Men do not desire to be rich, only to be richer than other men. – John Stuart Mills (1806-1873)
There is a great old Jewish folktale in Rabbi Harold Kushner’s book When Bad Things Happen to Good People. The story is about two competing shopkeepers in a small town. Their shops were right across the street from each other and they were bitter rivals.
Each spent almost as much time watching their rival as they did running their own shop. When one of them stole a customer from the other he would gloat mercilessly, while the one who lost the customer would not rest until he got revenge.
One night an angel appeared to one of the shopkeepers and said, “I have been sent from God to teach you a lesson.” The angel continued, “God will grant you whatever you want, but whatever he grants you, he will bless your competitor across the street with twice as much.”
First, the shopkeeper thought of asking for incredible riches, but he soon realized that no matter how rich he was he could not bear to see his competitor twice as rich as himself. Next he thought of asking for power or fame, but the very thought of his competitor having more of these than him made him miserable.
He was just about to despair when a smile slowly spread across his face. The shopkeeper confidently turned to the angel and replied, “I wish for God to make me blind in one eye.”
Truth is Stranger than Fiction
In a case of truth being stranger than fiction, Alan Greenspan, in his book The Age of Turbulence, reports the results of an interesting study of Harvard graduate students. The students were asked if they would be happier making $50,000 per year if their peers earned only $25,000, or earning $100,000 per year while their peers earned $200,000.
Surprisingly, a majority thought they would be happier earning the lower income if it was more than their peers, rather than earning twice as much, but less than their classmates. The students, essentially, were choosing to make themselves financially blind in one eye rather than see their classmates get ahead of them.
Keeping Up With the Jonses
We laugh at the foolish shopkeeper and irrational Harvard students while making similar mistakes in our own financial lives. The only way to progress financially is to make a plan based on our unique circumstances and stick with it over time. And yet most of us have deviated from our plan at one time or another in an effort to keep up with family members, friends, or neighbors. Each time we do this we weaken our own financial vision.
The moral of these two stories is that comparing ourselves to others leads to foolish choices. The next time you are tempted to make a poor financial decision to keep up with those around you remember the foolish shopkeeper and irrational Harvard students and make the choice that is best for you, regardless of what those around you are doing.