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The rich don’t see it that way. At its core wealth accumulation is a scoring contest so every penny counts for those care. Also if you have all the material ne

The rich don’t see it that way. At its core wealth accumulation is a scoring contest so every penny counts for those care. Also if you have all the material needs that is satisfied, then you go after the rare hard to get high value exclusive money drain this is human nature. For your specific example what that 50m might make difference it maybe a bigger jet that flies further or a second jet for the family or a yatch or a castle in Italy or penthouse in New York. For you and me that may seem ridiculous and unnecessary, yet we do the same thing too. There are many many parts of the world owning a car (or even riding in one) eating three meals a day or eating out are luxuries many don’t see in their lifetimes. Yet we use do all those things without second thought to people leaving on $1 a day or less .

rch 4y ago
I'd like to see what that amount of cash could could do for southern Madagascar right now.
- topicseed 4y ago
  I'd like to see what the amount you and I spend on a nice dinner out or nice shoes could do for a southern Malagasy right now.
- neodypsis 4y ago
  Well, you can take a guess by observing how the vainilla price spikes affected Madagascar in recent years.
nathanvanfleet 4y ago
I agree with you but there is also the dynamic that there is always other richer people than you with richer lifestyles. So while you might think that one jet is enough for you if you had friends who didn't own a jet. When all your friends own 3 jets it makes you feel like you should also own 3 or whatever random expense you can imagine. And while you say "human nature" I'd rather say it's "human illness." They someone are within a strata of society where there is no limit, a 20 minute private jet flight or a $20,000 meal is not out of the question and is in fact the norm. They buy a fully renovated house for $10 million but then gut it to renovate it to "their tastes" and then live in it for two weeks of the year. There's just not culture to tell them it's excessive.
- mistrial9 4y ago
  this is entertaining but, I think the relative-riches-rat-race theory here is missing the harsh "stick" part of carrot and stick. Money systems have both. Many wealthy people have debt and cash flow pressures, sometimes badly. The casinos and rehab clinics are full of those who lost touch with emotional stability during the race. The sort of stable accumulation described is typical for a very small number of people overall, from low income to higher incomes, in my experience. Life is complicated.
- throwaway0a5e 4y ago
  >They buy a fully renovated house for $10 million but then gut it to renovate it to "their tastes" and then live in it for two weeks of the year. There's just not culture to tell them it's excessive. I know of a billionaire (one of the ones most HNers consider evil) that had a lot of the local millionaires sneering at him when he didn't renovate the vacation house that he bought in the kind of place where those kinds of people buy vacation houses. According to the help at the yacht club his rational was that it wasn't worth his time to think about and there was no sense in paying someone to manage the process because from his POV there's no difference between vacationing in a house his contractor optioned out vs vacationing in one the last owner optioned out. That said, I think it may have been a "guest house" because upon Googling he has a much more extensive mansion in the area.
xpe 4y ago
Imagine if I was visiting Laos and told someone I met in the countryside that I spent, say $2,000 on a racing bicycle -- which would be considered "normal" in bike racing culture in many parts of the US. Imagine what that person would think! My central point is this: People are quick to "normalize" their behavior relative to their perceived peer group. So, yes, multinational CEO compensation is hard to comprehend. (It is arguably to the point where it does not serve those very corporations well. But that isn't my point...) Just remember, the income and spending habits of a "typical" mid-range software developer in a major U.S. city are similarly incomprehensible for a wide range of people. In some sense, it is turtles all the way down. P.S. I'm not defending CEO pay. First, I haven't really studied it up close. I'd like to see more, erm, experimentation in it. Lowering it, sure. But also I'd like to see it deferred, for example, so a CEO's compensation is also tied to what happens after they leave. That would increase the incentive to not plunder the place or take shortcuts. Yes, I recognize this proposal seems to mix incentives between past and current CEOs. But that reflects reality. You can't just "wash off" a terrible previous CEO. And the "glean" from a wonderful predecessor will pay dividends for a long time. P.P.S. Shameless plug: if you are a well-funded not-for-profit with a generous comp and benefits package, you could do worse than hire me. I'm an expert at studying CEO pay and pay inequity at organizations, both using intra- and inter- methodologies. I'm part of an exclusive self-selected, self-reinforcing group of self-proclaimed experts, so be sure to send your best offer.
- refurb 4y ago
  Indeed. I see plenty of people on HN complain that no, they are not middle class while making $400,000/yr because they can't afford a 2,000 sq ft house in the most expensive area of the US. Like the old saying "An alcoholic is someone who has one more drink than me."
- ethbr0 4y ago
  There was a podcast episode on the psychology behind this. Radio Lab? Summary: people only look up, never down. Ask someone who makes $100, and they'll explain they don't have a lot because someone makes $500. Ask someone who makes $100,000, and they'll explain they don't have a lot because someone makes $500,000. Ask someone who makes $100,000,000, and they'll explain they don't have a lot because someone makes $500,000,000.
bobthechef 4y ago

rch 4y ago

I'd like to see what that amount of cash could could do for southern Madagascar right now.

topicseed 4y ago
I'd like to see what the amount you and I spend on a nice dinner out or nice shoes could do for a southern Malagasy right now.
neodypsis 4y ago
Well, you can take a guess by observing how the vainilla price spikes affected Madagascar in recent years.

nathanvanfleet 4y ago

I agree with you but there is also the dynamic that there is always other richer people than you with richer lifestyles. So while you might think that one jet is enough for you if you had friends who didn't own a jet. When all your friends own 3 jets it makes you feel like you should also own 3 or whatever random expense you can imagine. And while you say "human nature" I'd rather say it's "human illness." They someone are within a strata of society where there is no limit, a 20 minute private jet flight or a $20,000 meal is not out of the question and is in fact the norm. They buy a fully renovated house for $10 million but then gut it to renovate it to "their tastes" and then live in it for two weeks of the year. There's just not culture to tell them it's excessive.

mistrial9 4y ago
this is entertaining but, I think the relative-riches-rat-race theory here is missing the harsh "stick" part of carrot and stick. Money systems have both. Many wealthy people have debt and cash flow pressures, sometimes badly. The casinos and rehab clinics are full of those who lost touch with emotional stability during the race. The sort of stable accumulation described is typical for a very small number of people overall, from low income to higher incomes, in my experience. Life is complicated.
throwaway0a5e 4y ago
>They buy a fully renovated house for $10 million but then gut it to renovate it to "their tastes" and then live in it for two weeks of the year. There's just not culture to tell them it's excessive. I know of a billionaire (one of the ones most HNers consider evil) that had a lot of the local millionaires sneering at him when he didn't renovate the vacation house that he bought in the kind of place where those kinds of people buy vacation houses. According to the help at the yacht club his rational was that it wasn't worth his time to think about and there was no sense in paying someone to manage the process because from his POV there's no difference between vacationing in a house his contractor optioned out vs vacationing in one the last owner optioned out. That said, I think it may have been a "guest house" because upon Googling he has a much more extensive mansion in the area.

xpe 4y ago

Imagine if I was visiting Laos and told someone I met in the countryside that I spent, say $2,000 on a racing bicycle -- which would be considered "normal" in bike racing culture in many parts of the US. Imagine what that person would think! My central point is this: People are quick to "normalize" their behavior relative to their perceived peer group. So, yes, multinational CEO compensation is hard to comprehend. (It is arguably to the point where it does not serve those very corporations well. But that isn't my point...) Just remember, the income and spending habits of a "typical" mid-range software developer in a major U.S. city are similarly incomprehensible for a wide range of people. In some sense, it is turtles all the way down. P.S. I'm not defending CEO pay. First, I haven't really studied it up close. I'd like to see more, erm, experimentation in it. Lowering it, sure. But also I'd like to see it deferred, for example, so a CEO's compensation is also tied to what happens after they leave. That would increase the incentive to not plunder the place or take shortcuts. Yes, I recognize this proposal seems to mix incentives between past and current CEOs. But that reflects reality. You can't just "wash off" a terrible previous CEO. And the "glean" from a wonderful predecessor will pay dividends for a long time. P.P.S. Shameless plug: if you are a well-funded not-for-profit with a generous comp and benefits package, you could do worse than hire me. I'm an expert at studying CEO pay and pay inequity at organizations, both using intra- and inter- methodologies. I'm part of an exclusive self-selected, self-reinforcing group of self-proclaimed experts, so be sure to send your best offer.

refurb 4y ago
Indeed. I see plenty of people on HN complain that no, they are not middle class while making $400,000/yr because they can't afford a 2,000 sq ft house in the most expensive area of the US. Like the old saying "An alcoholic is someone who has one more drink than me."
ethbr0 4y ago
There was a podcast episode on the psychology behind this. Radio Lab? Summary: people only look up, never down. Ask someone who makes $100, and they'll explain they don't have a lot because someone makes $500. Ask someone who makes $100,000, and they'll explain they don't have a lot because someone makes $500,000. Ask someone who makes $100,000,000, and they'll explain they don't have a lot because someone makes $500,000,000.

bobthechef 4y ago