People Care More About Status Than Money

The LATimes has an interesting article about the strange things people think about money. Chief among the odd behavior was the average person’s answer to the following question:
Would you rather be A or B?

A is waiting in line at a movie theater. When he gets to the ticket window, he is told that as he is the 100,000th customer of the theater, he has just won $100.

B is waiting in line at a different theater. The man in front of him wins $1,000 for being the 1-millionth customer of the theater. Mr. B wins $150.

According to the Times, the average person choses “A”:

Amazingly, most people said that they would prefer to be A. In other words, they would rather forgo $50 in order to alleviate the feeling of regret that comes with not winning the thousand bucks. Essentially, they were willing to pay $50 for regret therapy.

Regret falls under a psychological effect known as loss aversion. Research shows that before we risk an investment, we need to feel assured that the potential gain is twice what the possible loss might be because a loss feels twice as bad as a gain feels good. That’s weird and irrational, but it’s the way it is.

We can’t imagine a world where people would come to the conclusion that it was a good idea to pay $50 to avoid knowing that they didn’t win $1,000. Does not compute.

The article goes on to explain the possible evolutionary causes for such behavior. Evolution’s effect on people’s perception of money is such that the vast majority of people care more about “making more money than other people” than they do about how much money they’re actually making:

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.

Surprisingly — stunningly, in fact — research shows that the majority of people select the first option; they would rather make twice as much as others even if that meant earning half as much as they could otherwise have. How irrational is that?

Obviously the scenario can never happen, but do you feel this way? We suppose it can explain why some people bankrupt themselves just so they can have a better car than their neighbor.
Why people believe weird things about money [LATimes]
(Photo:Joy of the Mundane)