This only works if you can change your reference class at will just by moving. If you move, but you still care about what your old neighbours think, the move doesn't help. Worse, in an age of internet and celebrity gossip magazines, your reference class includes all the celebrities who moved into better neighborhoods than you can afford
That feels relevant, and not just old neighbors but coworkers (did you change jobs to a lower pay area but still retain high pay?) and family members as well.
In the short term, I agree that your reference class doesn't completely turn over when you move. But over time, it mostly does. When I think about my standard of living, I don't compare myself to distant relatives in other cities, childhood friends, or my next door neighbor ten years ago. I compare to coworkers, current neighbors, and current friends. While you may not be able to change your coworkers at will without taking a pay cut, you can certainly change your neighbors and friends at will, and over time this will become your new reference class.
Perhaps your experience is different, but it would seem odd to me for someone to move to a new city, but years later still be in frequent touch with more than a small handful of neighbors from their old city. If the main thing you have in common with someone is colocation, the relationship goes away when it does.
Regarding celebrities, doesn't the popularity of celebrity gossip support Bryan's thesis? If people really hated feeling poor relative to the super-rich, why would they be so interested in following the intimate details of their lives?
A simple explanation is that people can't enjoy feeling superior if they know they intentionally sought out some inferiors to surround themselves with.
Suppose you are conscious about your weight/height, so you go out of your way to surround yourself with obese people/dwarves. I predict that anyone without an impressive capacity for self-delusion would probably feel more self-conscious about their weight/height, as a result of their strategy.
I think you vastly underestimate people's capacity for self-delusion (or, more charitably, their capacity to modulate their own emotions). Otherwise, how would you ever feel better about any negative event that you can't change? If I'm upset because someone yelled at me at work, I might go for a run or watch a movie to forget about it. Or, just wait for the negative feelings to fade away. Those remedies aren't rendered useless by intrusive thoughts that "this doesn't count, I'm just doing it to feel better."
The relevant feature isn't merely that a person knows that they are "doing this to feel better." It's more specifically that they know they are going out of their way to surround themselves with people who are exceptionally poor on some dimension they feel bad about themselves being poor about, which perversely risks increasing the salience of their low status.
Each of these are quite different:
- Watching a movie or other distraction: often reduces salience of what you are concerned about
- Going for a run or some other positive action: an action that may improve your status you can feel good about
- Moving to an even lower status group so that you are less relatively poor: risks making your poor status even more salient (you worried you were poor/fat/stupid and now you've confirmed by deliberately moving to surround yourself with poorer/fatter/stupider people)
"Almost no one relocates to feel relatively rich. (In fact, isn’t this essay the first time you’ve heard anyone point out that this is even an option?!)"
Nope, Americans move to places where their wealth makes them locally powerful all the time. Thailand. Costa Rica. Digital nomads. Sex tourism. Playing the token American for a local corporation. You're usually sharper than this, Dr. Caplan.
People certainly do that, but it is an uncommon choice. The vast majority of Americans live in the nicest area they can afford.
Edited with some evidence for my claim: A quick search suggests the number of American expatriates is in the single digit millions (estimates I saw range from 5 to 9 million, but obviously not all of those have moved for cost of living reasons), whereas there are perhaps 300 million American citizens (some of its 333 million residents aren't citizens).
If we were to flip the script and say people don’t necessarily want to be “have mores” they just don’t want to appear be “has less” then we’re in a better epistemic position.
Moving to a poor area would make you seem like a “has less” and that’s intolerable and why people don’t do it.
It’s essentially the same formula but with an inverted frame.
People are more oriented to avoiding sneers than seeking praise.
I would actually flip this argument on its head. Rather than arguing this is "proof" that people don't care about relative income, I would say that this is a market inefficiency waiting to be arbitraged. Cultural norms run strongly against taking up Caplan's proposal, so the vast majority of people don't. Nevertheless, very many would be happy if they did so, I think. Perhaps another piece of life advice to add to the next book.
> Almost no one relocates to feel relatively rich. (In fact, isn’t this essay the first time you’ve heard anyone point out that this is even an option?!
My guess is that for at least some of the expats, it could be a motivation. Living in Russia in the 90s, it certainly felt that way.
The flaw in this thought experiment is assuming that neighbors are the peer group.
Instead people want to feel superior to their friends/coworkers/social circle. Few people socialize with their neighbors anymore... especially if their is a huge income/class difference. You spend more time hanging around coworkers and family who are more likely to be on your same income bracket regardless of where your house is.
Therefore buying a cheaper house in a better neighborhood is actually the superior move, because then you can status signal your zip code/neighborhood.
i.e. two engineers who work together... one lives in little house in Rich Area, one lives in big house in Poor Area. All peers will assume that one who lives in Poor Area is bad with money, and one who lives in Rich Area is more successful.
You also have to add in the cofounding factors of beauty, safety, schools (with is a proxy for status), etc...
This is really circular. Poorer places have cheaper cost of living. Part of the reason CA/NY have such high housing prices is that they have such high incomes.
It seems to me that everyone makes a tradeoff between earning potential and cost of living, which are usually in tension because a lot of the goods we care about are positional rival goods and a lot of earning potential is network effects.
You see people relocate to poorer areas when they are able to retain their income independent of place and live around people like themselves. So retirees, full time work from home, etc.
Real estate near high income potential gets bid up, and supply doesn't increase to keep the cost down. In part because "keeping out the riff raff" is part of the value of real estate, and high earning areas require higher prices to keep out the riff raff.
Discrimination might help in this case (keep out the riff raff based on something other then price), but we got the fair housing act and all that.
Caplan obviously doesn’t spend much time with the masses on Instagram or LinkedIn and doesn’t track what social media is doing to children (which now includes people in their 30’s and 40’s).
I’d argue that people ONLY care about relative income. Countless books (like those by Pinker, et al) dwell on this reality where people think economic expansion is destroying society rather than profoundly improving our prognosis (politics aside).
Maybe the status associated with being a professor has worn off recently in his social circles while absolute income has become more popular.
A lot if people move to poorer countries to feel richer. Its just overall its a small proportion of people ( very few people move out of their country ).
A lot of expats like to feel rich and its often one of the main reasons they are expats.
"Lower cost of living" is exact that - to feel rich among the poor.
100%. Anecdotally, plenty of folks move to poorer countries: Brits and Germans to Portugal and Spain (OK, the weather,too…), Americans to Central America (again, beach weather also a factor), but for sure retirees on fixed incomes, or “retirees at 40” move to lower living cost places. Not sure how this affects Caplan’s thesis.
Feel like I see a lot of articles about people moving out of higher cost areas to lower cost areas? "Why I Left New York/San Francisco" is a whole genre unto itself.
The process of gentrification you describe is basically what actually happens.
And developers try to build affordable housing near mansions all the time, they're just stopped by zoning laws (as I expect you're well aware since you wrote a YIMBY book). The weird thing would be if people tried to build mansions next to affordable housing (instead of vice versa). But people living in mansions are already relatively rich even in their rich neighborhoods, so that doesn't support your thesis.
Yes, though I think Bryan is unfairly excluding a lot of counterexamples if "lower cost of living" is defined out. It might be theoretically possible to move to a lower cost of living area without making the person relatively richer, but I would struggle to think of an example. And talking about moving for "lower cost of living" is politer than saying "I want to feel superior to my neighbors," so I'm not surprised people focus on the former.
Moving to a poorer area has consequences on many aspects of the surroundings that someone may desire.
Is anyone claiming ALL people care about is relative income? What I gather is it’s easy to poke at the envy impulse, that’s it. It’s easy for people to resent the success of others and explain it away as undeserved, ill gotten, stolen. The most ill gotten gains in society circa 2025 are likely from companies greasing the government. Inherited money may piss people off but passing down money is a motivator for many people to work hard.
- [ ] I found it beyond farcical a multimillionaire Liz Warren sold billionaire tear mugs. Everything about this was satire playing out in real life. She flipped housing, evil, but she’s out for the consumer who should be protected from arbitrarily defined too high prices except if she’s the seller. She invented an identity (to be fair she really seemed to believe it) that may have bumped up her income and most people don’t start reasoning maybe the problem is the people most benefiting from identity don’t need the benefit at all or at least anywhere near as much as those defined by class and distorted social environments. And if these identities are so bad in terms of current effect why are middle class and upper middle class and even wealthy people exploiting it. Can’t pick on millionaires because if you include housing wealth too many people make the cut. And what lifts up society- Making a profit off an objectively overpriced kitschy mug. It’s difficult to follow the logic of your article because it’s not like you can move to a poorer area and everything will just be the same for you. I agree most people don’t waste mental space comparing income in a broad sense though they may among friends or coworkers but envy is an unfortunately highly sensitive easily pushed button. Didn’t make the cut for a deadly sin for nothing. I’m writing this without my glasses so hopefully it’s in English
This cannot work as a proof since we should all be living in euphoria given that we are thousands of times materially richer than peasants in the middle-ages. Our happiness does not scale accordingly. Otherwise, everyone at that time would have committed suicide. I am not even sure our depression and suicide rates are much better. Even if they are, it’s a drop compared to the actual wealth gains. Without relative joy, humans would have been content with the invention of fire.
I think the mistake is in thinking that this is about neighborhoods. It has more to do with the knowledge of people in your circle, state or country who are doing much better than you. Social media obviously exacerbates this by showing you success all over the world which you are missing out on.
This only works if you can change your reference class at will just by moving. If you move, but you still care about what your old neighbours think, the move doesn't help. Worse, in an age of internet and celebrity gossip magazines, your reference class includes all the celebrities who moved into better neighborhoods than you can afford
That feels relevant, and not just old neighbors but coworkers (did you change jobs to a lower pay area but still retain high pay?) and family members as well.
In the short term, I agree that your reference class doesn't completely turn over when you move. But over time, it mostly does. When I think about my standard of living, I don't compare myself to distant relatives in other cities, childhood friends, or my next door neighbor ten years ago. I compare to coworkers, current neighbors, and current friends. While you may not be able to change your coworkers at will without taking a pay cut, you can certainly change your neighbors and friends at will, and over time this will become your new reference class.
Perhaps your experience is different, but it would seem odd to me for someone to move to a new city, but years later still be in frequent touch with more than a small handful of neighbors from their old city. If the main thing you have in common with someone is colocation, the relationship goes away when it does.
Regarding celebrities, doesn't the popularity of celebrity gossip support Bryan's thesis? If people really hated feeling poor relative to the super-rich, why would they be so interested in following the intimate details of their lives?
A simple explanation is that people can't enjoy feeling superior if they know they intentionally sought out some inferiors to surround themselves with.
Suppose you are conscious about your weight/height, so you go out of your way to surround yourself with obese people/dwarves. I predict that anyone without an impressive capacity for self-delusion would probably feel more self-conscious about their weight/height, as a result of their strategy.
I think you vastly underestimate people's capacity for self-delusion (or, more charitably, their capacity to modulate their own emotions). Otherwise, how would you ever feel better about any negative event that you can't change? If I'm upset because someone yelled at me at work, I might go for a run or watch a movie to forget about it. Or, just wait for the negative feelings to fade away. Those remedies aren't rendered useless by intrusive thoughts that "this doesn't count, I'm just doing it to feel better."
The relevant feature isn't merely that a person knows that they are "doing this to feel better." It's more specifically that they know they are going out of their way to surround themselves with people who are exceptionally poor on some dimension they feel bad about themselves being poor about, which perversely risks increasing the salience of their low status.
Each of these are quite different:
- Watching a movie or other distraction: often reduces salience of what you are concerned about
- Going for a run or some other positive action: an action that may improve your status you can feel good about
- Moving to an even lower status group so that you are less relatively poor: risks making your poor status even more salient (you worried you were poor/fat/stupid and now you've confirmed by deliberately moving to surround yourself with poorer/fatter/stupider people)
People measure themselves vs their peers. People in a poorer neighborhood are not considered their peers.
"Almost no one relocates to feel relatively rich. (In fact, isn’t this essay the first time you’ve heard anyone point out that this is even an option?!)"
Nope, Americans move to places where their wealth makes them locally powerful all the time. Thailand. Costa Rica. Digital nomads. Sex tourism. Playing the token American for a local corporation. You're usually sharper than this, Dr. Caplan.
People certainly do that, but it is an uncommon choice. The vast majority of Americans live in the nicest area they can afford.
Edited with some evidence for my claim: A quick search suggests the number of American expatriates is in the single digit millions (estimates I saw range from 5 to 9 million, but obviously not all of those have moved for cost of living reasons), whereas there are perhaps 300 million American citizens (some of its 333 million residents aren't citizens).
Here's a thought.
When do people not feel envious of another person's income or wealth?
When they love or admire what makes that other person rich such as your rock star, your surgeon, your squire.
When you are envious is when you don't readily see what makes them worthy.
If we were to flip the script and say people don’t necessarily want to be “have mores” they just don’t want to appear be “has less” then we’re in a better epistemic position.
Moving to a poor area would make you seem like a “has less” and that’s intolerable and why people don’t do it.
It’s essentially the same formula but with an inverted frame.
People are more oriented to avoiding sneers than seeking praise.
I would actually flip this argument on its head. Rather than arguing this is "proof" that people don't care about relative income, I would say that this is a market inefficiency waiting to be arbitraged. Cultural norms run strongly against taking up Caplan's proposal, so the vast majority of people don't. Nevertheless, very many would be happy if they did so, I think. Perhaps another piece of life advice to add to the next book.
> Almost no one relocates to feel relatively rich. (In fact, isn’t this essay the first time you’ve heard anyone point out that this is even an option?!
My guess is that for at least some of the expats, it could be a motivation. Living in Russia in the 90s, it certainly felt that way.
The flaw in this thought experiment is assuming that neighbors are the peer group.
Instead people want to feel superior to their friends/coworkers/social circle. Few people socialize with their neighbors anymore... especially if their is a huge income/class difference. You spend more time hanging around coworkers and family who are more likely to be on your same income bracket regardless of where your house is.
Therefore buying a cheaper house in a better neighborhood is actually the superior move, because then you can status signal your zip code/neighborhood.
i.e. two engineers who work together... one lives in little house in Rich Area, one lives in big house in Poor Area. All peers will assume that one who lives in Poor Area is bad with money, and one who lives in Rich Area is more successful.
You also have to add in the cofounding factors of beauty, safety, schools (with is a proxy for status), etc...
So the jury is still out.
"for a lower cost of a living"
This is really circular. Poorer places have cheaper cost of living. Part of the reason CA/NY have such high housing prices is that they have such high incomes.
It seems to me that everyone makes a tradeoff between earning potential and cost of living, which are usually in tension because a lot of the goods we care about are positional rival goods and a lot of earning potential is network effects.
You see people relocate to poorer areas when they are able to retain their income independent of place and live around people like themselves. So retirees, full time work from home, etc.
Real estate near high income potential gets bid up, and supply doesn't increase to keep the cost down. In part because "keeping out the riff raff" is part of the value of real estate, and high earning areas require higher prices to keep out the riff raff.
Discrimination might help in this case (keep out the riff raff based on something other then price), but we got the fair housing act and all that.
Austin has lower cost of living because it's legal to build there.
Travis County which contains Austin has a per capita personal income of 60k.
Santa Clara is 150k.
A single family home in Travis County costs $500k. In Santa Clara its 1.86M.
1.86M / 150k = 12.4
500k / 60k = 8.33
Now 12.4 vs 8.33 ain't nothing to sneeze at. Income adjusted housing in Austin is 1/3 cheaper.
But non-income adjusted housing is 75% cheaper. Income differences are still doing a lot of the work here.
This is an insane headline.
Caplan obviously doesn’t spend much time with the masses on Instagram or LinkedIn and doesn’t track what social media is doing to children (which now includes people in their 30’s and 40’s).
I’d argue that people ONLY care about relative income. Countless books (like those by Pinker, et al) dwell on this reality where people think economic expansion is destroying society rather than profoundly improving our prognosis (politics aside).
Maybe the status associated with being a professor has worn off recently in his social circles while absolute income has become more popular.
It is rather difficult to move though, without incurring other effects. Poorer places are often much more violent.
Not in Japan, for example. Do Japanese people frequently make use of this strategy?
I don't think the Japanese has the same cultural outlook as the West. They value conformity and togetherness much much much more.
Poland then? Second lowest crime rate in the world.
Poland is no.33, not no.2, though. No.1 Singapore is Asian. No.15 Italy seems a good fit. Or No.20 the Swiss
Switzerland has a higher violent crime rate than Italy? I would not have guessed that in a million years.
A lot if people move to poorer countries to feel richer. Its just overall its a small proportion of people ( very few people move out of their country ).
A lot of expats like to feel rich and its often one of the main reasons they are expats.
"Lower cost of living" is exact that - to feel rich among the poor.
100%. Anecdotally, plenty of folks move to poorer countries: Brits and Germans to Portugal and Spain (OK, the weather,too…), Americans to Central America (again, beach weather also a factor), but for sure retirees on fixed incomes, or “retirees at 40” move to lower living cost places. Not sure how this affects Caplan’s thesis.
Not sure I agree with the premises here.
Feel like I see a lot of articles about people moving out of higher cost areas to lower cost areas? "Why I Left New York/San Francisco" is a whole genre unto itself.
The process of gentrification you describe is basically what actually happens.
And developers try to build affordable housing near mansions all the time, they're just stopped by zoning laws (as I expect you're well aware since you wrote a YIMBY book). The weird thing would be if people tried to build mansions next to affordable housing (instead of vice versa). But people living in mansions are already relatively rich even in their rich neighborhoods, so that doesn't support your thesis.
"People relocate to get a better job, to be closer to family, for a lower cost of a living"
Note that last bit.
Yes, though I think Bryan is unfairly excluding a lot of counterexamples if "lower cost of living" is defined out. It might be theoretically possible to move to a lower cost of living area without making the person relatively richer, but I would struggle to think of an example. And talking about moving for "lower cost of living" is politer than saying "I want to feel superior to my neighbors," so I'm not surprised people focus on the former.
This is off unfortunately.
Moving to a poorer area has consequences on many aspects of the surroundings that someone may desire.
Is anyone claiming ALL people care about is relative income? What I gather is it’s easy to poke at the envy impulse, that’s it. It’s easy for people to resent the success of others and explain it away as undeserved, ill gotten, stolen. The most ill gotten gains in society circa 2025 are likely from companies greasing the government. Inherited money may piss people off but passing down money is a motivator for many people to work hard.
- [ ] I found it beyond farcical a multimillionaire Liz Warren sold billionaire tear mugs. Everything about this was satire playing out in real life. She flipped housing, evil, but she’s out for the consumer who should be protected from arbitrarily defined too high prices except if she’s the seller. She invented an identity (to be fair she really seemed to believe it) that may have bumped up her income and most people don’t start reasoning maybe the problem is the people most benefiting from identity don’t need the benefit at all or at least anywhere near as much as those defined by class and distorted social environments. And if these identities are so bad in terms of current effect why are middle class and upper middle class and even wealthy people exploiting it. Can’t pick on millionaires because if you include housing wealth too many people make the cut. And what lifts up society- Making a profit off an objectively overpriced kitschy mug. It’s difficult to follow the logic of your article because it’s not like you can move to a poorer area and everything will just be the same for you. I agree most people don’t waste mental space comparing income in a broad sense though they may among friends or coworkers but envy is an unfortunately highly sensitive easily pushed button. Didn’t make the cut for a deadly sin for nothing. I’m writing this without my glasses so hopefully it’s in English
This cannot work as a proof since we should all be living in euphoria given that we are thousands of times materially richer than peasants in the middle-ages. Our happiness does not scale accordingly. Otherwise, everyone at that time would have committed suicide. I am not even sure our depression and suicide rates are much better. Even if they are, it’s a drop compared to the actual wealth gains. Without relative joy, humans would have been content with the invention of fire.
I think the mistake is in thinking that this is about neighborhoods. It has more to do with the knowledge of people in your circle, state or country who are doing much better than you. Social media obviously exacerbates this by showing you success all over the world which you are missing out on.