I happened to spend an evening recently in the company of some very, very rich people. Not so rich that they, like Bill and Melinda Gates, could take on the challenge of global malaria single-handed - but certainly rich enough that they need never worry about keeping their jobs or funding their old age or health care. They are comfortably insulated from the three-in-the-morning anxieties that trouble the rest of us - so, if avoiding stress is the secret of a contented life, these people ought to have achieved the inner peace of a Zen master.
Not so. "Do you know how expensive a yacht berth in St. Tropez is now?" It turns out the life of a multi-millionaire is permanently embattled: finishing school fees, nannies' and gardeners' salaries, free-spending offspring, envious relatives, cash-hungry charities... not forgetting the government, with its constant, unreasonable demand for taxes. And the worst of it is that no one else understands - it is only among fellow Croesuses that your problems get a fair hearing. The evening was full of bejewelled matrons clucking sympathetically at each other's sufferings. The rising cigar-smoke seemed fuelled by the fires of martyrdom.
In this, the rich are no different from you and me - and the reason is a fundamental aspect of behavioral economics. You may be familiar with the discovery of Dan Ariely's that anything you own, from coffee cups to basketball tickets, is intrinsically more valuable than the same thing on the open market; it's called the endowment effect. Now add to this the remarkable human capacity to get used to things and assume that whatever is, is normal. The nomad of the Kalahari desert lives happily in possession of three useful objects in an antelope-skin pouch. The heiress has a portfolio of houses extending from Jackson's Hole to Gstaad. Both consider their circumstances to be entirely normal and both, thanks to the endowment effect, would strenuously object to having to make do with any less.
The icing on this irrational cake is what the pioneers of behavioral economics, Kahneman and Tversky, called reflection: we can't think the same way about gain and loss. The rich see the thousands accumulate in their bank accounts, but it means very little - it's normal. Any unsought losses, however (such as taxes) loom large: it's my money, spent without an obvious return (forgetting, of course, the security, laws, banking system, and so on that taxes pay for). The rich, like the rest of us, feel personally entitled to whatever they have and resent any attempt to remove some of it - even if they have no specific use for the extra money.
The hardest truth about being human is that we tend to value things in relative terms: if we have the same as everyone else, we're content. If we have less than we had yesterday, we're unhappy. We constantly reset our norms and assume that we deserve whatever we possess, whether we earned it or had it fall into our laps from a clear sky. The result is that no one, not even the most fortunate, can easily extract the simple pleasure that riches promise, enjoying the here and now without some lurking anxiety. So if you can, congratulations: you have a gift that money truly cannot buy.
If you enjoy such tales of human fallibility, you can find a new one every day at http://bozosapiens.blogspot.com. See you there.
