Not disagreeing, but an awful lot of people with a lot of money seem incredibly bad at spending it on anything they care about; often it seems like most of it goes on positional goods. I’m with Jarvis Cocker here.
Money isn’t important, but you have to have enough, so you don’t have to think about it. Thinking about money is a drag.
Depending on how you interpret it, “enough money that you don’t have to think about it” could mean a lot of money. And given that this is a famous musician talking...
To expand on Lumifer’s point, maybe most people really do care about positional goods. Or rather, they care about the status positional goods bring (and various indirect benefits of status). After all, there does seem to be a lot of independent evidence that most people care a lot about status.
maybe most people really do care about positional goods
And I’ll make a stronger point as well: people rich enough so that their “basic” needs are fulfilled effortlessly and semi-automatically care about status goods a great deal more than people who have to make budgets and worry about money.
A guy who buys a yacht and parks it in the marina “doesn’t use it” from one point of view, but does successfully use it from another point of view which considers that as a symbol of wealth and status it works perfectly fine at the dock (actually, works much better at the dock that in the open sea where not many people can see it).
Not high-status within their peer group anymore, you mean. I’ve heard people talk about this, and for many of them it may not be what they really want, but some people may value being part of a high-status peer group.
(What we really want to know is this: how often do people set out to make money with one purpose in mind, but get sucked into spending more and more money on positional goods they didn’t originally want?)
I don’t put much stock in “revealed preferences.” Humans are massively inconsistent. Our minds are a bunch of disparate processes operating over different domains hacked together, we respond differently to the same dilemmas framed in different ways, we can be money pumped, we can exhibit or avoid biases depending on how we’re prompted to consider a situation, our systems for liking and wanting things operate independently, and so on and so on.
Even if human preferences were coherent, what people’s spending habits revealed about them would still contain a great deal of ambiguity. For instance, a week or so back, I gave money to a Buddhist monk soliciting for charity. Do I consider this a worthy use of my money? Absolutely not. It still pains me to think that I spent it in that way. I used to struggle with extricating myself from social situations with solicitors without giving them money, and I thought that I had moved beyond that, but it turns out that when the solicitor is a saffron clad monk with minimal English fluency, my difficulties return in full force. So while the fact that I can be induced to give money to a begging monk is a significant piece of data about my behavior, it would be a mistake to conclude that I’d be doing it out of a considered valuation of what the monk will be spending the money on, or for the experience of warm fuzzies, or for the signaling value of having people see that I give money to monks.
I think you’re reading more into this than there is.
“Revealed preferences are revealed”
Notably, this says nothing about whether humans are consistent or whether their preferences are coherent or unambiguous. In your example you’re drawing clearly unsupported conclusions from your action and then point out that they are unsupported. Well...
I don’t think that it’s very relevant to note that people care about the things they spend money on in some sense, if the people do not actually approve of or enjoy their purchases, and will stop spending their money in those ways, and be happier as a consequence, if they can avoid having the purchase opportunity presented in certain contexts.
If I’m reading too much into your statement, could you explain what the significance of it was to begin with?
an awful lot of people with a lot of money seem incredibly bad at spending it on anything they care about
It seems to me that the evidence of spent money is better than general (and as far as I can see, quite unspecified and unsupported) ideas about what rich people might/could/should/would care about.
That I would definitely dispute. Rational spenders, whose buying habits are well adjusted to satisfy their own preferences, are to the best of my experience as mythical as rational voters.
We learn that he commissioned a megayacht. Now, do you want to update towards “He’s interested in boats” or do you want to update towards “He spends his money on something he won’t enjoy”?
Having known a few yacht owners in my time, I very much would update toward the latter. I often think that the point is “having a yacht” and not at all the yacht in itself.
It might sound reasonable, but that’s a very different matter from the purchase actually being an effective per-dollar way to get something that will actually make him happy.
Would knowing that he’s commissioned a mega-yacht make me update in favor of the proposition that having a megayacht would make him feel happy or fulfilled? A little bit, sure, it’s better than nothing. But I would absolutely weight his thus “revealed” preference less strongly on that question than I would the evidence of simply asking him what he thought about yachts, and even that is pretty shaky evidence.
Not disagreeing, but an awful lot of people with a lot of money seem incredibly bad at spending it on anything they care about; often it seems like most of it goes on positional goods. I’m with Jarvis Cocker here.
Are you referring to this?:
Depending on how you interpret it, “enough money that you don’t have to think about it” could mean a lot of money. And given that this is a famous musician talking...
To expand on Lumifer’s point, maybe most people really do care about positional goods. Or rather, they care about the status positional goods bring (and various indirect benefits of status). After all, there does seem to be a lot of independent evidence that most people care a lot about status.
And I’ll make a stronger point as well: people rich enough so that their “basic” needs are fulfilled effortlessly and semi-automatically care about status goods a great deal more than people who have to make budgets and worry about money.
A guy who buys a yacht and parks it in the marina “doesn’t use it” from one point of view, but does successfully use it from another point of view which considers that as a symbol of wealth and status it works perfectly fine at the dock (actually, works much better at the dock that in the open sea where not many people can see it).
I really don’t think it works for them—they keep changing their up their peers until they’re not high status any more.
Not high-status within their peer group anymore, you mean. I’ve heard people talk about this, and for many of them it may not be what they really want, but some people may value being part of a high-status peer group.
(What we really want to know is this: how often do people set out to make money with one purpose in mind, but get sucked into spending more and more money on positional goods they didn’t originally want?)
BTW I was thinking of “What’s the point of being rich, if you don’t know what to do with it?”
How do you know what do they care about?
Revealed preferences are revealed.
If it causes them stress, or they don’t use what they buy, it’s an indication.
Would Your Real Preferences Please Stand Up?
I don’t put much stock in “revealed preferences.” Humans are massively inconsistent. Our minds are a bunch of disparate processes operating over different domains hacked together, we respond differently to the same dilemmas framed in different ways, we can be money pumped, we can exhibit or avoid biases depending on how we’re prompted to consider a situation, our systems for liking and wanting things operate independently, and so on and so on.
Even if human preferences were coherent, what people’s spending habits revealed about them would still contain a great deal of ambiguity. For instance, a week or so back, I gave money to a Buddhist monk soliciting for charity. Do I consider this a worthy use of my money? Absolutely not. It still pains me to think that I spent it in that way. I used to struggle with extricating myself from social situations with solicitors without giving them money, and I thought that I had moved beyond that, but it turns out that when the solicitor is a saffron clad monk with minimal English fluency, my difficulties return in full force. So while the fact that I can be induced to give money to a begging monk is a significant piece of data about my behavior, it would be a mistake to conclude that I’d be doing it out of a considered valuation of what the monk will be spending the money on, or for the experience of warm fuzzies, or for the signaling value of having people see that I give money to monks.
I think you’re reading more into this than there is.
“Revealed preferences are revealed”
Notably, this says nothing about whether humans are consistent or whether their preferences are coherent or unambiguous. In your example you’re drawing clearly unsupported conclusions from your action and then point out that they are unsupported. Well...
I don’t think that it’s very relevant to note that people care about the things they spend money on in some sense, if the people do not actually approve of or enjoy their purchases, and will stop spending their money in those ways, and be happier as a consequence, if they can avoid having the purchase opportunity presented in certain contexts.
If I’m reading too much into your statement, could you explain what the significance of it was to begin with?
It was a pretty simple observation.
ciphergoth said:
It seems to me that the evidence of spent money is better than general (and as far as I can see, quite unspecified and unsupported) ideas about what rich people might/could/should/would care about.
That I would definitely dispute. Rational spenders, whose buying habits are well adjusted to satisfy their own preferences, are to the best of my experience as mythical as rational voters.
Really? Let’s take a random member of the Walton family who is stupidly rich but about whose preferences we know nothing—an uninformative prior.
We learn that he commissioned a megayacht.
Now, do you want to update towards “He’s interested in boats” or do you want to update towards “He spends his money on something he won’t enjoy”?
Having known a few yacht owners in my time, I very much would update toward the latter. I often think that the point is “having a yacht” and not at all the yacht in itself.
In which case you want to update towards “He’s buying himself a bit more status” which still seems entirely reasonable to me :-)
It might sound reasonable, but that’s a very different matter from the purchase actually being an effective per-dollar way to get something that will actually make him happy.
Would knowing that he’s commissioned a mega-yacht make me update in favor of the proposition that having a megayacht would make him feel happy or fulfilled? A little bit, sure, it’s better than nothing. But I would absolutely weight his thus “revealed” preference less strongly on that question than I would the evidence of simply asking him what he thought about yachts, and even that is pretty shaky evidence.