Dr. Sheldon Lee Cooper, Ph. D, The Gorilla Experiment
One of the assumptions that micro-economists usually employ is that preferences are monotonic. For non-economist readers, this means that more is preferred to less i.e. two dollars is better than one, an 9 oz steak is better than a 6 oz steak, and a bigger house is a better house.
Obviously it doesn’t take Sheldon Cooper to devise a few counterexamples. We are not always better off by enjoying one more beer (more true for our older readers than our younger readers). That second girlfriend probably doesn’t provide more utility (at least in the long-run). Eventually, your house is so big that it is a hassle to maintain and clean.
Now surely, some of you have had an economics course and are a little uncomfortable with what seems to be my premise- that perhaps more isn’t always better. You are probably trying to recall something about how giving someone who has no money a hundred dollars brings them more happiness than giving a millionaire a hundred dollars (economists call it diminishing marginal utility). And I am not trying to unravel the foundations of microeconomics. But, the point of this jargon-steeped post is that, in the words of Lao Tzu, “To know you have enough is to be rich.”
So let’s talk about being young adults on Federal Tax Day. Starting out on our own, finally cut off from the bountiful coffers of our parental units, we don’t have much. As Allstate likes to remind us, some of us are starting out on a budget- a Ramen noodle every night kind of budget. The luxuries we can enjoy are afforded by deep discounts through Groupon and Scoutmob. Every hard-earned paycheck is a joy, however short-lived as we dole out checks drawn against our liabilities. We try to save what we can, and some of us have too much debt or not enough income (or both) to even think about a 401K. Right now, that hundred dollars brings us far more utility than it would bring a millionaire.
We hope that our condition is part of starting out, part of being a young adult. We hope that someday, when we are no longer starting out, we will be able to afford more. Maybe you envision a kitchen full of food that isn’t leftover takeout, big enough to prepare a proper meal in. Perhaps you want to be able to participate in those extra Zumba classes, rather than just your basic gym membership. Maybe you hope that someday your work week will be more like 40 hours long. But while we are starting out, we aren’t complaining about it. Why? Because we have enough, and we know it. That is, after all, what it means to be rich. If starting out meant living comfortably, with all the amenities that we are used to our parents providing for us, how would we ever appreciate their value? More is usually better. But when we have more, we need to remember how it felt to have less. That is the way to stay rich.