The Lexicon is back. Today's lesson? Lifestyle creeping on the hedonic treadmill.
In the movie The Social Network (please tell me you’ve seen it), Sean Parker tells Mark Zuckerberg, "A million dollars isn't cool. You know what's cool? A billion dollars." Though the real-life Sean Parker says the line is purely fictional, screenwriter Aaron Sorkin was on to something: we have a tendency to continually want more. The minute one thing becomes cool, usually something else comes along to top it (ahem). When it comes to money, having more money can be like a gateway drug to...well, wanting more money.
LIFESTYLE CREEP: n. The tendency for standard of living and lifestyle to increase as discretionary income increases. The result is that things once considered luxuries are perceived as necessities.
In a hot-off-the-press survey of millionaires by Fidelity Investments, 42% of millionaires reported not feeling wealthy. The respondents expressed fear that they would outlive their current assets. On average, the millionaires reported that in order to truly feel rich, they would need to have least 7.5 million dollars (which seems rather abitrary if you ask me). Outliving your means breaks down to a simple equation: spending more than you have, whether that's $10,000 a year or $1,000,000. If $3.5 million (the average wealth of those surveyed) isn't enough to get by, I'm going to go out on a limb and guess that their lifestyle is more elaborate than mine.
A controversial blog post written last year by Chicago professor Todd Henderson similarly illustrates this point. Henderson complained about his tax bracket and asserted that he and his wife were just scraping by with their $350,000 combined income. Henderson listed off the bare necessities his family was living with, from their renovated home to private schooling for the children to the few thousands of discretionary income a month. Clearly his expectations of necessities seriously differ from other Americans who are accustomed to a lower income level.
HEDONIC TREADMILL: n. The tendency for one’s happiness level to remain the same despite an increase in money.
Investopedia explains it like this: “As a person makes more money, expectations and desires rise in tandem, which results in no permanent gain in happiness.”
A 2010 study by social psychologist Daniel Kahneman explored this concept. In his research on income and happiness, Kahneman found that beyond a certain income figure, happiness levels did not increase in subjects. The cut-off point? $75,000. Though earning less than $75,000 a year was linked to lower happiness levels, subjects who made more than this figure were on the whole no happier.
Do you have any real life examples of these terms?