6 ms·

Humans are status-seeking creatures, and status is expressed through signaling. If you're rich and so are the people around you, money alone ceases to be a diff

Humans are status-seeking creatures, and status is expressed through signaling. If you're rich and so are the people around you, money alone ceases to be a differentiator. Ultra-luxury brands appeal to this by adding hoops that money alone can't clear: time, loyalty, relationships. The signal shifts from "I can afford this" to "I was invited to spend my money here." Lines outside Louis Vuitton are more down-market, aspirational luxury - an ultra-wealthy person wouldn't be caught dead queuing on a sidewalk. Patek and Ferrari operate at the level above, where the signal isn't wealth but access. (HBS calls Ferrari's version "deprivation marketing.") Is it a game worth bothering with? Enough people think so to sustain billion-dollar brands. (Of course, PG writing an essay about being too smart for fancy watches - while knowing a lot about them - is its own signaling game, just aimed at a different audience)

keybored 8mo ago
I know I’m being sold something when someone declares the science of human nature.
observationist 8mo ago
>>> ...PG writing an essay about being too smart for fancy watches Stealthy, like a submarine.
titanomachy 8mo ago
He’s probably also too rich for fancy watches to actually be a useful signal of wealth amongst his peers.
- intuitionist 8mo ago
  The price isn’t keeping anyone at that level of wealth from buying a Nautilus or a Lange 1 or a panda Daytona. But they can still flex with ultralimited pieces like Zuck’s Greubel Forsey.
  - soperj 8mo ago
    I didn't realize that "fools and their money will soon be parted" was a flex.
    - intuitionist 8mo ago
      “There are three of these things made in a year, and I’ve got the juice to get one of them” is. Zuck doesn’t care about a million dollar price tag, any more than I would care about a couple bucks.
      - soperj 8mo ago
        If he was buying a solid gold furby would you have the same take? That's great that he doesn't care, still looks like an idiot to me.
- eucyclos 8mo ago
  I had a coworker who became nouveau riche a while back- he made fuck you money day trading during the roaringkitty debacle - and one interesting thing he said about the experience was that he learned certain luxury goods, such as high end watches, don't depreciate. Like gold jewelry one can usually resell them for cost plus inflation. As such, his logic was that a fancy watch is essentially free while a cheap watch costs whatever it costs. Not sure if that's the truth or clever marketing by purveyors of luxury goods, but it changes the wealth signaling dynamics of fancy watches if it is.
  - OJFord 8mo ago
    I don't think that's really any more true of watches and gold jewellery than it is cars - which is to say it's true of some models, or over time and especially what comes to be considered a classic. Maybe he meant second-hand though? If someone else has already taken the 'used' depreciation on a watch, the 'art' added value on the gold price, then yes I think it's probably fair to say they hold their residual value better than a lot of things that continue to depreciate.
  - cam_l 8mo ago
    I dunno about that. I bought a Casio at a garage sale in the late eighties for 20 cents, and sold it to a mate 10 years later, give or take, for a couple of bucks. It was still running, still keeping time. Expensive watches are way closer to bitcoins than useful assets. They inherently rely on the gullibility of other rich prick wanna be's. Still a good bet probably.. sadly..
  - garethsprice 8mo ago
    Patek and Rolex have generally always held value well. The internet has brought price transparency and created a secondary market that has made this true for most well-known brands these days, with the caveat that there is not a high degree of liquidity (yes you can sell a Rolex same-day at a pawn shop but you'll take a big hit, otherwise you are waiting a while for a buyer and navigating various risks like scammers). So you likely won't get rich day-trading (or even collecting) watches, but besides the initial capital investment it is not as irrational as it seems at first. Of course, that only adds to the signaling power for the classes where merely having money isn't enough, and being a "savvy investor" is a status marker (ie. the upper-middle and nouveau riche). The Patek Nautilus PG mentions is particularly interesting as a status symbol as it has not only held value but, for various reasons, been an outlier that has appreciated drastically in value. It'd be gauche even on Sand Hill Rd to wear a hat that says "My investments beat the S&P 500" — but for the last few years, flashing a Nautilus (~413% investment return from 2016-2026 vs ~322% in the S&P) is the equivalent of that, a self-reinforcing cycle boosting its value as a Veblen good where the high price is the point.
Retric 8mo ago
Status is a tool for the working wealthy, but ultra-luxury brands are only appealing to a subset of wealthy people. There’s a great number of people with 100+M and even far beyond that who enjoy nobody knowing just what kind of wealth they have. This doesn’t mean looking poor, but there’s plenty of value in anonymity.
- velocity3230 7mo ago
  I don't know why anyone would want to be rich and famous. Rich and anonymous is where it's at.
nitwit005 8mo ago
While the ultra rich do buy from luxury brands, they're often spending the most on unique items, such as ordering a custom yacht. Having the most expensive item in some category, or close to it, often gets you news coverage, which is something a normal purchase can't really offer.
userulluipeste 8mo ago
"The signal shifts from «I can afford this» to «I was invited to spend my money here.»" "the signal isn't wealth but access" The most shocking aspect here is the mindset of these people that come to value this access, and the fact that they have to have their own self-perceived worth at some lower (i.e. improvable) level in comparison. It has to be, otherwise the value of that access can't make much sense, otherwise that association to a brand (as chosen not chooser) can't be perceived as something of value. The only (sane) question worth asking, knowing that about the people falling into this game is - do I want to count myself as one of them?
- danielparsons 8mo ago
  I think it just sounds like a fun game to be honest. By a goofy little overengineered piece of jewellery. Buy a bunch of them and join the club. Compare to your friends. Reminds me of pokemon cards on the school playground...
otterley 8mo ago
> If you're rich and so are the people around you, money alone ceases to be a differentiator. You could differentiate based on your personality. It costs nothing at all, and is far more interesting than a trinket. Strive to be Warren Buffet, not Elon Musk or Jeff Bezos.
bigstrat2003 8mo ago
> Of course, PG writing an essay about being too smart for fancy watches - while knowing a lot about them - is its own signaling game, just aimed at a different audience So you're saying that everyone seeks status, and even the people who say they don't are seeking status by not seeking status? That argument seems like you are overreaching. What, then, would you consider evidence that falsifies your theory?
- danielparsons 8mo ago
  status-seeking isn't inherently bad or good, depends who's appreciation you are seeking
- garethsprice 8mo ago
  Yes - though this isn't my theory so much as settled science. There are no substantial counter-theories to the concept that status desire is a fundamental and universal human motive. As for falsification: you'd need evidence like subjects showing no well-being drop (self-esteem, cortisol) from lab-induced status demotions, or entire cultures genuinely indifferent to respect. Neither holds up in the data: https://pubmed.ncbi.nlm.nih.gov/25774679/ https://pubmed.ncbi.nlm.nih.gov/25774679/ John Adams put it well in Discourses on Davila (1790): "The desire of the esteem of others is as real a want of nature as hunger — and the neglect and contempt of the world as severe a pain as the gout or stone."
rswail 8mo ago
> (Of course, PG writing an essay about being too smart for fancy watches - while knowing a lot about them - is its own signaling game, just aimed at a different audience) He was aiming at people like the people commenting on this thread and who read the essay. Also to the startup/entrepreneur founder-types that are actually interested in building a business that makes a qualitative improvement in the market that it works in. But mechanical watches are very appealing to nerd/geek types as well, purely in terms of the design and engineering of the movements and the precision of the manufacture. Complications are absolutely pointless, but making a movement that can deliver them is very appealing.

keybored 8mo ago

I know I’m being sold something when someone declares the science of human nature.

observationist 8mo ago

>>> ...PG writing an essay about being too smart for fancy watches Stealthy, like a submarine.

titanomachy 8mo ago

He’s probably also too rich for fancy watches to actually be a useful signal of wealth amongst his peers.

intuitionist 8mo ago
The price isn’t keeping anyone at that level of wealth from buying a Nautilus or a Lange 1 or a panda Daytona. But they can still flex with ultralimited pieces like Zuck’s Greubel Forsey.
- soperj 8mo ago
  I didn't realize that "fools and their money will soon be parted" was a flex.
  - intuitionist 8mo ago
    “There are three of these things made in a year, and I’ve got the juice to get one of them” is. Zuck doesn’t care about a million dollar price tag, any more than I would care about a couple bucks.
    - soperj 8mo ago
      If he was buying a solid gold furby would you have the same take? That's great that he doesn't care, still looks like an idiot to me.
eucyclos 8mo ago
I had a coworker who became nouveau riche a while back- he made fuck you money day trading during the roaringkitty debacle - and one interesting thing he said about the experience was that he learned certain luxury goods, such as high end watches, don't depreciate. Like gold jewelry one can usually resell them for cost plus inflation. As such, his logic was that a fancy watch is essentially free while a cheap watch costs whatever it costs. Not sure if that's the truth or clever marketing by purveyors of luxury goods, but it changes the wealth signaling dynamics of fancy watches if it is.
- OJFord 8mo ago
  I don't think that's really any more true of watches and gold jewellery than it is cars - which is to say it's true of some models, or over time and especially what comes to be considered a classic. Maybe he meant second-hand though? If someone else has already taken the 'used' depreciation on a watch, the 'art' added value on the gold price, then yes I think it's probably fair to say they hold their residual value better than a lot of things that continue to depreciate.
- cam_l 8mo ago
  I dunno about that. I bought a Casio at a garage sale in the late eighties for 20 cents, and sold it to a mate 10 years later, give or take, for a couple of bucks. It was still running, still keeping time. Expensive watches are way closer to bitcoins than useful assets. They inherently rely on the gullibility of other rich prick wanna be's. Still a good bet probably.. sadly..
- garethsprice 8mo ago
  Patek and Rolex have generally always held value well. The internet has brought price transparency and created a secondary market that has made this true for most well-known brands these days, with the caveat that there is not a high degree of liquidity (yes you can sell a Rolex same-day at a pawn shop but you'll take a big hit, otherwise you are waiting a while for a buyer and navigating various risks like scammers). So you likely won't get rich day-trading (or even collecting) watches, but besides the initial capital investment it is not as irrational as it seems at first. Of course, that only adds to the signaling power for the classes where merely having money isn't enough, and being a "savvy investor" is a status marker (ie. the upper-middle and nouveau riche). The Patek Nautilus PG mentions is particularly interesting as a status symbol as it has not only held value but, for various reasons, been an outlier that has appreciated drastically in value. It'd be gauche even on Sand Hill Rd to wear a hat that says "My investments beat the S&P 500" — but for the last few years, flashing a Nautilus (~413% investment return from 2016-2026 vs ~322% in the S&P) is the equivalent of that, a self-reinforcing cycle boosting its value as a Veblen good where the high price is the point.

Retric 8mo ago

Status is a tool for the working wealthy, but ultra-luxury brands are only appealing to a subset of wealthy people. There’s a great number of people with 100+M and even far beyond that who enjoy nobody knowing just what kind of wealth they have. This doesn’t mean looking poor, but there’s plenty of value in anonymity.

velocity3230 7mo ago
I don't know why anyone would want to be rich and famous. Rich and anonymous is where it's at.

nitwit005 8mo ago

While the ultra rich do buy from luxury brands, they're often spending the most on unique items, such as ordering a custom yacht. Having the most expensive item in some category, or close to it, often gets you news coverage, which is something a normal purchase can't really offer.

userulluipeste 8mo ago

"The signal shifts from «I can afford this» to «I was invited to spend my money here.»" "the signal isn't wealth but access" The most shocking aspect here is the mindset of these people that come to value this access, and the fact that they have to have their own self-perceived worth at some lower (i.e. improvable) level in comparison. It has to be, otherwise the value of that access can't make much sense, otherwise that association to a brand (as chosen not chooser) can't be perceived as something of value. The only (sane) question worth asking, knowing that about the people falling into this game is - do I want to count myself as one of them?

danielparsons 8mo ago
I think it just sounds like a fun game to be honest. By a goofy little overengineered piece of jewellery. Buy a bunch of them and join the club. Compare to your friends. Reminds me of pokemon cards on the school playground...

otterley 8mo ago

> If you're rich and so are the people around you, money alone ceases to be a differentiator. You could differentiate based on your personality. It costs nothing at all, and is far more interesting than a trinket. Strive to be Warren Buffet, not Elon Musk or Jeff Bezos.

bigstrat2003 8mo ago

> Of course, PG writing an essay about being too smart for fancy watches - while knowing a lot about them - is its own signaling game, just aimed at a different audience So you're saying that everyone seeks status, and even the people who say they don't are seeking status by not seeking status? That argument seems like you are overreaching. What, then, would you consider evidence that falsifies your theory?

danielparsons 8mo ago
status-seeking isn't inherently bad or good, depends who's appreciation you are seeking
garethsprice 8mo ago
Yes - though this isn't my theory so much as settled science. There are no substantial counter-theories to the concept that status desire is a fundamental and universal human motive. As for falsification: you'd need evidence like subjects showing no well-being drop (self-esteem, cortisol) from lab-induced status demotions, or entire cultures genuinely indifferent to respect. Neither holds up in the data: https://pubmed.ncbi.nlm.nih.gov/25774679/ https://pubmed.ncbi.nlm.nih.gov/25774679/ John Adams put it well in Discourses on Davila (1790): "The desire of the esteem of others is as real a want of nature as hunger — and the neglect and contempt of the world as severe a pain as the gout or stone."

rswail 8mo ago

> (Of course, PG writing an essay about being too smart for fancy watches - while knowing a lot about them - is its own signaling game, just aimed at a different audience) He was aiming at people like the people commenting on this thread and who read the essay. Also to the startup/entrepreneur founder-types that are actually interested in building a business that makes a qualitative improvement in the market that it works in. But mechanical watches are very appealing to nerd/geek types as well, purely in terms of the design and engineering of the movements and the precision of the manufacture. Complications are absolutely pointless, but making a movement that can deliver them is very appealing.