Win the rat race by not running it

Ezra Klein is a staff writer at the American Prospect. He blogs at

It’s always sad to see Thanksgiving finish. I don’t attend Renaissance fairs, so it’s the only time of year when I tear at giant legs of roast turkey. I’m also not an insane person, so it’s the only time of year when I combine marshmallows and yams. And I’ll just admit it: I like giving thanks. It offers an organizing structure within which to create a coherent narrative of the past year. And here’s what I find, year after year: People matter. No matter how much cool stuff I purchase while waiting for the Earth to rotate around the sun, come November, all I remember, and all I mention, are people.

The emergent field of happiness studies backs me up. Richard Layard, an economist at the London School of Economics and the author of “Happiness: Lessons From a New Science,” puts it succinctly. “Family, colleagues, community,” he’s said. “We are basically social animals, and most of our enjoyment comes from other people.”

Each Thanksgiving, our litany of gratitude suggests that, on some level, we know that. But in the time between each Thanksgiving, we prove, rather decisively, that we don’t know it all that well. Because so much as “people” happiness tends to rule our memories, “thing” happiness, or at least the promise of it, has a habit of governing our actions. How else to explain the ceaseless march for more hours at work, for larger incomes, for bigger houses (that, as we’re rapidly finding out, we couldn’t really afford in the first place)? How else to explain the fact that the United States, alone among developed nations, does not guarantee its workers even one day of compensated vacation time (France, by contrast, guarantees 30)?


We are a country obsessed with consumption, which would be fine if we seemed to be fulfilled getting bigger TVs but having less time to watch them. But, in the aggregate, that’s not the case. “The things that we get used to most easily and then take for granted are our material possessions -- our car, our house,” writes Layard. “But there is lots of evidence that people underestimate the process of habituation.” The amount of happiness we think we’ll get from a new house, and the amount of happiness we actually get from a new house, are not the same.

So why the ceaseless search for stuff? In a word, competition. It’s worth it to stay ahead in the rat race. Researchers have asked people which they’d prefer: a world in which they made $50,000 but everyone else made half that; or one in which they made $100,000 and everyone else made twice that (prices are the same in both worlds). The majority preferred the first world. They would happily make less money, as long as everyone else made even less money.

Surveys have returned similar results for houses. Most individuals prefer a smaller house in a world where their neighbors have even smaller houses to a bigger house in a world where their neighbors have even bigger houses. Winning the competition is more important than having a yard, it turns out. Which is why economists call these “positional goods” -- goods whose worth is deeply tied into their position vis-a-vis your direct “competitors” (which is to say neighbors, friends, etc.).

On the other hand, not all goods are positional. Some make us happy simply because they make us happy. Another question asked whether respondents would prefer a world in which they had two weeks of vacation and everyone else got one, or a world in which they had four weeks of vacation and everyone else got eight. Here, positional concerns did not interject, and the majority chose the larger number of days off. The amount of time your neighbor spends with his family does not diminish the amount of time you spend with yours.

The problem is, positional goods tend to appear to be the most pressing purchases. Your old car may work fine and be plenty spacious, but if your co-workers see you in a 1998 Civic, you may feel embarrassed. You purchase the goods to avoid falling behind. But then you’re just constantly competing with everyone else to buy more stuff in order to stay in the same place. And because money is finite, these purchases “crowd out” what you could spend on more enduring generators of happiness -- forcing you, for instance, to work more hours to support a larger mortgage than you needed, thus losing the time you could otherwise spend enjoying family and friends, and leaving you less happy.

But there’s an easy solution. Stop. Pull out of the competition. Seriously ask whether you want to continue trading away your time for your stuff. And that requires ignoring what your neighbors have. It requires shutting your eyes against short-term incentives and trying to remember what actually makes you happy, what you tend to remember when each year closes out. It requires keeping a little of that Thanksgiving litany in mind, even after the meal is forgotten and marshmallows and yams again seem an absurd combination.