
In 1991, a researcher named James Duesenberry proposed a theory that explains why people spend more as they earn more. He called it the “Relative Income Hypothesis.” The idea is simple: people don’t just care about what they have. They care about what they have compared to others.
This is why someone earning $250,000 a year can feel broke if their friends are making $500,000. It’s why the new Tesla Model S doesn’t feel as exciting once your neighbor gets the Porsche Taycan.
It’s also why flaunting wealth can be a trap. Not just financially, but socially.
[Read more…] about The Social Cost of Flaunting Wealth (And Why the Smartest People Avoid It)









