By Alexander Green 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 …read more
Source:: Investment You
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