Would You Rather Be Earning $50K In A $25K World, Or $100K In A $200K World?

Who would you rather be, a person who earns $50,000 per year when everyone else earns $25,000 per year, or a person who earn $100,000 per year when everyone else earns $200,000?

Do you care more about your relative level of wealth, or your absolute level of wealth?

Assume that all goods and services have the same cost in either case, and that you must work the same amount of hours either way. Which would you prefer and why?


As I don’t care about my salary relative to that of others, I’ll take the $100,000.

I’ve made both and the $100,000 is much nicer.

It’s not just relative wealth. The buying value of the dollar depends on the wealth of other people. In the $25k world, you would have plenty of money to pay for human services whereas in the $200k world you probably wouldn’t have that much. The buying power, and hence your standard of living would probably be greater making twice as much as the average regardless of the absolute value of those earnings.

I would want $50k in a $25k world now question.

I’m aware of that, Shagnasty, but in Surrealville, goods and service have the same cost in either case. I know the economy doesn’t work that way but in Surrealville, it does.

With all due respect, there’s really not a lot of substance to this question.

I think this is what Surreal wants to really know, TaxGuy.

In other words, do you care more about what you make or if you make more than the Joneses.

Don’t worry if you don’t understand the implications of the question, Taxguy. You’re not required to participate in this thread, or any others for that matter.

If goods and services would cost the same (which as it has been noted, they wouldn’t), I would of course take the 100K. More money is more money, I don’t care about having more of it than anyone else, my goal is more security and/or buying power for myself.

OK, I guess I was a little snippy, so maybe your return snippiness was deserved. I apologize.

If what you really care about is what JuanitaTech quoted (and I’m not implying that that is not the case), then I don’t think your hypo really gets at that because wealth is of course different than income.

It seems to me that in the real world, there is no difference between “absolute” v. “relative” levels of wealth; there’s only one person who’s the poorest in the world (well, depends on how you define poor, I guess) and one who’s the richest, and everyone else falls somewhere in between. When people do things to increase their wealth, it seems to me like they have the “absolute” idea in mind (i.e., they want to be able to buy more stuff) rather than the “relative” idea (i.e., they simply want to be richer than other people and don’t really care about being able to buy more stuff).

In other words, it seems that one would think “I’m going to get a master’s degree so I can get a better job so I can buy a better house, car, and vacations” not “I’m going to get a master’s degree so I can make more than the people that will make less than me once I get the degree.”

Also, who’s going to say “Yeah, I don’t care how much I and everyone else make as long as I make more than everyone else.” That position seems patently stupid. Maybe I’ll be proven wrong, though, and someone here really feels that way.

Apology accepted, TaxGuy.

I apologize too for the smart-alecky response.

I think I can sort of answer this from experience. My family income is considerably more than average for the larger area that we live and shop in, but probably less than average for the immediate neighborhood where I live and where my kids go to school. I can definitely say that it is the former that has the most impact on my life. The fact that I can afford all the basics and plenty of modest treats, that I have good health insurance, that I can save money, and that my kids go to a good school is what is important, not whether we can lord it over the neighbors (which we certainly can’t.)

Here’s something interesting: I think most people think their income is a lot closer to average than it really is in lots of cases.

Here’s how you can check your perception: decide where you think your income is in relation to the other households in your zip code or city, then go to this site and check it out: http://www.zip-codes.com/search.asp

I think you’ll find that the average household income in a lot of areas is lower than you thought it would be.

But cher3, aren’t you saying that your relative wealth is what allows you to live well? That is, you can afford not only what everyone else can, but also some modest treats? It is the standard that defines what living “well” means.

I find this question really intriguing, because at first I found myself agreeing with troub , that is, that I’d be better off with double the purchasing power regardless of anyone else’s. But upon further thought, I’m not so sure. In the 100k world, I’m still the poorest guy of all. How could I be proud of that? Other kids would be able to do more than my kids, see more, experience more. And those things would, perhaps, give them unsurmountable advantages. We’d always be behind , even though we’re “ahead” of our hypothetical $50k selves.

And I think this is the way it is in real society. Many so-called “poor” American families have telephones, TVs, microwave ovens, cars, and so on. They’re way better off than their counterparts of the past, yet the standard they aspire to has been raised.

So, on second thought, make me the richest of the poor people. Because I think that’s ultimately what we strive for. We do what we can (get a degree, a certification, take on extra projects, work overtime, etcetera), to do better relative to our current income, but also to do the best we can relative to the standard.

Not necessarily, CCYMan. In the 200k world, there are, I’m assuming, still people who make 25k, 35k and 50k. You’re still doing better than those people.

I chose my answer, in part, because no matter what others are making, I’m more accustomed to living on $100,000/year than $50,000/year

100k, because it is more than 50k.

Next question!

50K In A $25K World

Actually, the OP states “when everyone else makes $200k.”

If all costs are the same between the two, then $100K. In a realistic model, of course, the $50K would be better.

As an aside, according to the US Census Bureau, the median household income in the USA as of the last census was $41K.

That’s right, if you made more than $41K per year in 2000, you made more than half the households (not individual income-earners, but households) in the USA.

I see, CCYMan. Thanks for pointing that out.

Dogface, I didn’t know the median household income was so low!!!

I don’t care to be rich, relatively. That’s status, and that is irrelevant to me. However, having a lot of spending cash is a peace of mind I enjoy. I’ll be in the 100k category, thank you.