Last week we talked about how to help reduce status competition among friends, family, peers and colleagues. Today's post is about an intriguing nuance of status competition: We usually pick the wrong people to compete with.
As Juliet Schor puts it in her book The Overspent American, humans, like other higher mammals, place extraordinary value on social status. Our desire for status among our peers is instinctive, subconscious and largely beyond our control. And it turns out that the modern era is becoming a petri dish for status competition of the worst kind.
Imagine the standard cubicle office space, a social environment where entry level staffers work right alongside senior executives. All employees pull their cars into the same parking lot every day, they all hear water cooler discussions about peoples' homes, vacations and other emulatory consumption decisions. Naturally, and instinctively, employees will find themselves "looking up" to the senior people around them, and thus emulating them.
The problem, however, is this: compared to the senior people, the junior people in the office are at completely different life and career stages. The senior executives are not appropriate benchmarks. To "compete" here, a junior level staffer would need to spend all her income and then some to try to match the car, clothes, vacations and other surface-level status signifiers of, say, her boss, or boss's boss.
This is what Schor calls a false referent. In their instinctive, subconscious desire for social status, people cannot help but compare themselves to those around them, even when they're not in the same league.
The thing is, false referent groups aren't just at work. When we go home and turn on our media, we see celebrities on TV living in conditions far beyond what most can afford. Yet again, however, we instinctively see them as benchmarks to aspire to when they are not appropriate benchmarks at all. In reality, a celebrity or the CEO of a large corporation are extreme, extreme outliers in the proverbial statistical sample of humanity.
Before the mass media era, we only competed with the Joneses. Now, we can compete with everyone, everywhere. And it doesn't take a rocket scientist to see that whenever you compare your stuff to the stuff of someone decades ahead of you in a career progression (or worse, some celebrity on TV), you're guaranteed to find your stuff... wanting.
This phenomenon probably explains why, in an era when humans are wealthier, healthier and safer than ever, we all seem to have this vague sinking feeling that things just aren't as good as they ought to be.
There's one final step in the discussion here. In the modern era of consumer lending, it's much easier to (temporarily) match the emulatory behavior of a much higher income person. How? With debt! It's relatively easy for people from a wide range of socioeconomic levels to lease luxury cars, buy a larger home with as little a down payment as possible, and aggressively use HELOCs, credit cards and other readily available consumer debt sources.
In other words, people now have the means, motive and opportunity to satisfy their emulatory urges to a greater extreme than ever.
Okay. One critically important point: While reading this post, if your main thought so far is something along the lines of I would never status compete with my boss's boss or I don't 'emulate' ... well, great. Lovely. I'm really happy to hear it.
Except that this post isn't about your status competition urges. This post is about everyone else around you and their status competition urges.
What I'm trying to say is this: it's very likely that in some area of your life, you are someone else's false referent. If you think about this for a minute, you'll realize that you have your own opportunity to either raise--or lower--the status competition bar for others. You can change the default status environment in a significant way for everyone around you. Note: This is most powerfully true in areas of your life where it hasn't yet occurred to you that you might be influencing anyone.
Back to the metaphor of Laura's old car for a moment. Laura is one of the senior staff in her office, which means by continuing to drive her old Honda Civic, she sets an example in many ways, including in ways she probably doesn't even realize, for those around her. At the least, she may help someone in her office take pride in the economically sound decision to continue driving a modest yet fully functional car. At the most, she shows everyone around her a crystal-clear alternative to status competition.
So, if you lead others in a work environment, if you interact with people of various ages or socio-economic backgrounds... heck, if you have anyone looking up to you at all, you've been handed an enormous opportunity. Help those around you by giving them less to compete against. By "lowering the status competition bar" and avoiding all flashy purchases, you can positively impact the financial future of far more people than you think.
Don't forget: you get to save money too. A lot of money. So there's something in it for you as well.
Finally, for those readers just starting out their adult lives and their careers, remember: across the course of your life, you'll be surrounded by a wide range of social referents from a wide range of socioeconomic levels--at work, outside of work and in the media you consume. The first rule to follow is don't status compete. The second rule: when you inevitably do status compete, don't compete with the wrong people.
Readers, share your thoughts.
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 A quick side thought on our egos. Consider the depressingly large segment of consumers who make statements exactly like these while they merrily go around emulating and status-competing: No, my [high end car brand] isn't conspicuous consumption at all. I really get a lot of value out of it. I need the turbo engine for good acceleration and these Corinthian leather seats are simply more comfortable. Ego defense can be a real bitch, can't it? We all engage in status competition, no matter how much we'd like to think we don't.
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