the average was $200,000. Similarly, a majority favored relative over absolute advantage when it came to their own intelligence and attractiveness, their child’s intelligence and attractiveness, or praise from a superior. Apparently the survey respondents would rather the planet be filled with stupid, ugly children than have their own child left behind [1].
H. L. Mencken was on to something when he defined wealth as “any income that is at least $100 more a year than the income of one’s wife’s sister’s husband.” According to one analysis of labor statistics, sisterly competition may have contributed to rising female employment after World War II. Among grown sisters not in the workforce, a woman was more likely to get a job if her brother-in-law outearned her husband [2].
People also suffer from a phenomenon known as “last-place aversion.” Although players in an economics game tended to give money to those with fewer assets, this tendency waned when a player was ranked second-to-last. The researchers who ran the game also found that in real life, people making just above the minimum wage were among the least supportive of a minimum-wage hike [3].
And yet, competitive though we clearly are, we underestimate the influence of social comparison. In one study, call-center employees said that achieving mastery at their job was more important than achieving superiority (ranking better than peers). But in reality, relative rankings affected their self-evaluations, and mastery did not [4].
Our desire for relative advantages is not irrational: Such advantages may make us happier. In 1974, Richard Easterlin, an economist, found that although a country’s richer citizens are happier than its poorer ones, as countries become richer, their citizens do not become happier—a contradiction known as the Easterlin paradox. Happiness, Easterlin reasoned, must depend on one’s wealth relative to one’s compatriots: When everyone gets richer, no one gets happier [5]. A study of 12,000 British citizens would seem to support Easterlin’s conclusion, revealing that increased income boosted life satisfaction only when income rose relative to peers of a similar age, educational level, or region [6].
And so it goes. We decry the goal of keeping up with the Joneses, even as we struggle ferociously to keep one step ahead of them. Perhaps this is with good reason. If we don’t, our rivals will win all the glory, and we’ll become bear food.
The Studies:
[1] Solnick and Hemenway, “Is More Always Better?” (Journal of Economic Behavior & Organization, Nov. 1998)
[2] Neumark and Postlewaite, “Relative Income Concerns and the Rise in Married Women’s Employment” (Journal of Public Economics, Oct. 1998)
[3] Kuziemko et al., “ ‘Last-Place Aversion’ ” (The Quarterly Journal of Economics, Feb. 2014)
[4] Van Yperen and Leander, “The Overpowering Effect of Social Comparison Information” (Personality and Social Psychology Bulletin, May 2014)
[5] Easterlin, “Does Economic Growth Improve the Human Lot?,” in Nations and Households in Economic Growth (Academic Press, 1974)
[6] Boyce et al., “Money and Happiness” (Psychological Science, April 2010)