2 min read
I recently read a great article by Morgan Housel in which he shared 20 flaws, biases, and mistakes he often sees people make when dealing with money.
One bias in particular stood out to me, which Housel calls the rich man in the car paradox:
When you see someone driving a nice car, you rarely think, “Wow, the guy driving that car is cool.” Instead, you think, “Wow, if I had that car people would think I’m cool.” Subconscious or not, this is how people think.
The paradox of wealth is that people tend to want it to signal to others that they should be liked and admired. But in reality those other people bypass admiring you, not because they don’t think wealth is admirable, but because they use your wealth solely as a benchmark for their own desire to be liked and admired.
This stuff isn’t subtle. It is prevalent at every income and wealth level. There is a growing business of people renting private jets on the tarmac for 10 minutes to take a selfie inside the jet for Instagram. The people taking these selfies think they’re going to be loved without realizing that they probably don’t care about the person who actually owns the jet beyond the fact that they provided a jet to be photographed in.
The point isn’t to abandon the pursuit of wealth, of course. Or even fancy cars – I like both. It’s recognizing that people generally aspire to be respected by others, and humility, graciousness, intelligence, and empathy tend to generate more respect than fast cars.
I went back and reread this passage about four times because I was stunned at how much truth it held. When I personally see someone with a fancy car, house, or tech gadget, I don’t envy them, but rather my gut instinct is to imagine what it would be like if I personally owned that thing.
The paradox of this situation is borderline hilarious.
Person A buys some object to impress persons B, C, and D. But when persons B, C, and D see person A with that object, they aren’t impressed by person A at all because they’re too busy picturing themselves owning that object and imagining all of the attention that might come from it.
This means that purchasing things purely to gain approval and attention from others is a flawed strategy. As Housel says,
“But in reality those other people bypass admiring you, not because they don’t think wealth is admirable, but because they use your wealth solely as a benchmark for their own desire to be liked and admired.”
We can all use this insight to our advantage. Whether we’re purchasing something big like a house or something small like a wrist watch, we should be thinking about utility, not attention. If a certain purchase will add real value to your life, you should feel OK about it. But if you’re looking to buy something purely to gain the attention, approval, and admiration from your peers, you’re participating in a game that you can’t win.
Housel goes on to explain the real way to gain respect and admiration from others:
“It’s recognizing that people generally aspire to be respected by others, and humility, graciousness, intelligence, and empathy tend to generate more respect than fast cars.”
If you want people to think highly of you, you should strive to be a good person. You won’t gain anyone’s admiration from buying a large house or a fancy car.
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Zach is the author behind Four Pillar Freedom, a blog that teaches you how to build wealth and gain freedom in life.
He quit his day job as a data scientist in 2019 because he was able to earn enough income from profitable websites to replace his salary. He now teaches people how to start and grow their own profitable websites from scratch in the Income Community.
Zach's favorite free financial tool he's been using since 2015 to manage his net worth is Personal Capital. Each month he uses their free Investment Checkup tool and Retirement Planner to track his investments and ensure that he's on the fast track to financial freedom.
His favorite investment platform is M1 Finance, a site that allows him to build a custom portfolio of stocks for free, has no trading or maintenance fees, and even allows him to set up automated target-allocated investments.
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I’m finding that money is a very strange tool. The more we think we need it, the more it subconsciously surprises us in that we are truly happy when it’s involvement is little to none.
Money is a strange tool indeed. It’s only needed to free up our time so we can pursue the things that actually make life worthwhile. In that sense, it’s simultaneously the most and least important tool at our disposal.
Zach, If I didn’t know you were 24 from reading your about page, I would think you are much older. It just proves that wisdom does not have to be accompanied by age. This is some really good and thoughtful stuff. Tom
Thanks, Tom! I appreciate the kind words. I just try to grow and learn a tiny bit each day. Over time, it really starts to add up. Glad you liked this article 🙂
I completely agree! Wise beyond your years, my friend. As always, great stuff! Hitting the share button now.
Thanks so much Cody! 🙂
I had to double read that too. Its like the Facebook syndrome… Well actually Instagram. Its much worse than Facebook.
Hi Zach,
“It’s recognizing that people generally aspire to be respected by others, and humility, graciousness, intelligence, and empathy tend to generate more respect than fast cars.”
Hmm, I wonder if people will treat these admirable character traits like a objects, replacing the person having such traits with themselves, exactly like how they would do if they are taking photographs of fast cars and jets. Like if they see an intelligent person, they will replace the person with themselves and retain the intelligence trait.
To me, both the pursuit of material goods and good character are one and the same thing, if they are meant to elicit a envious response from others. Of course the latter is of a ‘better quality’ than the former, but the same nevertheless.
What should we do? Perhaps we should just do what is right for us, regardless of whether there is any person watching you. Keep true to your own character, your perfection and your flaws and people will admire you for who you really are – having the courage to express your true self.
You bring up an interest point, La Papillion. Personally I do find that I admire people who are humble gracious, intelligent, etc. I admire the person, not just the attribute. I do agree that it’s important to keep true to your character though. Thanks for the comment, it’s great to hear from you again!