4 ms·

This sounds a bit like "my income is normal, and everyone above that is rich"-thinking that a lot of people have.(if there's a word for that i'd appreciate any

by karyon 10y ago

This sounds a bit like "my income is normal, and everyone above that is rich"-thinking that a lot of people have.(if there's a word for that i'd appreciate any hints :) ) i'd definitely consider engineers at google to be rich and don't see how another 200k makes that much of a difference. you think these execs are rich and don't see how another million makes a difference. and the execs consider billionaires to be rich and don't see how another billion makes a difference. it's just different scales, but who's actually right? i think it's important to realise that the scale of income has an extreme range and we are already on the upper end and definitely rich by global standards. my personal opinion is that a majority of people living in the western world is actually rich and any complaints on salaries by these are just first world problems. on a more constructive note, i think i've seen a study that said that higher salary actually does motivate more, but hits the point of diminishing returns at about (i think) 80k or 100k. I don't remember which country and whether it was $ or €, but that should give a sense of the rough order of magnitude.

zackkrida 10y ago
This would be true except that there are fixed costs of living. Say Tim Cook was making three million less -- is he going to have to make lifestyle changes to spend 3 million less a year? No way. A person making 60k a year losing 15% of their income? There's likely to be significant lifestyle changes.
- karyon 10y ago
  I'm pretty sure that there are lifestyles that burn several millions per year, and my guess would be there are people living a happy life with less than 60k. but of course it's true that the further you go up the scale, the more absurd it becomes to talk about serious comfort losses, and there's a point on the lower end where we're talking about actual poverty.
  - ChuckMcM 10y ago
    You might be hard pressed to construct one without getting a bit crazy. Most of the cost is going to be salaries of staff. At the extremes you have the Royal Family of England[1] ($43M) and Warren Buffet[2] (<.5M$). [1] http://home.bt.com/lifestyle/money/mortgages-bills/how-much-does-the-royal-family-cost-11363982445194 http://home.bt.com/lifestyle/money/mortgages-bills/how-much-... [2] (warning self starting video) http://www.investopedia.com/articles/financialcareers/10/buffett-frugal.asp http://www.investopedia.com/articles/financialcareers/10/buf...
    - hyperpape 10y ago
      The killer for entertainers and sports figures who blow through tons of money is keeping an entourage. There are probably tech figures who have one, but I don't know who they are.
- OJFord 10y ago
  Whether or not it necessitates a 'lifestyle change' depends on what you spend as a proportion of your income; not your income alone. Furthermore, I think any financial advisor would advise that your 'lifestyle' not depend on one year's bonus!
ChuckMcM 10y ago
This is a good point. Everyone brings an idea of what "rich" means with them to the table. My experience of being an engineer in the Bay Area, with three kids and a wife, has been that much of my annual salary has been consumed in costs which I felt I "had" to pay (mortgage, power, food, pre-school or school, clothes, saving for the future (401k)). And while I recognize that from an annual salary, property ownership, and actually having savings for retirement that made me "rich", a bit of extra money from bonuses would enable things like replacing an older car, or a family trip to Hawaii. Often times the bulk of any "extra" money would go into things like the savings fund for my kids college tuition. For me, and my living situation, when I had the option of earning a bonus it would enable something in my life (saving for kids educations, a vacation trip) that would normally be outside of my financial profile. As a result I was motivated to compete for those bonuses. But had all those other things been covered vacationing every year in the Alps in my chalet, private jet service where ever I wanted to go etc. Extra money would have very little motivation for me. That is why I was really curious about how it motivated someone who had a multi-million dollar bonus program.
- karyon 10y ago
  but what about maybe another yacht? some island? that limited edition lamborghini? oh you could collect art. use your bonus to get more of that. i think this "if i had this specific amount of money, then i'd have everything i could possibly desire" is unlikely to be true, you'll find more things to spend your money on. another thought: you could donate all of it. the perfect money sink. it actually helps, and more of it helps better. so with an altruistic mind you can get motivated with that no matter on which salary level :)
  - ChuckMcM 10y ago
    Obviously I can't answer for anyone but myself, and I personally wouldn't be motivated to get a second yacht given how much work keeping one up is (not that I have one). But how about you? Do you feel better about yourself if you have more art? or more cars? a bigger house? a staff? And if so, why does that make you feel better about yourself?
tobyjsullivan 10y ago
I'm no expert but I think this would qualify as a projection bias.
cymbalrush 10y ago
It was $75K https://www.princeton.edu/~deaton/downloads/deaton_kahneman_high_income_improves_evaluation_August2010.pdf https://www.princeton.edu/~deaton/downloads/deaton_kahneman_... Happiness does not grow linearly with salary and happiness is what you ultimately want to maximize. Income is only one input, and as it grows, it can actually complicate your life decreasing your happiness.
jrkelly 10y ago
hedonic treadmill is close to word you are looking for.

by karyon 10y ago

zackkrida 10y ago

This would be true except that there are fixed costs of living. Say Tim Cook was making three million less -- is he going to have to make lifestyle changes to spend 3 million less a year? No way. A person making 60k a year losing 15% of their income? There's likely to be significant lifestyle changes.

karyon 10y ago
I'm pretty sure that there are lifestyles that burn several millions per year, and my guess would be there are people living a happy life with less than 60k. but of course it's true that the further you go up the scale, the more absurd it becomes to talk about serious comfort losses, and there's a point on the lower end where we're talking about actual poverty.
- ChuckMcM 10y ago
  You might be hard pressed to construct one without getting a bit crazy. Most of the cost is going to be salaries of staff. At the extremes you have the Royal Family of England[1] ($43M) and Warren Buffet[2] (<.5M$). [1] http://home.bt.com/lifestyle/money/mortgages-bills/how-much-does-the-royal-family-cost-11363982445194 http://home.bt.com/lifestyle/money/mortgages-bills/how-much-... [2] (warning self starting video) http://www.investopedia.com/articles/financialcareers/10/buffett-frugal.asp http://www.investopedia.com/articles/financialcareers/10/buf...
  - hyperpape 10y ago
    The killer for entertainers and sports figures who blow through tons of money is keeping an entourage. There are probably tech figures who have one, but I don't know who they are.
OJFord 10y ago
Whether or not it necessitates a 'lifestyle change' depends on what you spend as a proportion of your income; not your income alone. Furthermore, I think any financial advisor would advise that your 'lifestyle' not depend on one year's bonus!

ChuckMcM 10y ago

This is a good point. Everyone brings an idea of what "rich" means with them to the table. My experience of being an engineer in the Bay Area, with three kids and a wife, has been that much of my annual salary has been consumed in costs which I felt I "had" to pay (mortgage, power, food, pre-school or school, clothes, saving for the future (401k)). And while I recognize that from an annual salary, property ownership, and actually having savings for retirement that made me "rich", a bit of extra money from bonuses would enable things like replacing an older car, or a family trip to Hawaii. Often times the bulk of any "extra" money would go into things like the savings fund for my kids college tuition. For me, and my living situation, when I had the option of earning a bonus it would enable something in my life (saving for kids educations, a vacation trip) that would normally be outside of my financial profile. As a result I was motivated to compete for those bonuses. But had all those other things been covered vacationing every year in the Alps in my chalet, private jet service where ever I wanted to go etc. Extra money would have very little motivation for me. That is why I was really curious about how it motivated someone who had a multi-million dollar bonus program.

karyon 10y ago
but what about maybe another yacht? some island? that limited edition lamborghini? oh you could collect art. use your bonus to get more of that. i think this "if i had this specific amount of money, then i'd have everything i could possibly desire" is unlikely to be true, you'll find more things to spend your money on. another thought: you could donate all of it. the perfect money sink. it actually helps, and more of it helps better. so with an altruistic mind you can get motivated with that no matter on which salary level :)
- ChuckMcM 10y ago
  Obviously I can't answer for anyone but myself, and I personally wouldn't be motivated to get a second yacht given how much work keeping one up is (not that I have one). But how about you? Do you feel better about yourself if you have more art? or more cars? a bigger house? a staff? And if so, why does that make you feel better about yourself?

tobyjsullivan 10y ago

I'm no expert but I think this would qualify as a projection bias.

cymbalrush 10y ago

It was $75K https://www.princeton.edu/~deaton/downloads/deaton_kahneman_high_income_improves_evaluation_August2010.pdf https://www.princeton.edu/~deaton/downloads/deaton_kahneman_... Happiness does not grow linearly with salary and happiness is what you ultimately want to maximize. Income is only one input, and as it grows, it can actually complicate your life decreasing your happiness.

jrkelly 10y ago

hedonic treadmill is close to word you are looking for.