Status Anxiety – Why Money Can’t Buy Happiness
Editor’s Note: Memorial Day weekend starts today. Many of you are probably traveling somewhere, and Alexander Green is no exception. He’s currently making his way through Austria on The Oxford Club’s Beyond Wealth River Cruise.
Here at Investment U, we often talk about how to accumulate wealth. But today, we’re digging into the question of why we seek wealth. Enjoy this excerpt from Alex’s Beyond Wealth series. It’s an illuminating look at what money can do – and what it can’t do.
In 1759, Adam Smith inquired in his Theory of Moral Sentiments about why we seek wealth. Is it to meet our basic wants and needs?
No, he concluded. “The wages of the meanest laborer can supply them.”
The point of all our striving, he argued, is “to be observed, to be attended to, to be taken notice of with sympathy, complacency and approbation.”
William James, the father of American psychology, echoed this sentiment a century later when he declared that the deepest principle in human nature is the craving to be appreciated.
We don’t like to admit it – even to ourselves – but most men and women are in a near-constant pursuit of higher status.
Psychologists have even identified a new malady, one that afflicts millions. They call it “status anxiety.”
Throughout history and around the world, men and women have always sought status and recognition. But in the modern era, the yardstick is almost always the same: economic success.
Or, more bluntly, money.
The benefits of money and status are obvious: freedom, resources, comfort, time, attention and deference. A lack of status, on the other hand – even if it is only a perceived one – can lead to sadness, anxiety and even depression.
Our capitalist system thrives on the pursuit of status. Entrepreneurs take elaborate risks in the pursuit of great rewards. Consumers buy superfluous products – especially luxury brands – that they believe confer stature and prestige. The pursuit of status motivates us to develop our talents, work hard, demonstrate excellence and achieve worthy goals.
In today’s increasingly affluent society, however, our ideas about what is essential to modern living constantly change.
For example, consider the percentage of Americans who believed the following items were necessities in 1970:
- More than one phone – 2%
- Second television set – 3%
- Dishwasher – 8%
- Car air conditioning – 11%
- Second car – 20%
- Home air conditioning – 22%.
If these were nonessential to Americans 45 years ago, why do hundreds of millions consider them necessities today?
It’s not just that these things make our lives easier and more comfortable. Many folks would feel embarrassed or ashamed to be without them.
To an astonishing degree, our sense of happiness is based on comparing ourselves to others.
Unfortunately, that is a guaranteed recipe for unhappiness. It allows us to walk around – in the midst of abundance – nursing a sense of misfortune.
The problem with making economic success the foundation of personal happiness is that a) you cannot control the economy and b) most companies eventually fail. Needless to say, this undermines job security and financial well-being.
The history of Western economies is one of repeated cycles of boom and bust. Four or five years of expansion are regularly followed by one or two years of contraction.
If you were to magically travel back 10 years in time and warn people that within a decade Lehman Brothers, Bear Stearns, Countrywide Financial, Borders, Circuit City, Blockbuster and RadioShack would all be gone – and that many of the nation’s biggest banks, insurance companies and automakers would need a federal bailout – you’d be dismissed as a crackpot.
Aside from regular recessions and the occasional financial crisis, new companies – with innovative products and services – regularly and decisively put old ones out of business. Railways made canals obsolete. Airplanes overtook passenger liners. And personal computers cut the legs off Smith Corona.
Half the value of the U.S. stock market is in companies that didn’t exist 40 years ago.
No matter how secure your job and fortune, things can and will change. Sometimes dramatically. That means status based on relative financial worth rests on a precarious foundation indeed.
While life will always be uncertain, there is a simple and effective cure for status anxiety: changing the way you think.
Every time we feel satisfied with what we have, however little that may be, we can count ourselves rich.
Jean-Jacques Rousseau insisted there are two ways to make a man wealthier: Give him more money or curb his desires. Or, as Socrates declared as he passed the expensive goods on sale in the Athens agora, “How many things I can do without!”
As for other people’s opinions, whether you get the recognition you believe you deserve is out of your control. But if you haven’t done anything that deserves contempt or disrespect, what difference does it make what someone else thinks?
We overvalue others’ opinions, especially since most people’s views on most subjects (and most people) are chock-full of prejudice, confusion, illogic, oversimplification, shallowness and error.
So why would we let their verdicts govern what we make of ourselves?
Simply recognizing the superficial nature of public opinion doesn’t just relieve stress and anxiety. It’s entirely liberating.
(And if you really want to put things in perspective, consider that before long you and everyone you know will be dead and gone. What will their dissatisfactions be worth then?)
Every individual has a unique identity and an equal claim on existence. There is no reason for any self-supporting man or woman to live up to some outer-imposed image of financial success.
America was founded on the premise that you have an inalienable right not just to life and liberty but to “the pursuit of happiness.” Our founders declared that life is to be not just endured but enjoyed.
Our society’s affluence today presents you – and your children and grandchildren – with a rare and remarkable chance: the opportunity to find your purpose, embrace your vocation and still live a decent life.
An obsessive pursuit of status may not be a waste of just time. It could be a waste of a life.
Beyond a basic level of material comfort, happiness consists of two things: meaningful work and the feeling of being connected to others.
When you quit overvaluing other people’s opinions and policing your status, your happiness is grounded – logically – in your own sense of worth.
As the German philosopher Arthur Schopenhauer said, “Other people’s heads are too wretched a place for true happiness to have its seat.”
About Alexander Green
An expert on momentum investing, value investing and investing based on insider activity, Alex worked as an investment advisor, research analyst and portfolio manager on Wall Street for 16 years. He now runs the wildly successful Oxford Communiqué, ranked as one of the top investment newsletters by Hulbert Digest for more than a decade. He is also the author of four national best-sellers: The Gone Fishin’ Portfolio, The Secret of Shelter Island, Beyond Wealth and An Embarrassment of Riches. He shares his wisdom in his free daily e-letter, Liberty Through Wealth.