Sunday, February 19, 2006

The Benefits of Status-Seeking

As most non-Marxists will agree, there are definitely positive externalities associated with entrepreneurial effort (that is, benefits that fall to society in general, beyond the actual individual involved). For example: some dude works long and hard attempting to invent some cool new piece of technology. He succeeds, and while he is definitely handsomely rewarded for his efforts (hopefully, a patent and loads of riches), our lives (society’s) are all enriched in ways that go beyond his direct compensation. Now hold that thought while we consider a situation where this economic reality interacts with human psychology. Consider the role that status-seeking plays in how people approach their lives. As many studies have shown, there are some definite happiness benefits associated with becoming more wealthy, but most of this seems to result from a comparison to others around you – how well you are keeping up with the Joneses. Clearly, part of the motivation for becoming wealthier is the positive position it puts you in compared to those around you. And while we usually think of status-seeking as being a negative thing, I think you can see that there are real benefits to society at large because of our innate human desire to outdo our neighbors. If we didn’t have this desire, we’d probably have less entrepreneurship and less technological advancement, because the monetary benefits alone wouldn’t be enough to spur people to devote the effort needed to invent cool stuff.

Will has more at The Fly Bottle.


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