Friday, November 25, 2005
MONEY AT THE MARGIN
A couple of days ago, I posted an obscure preface to some thoughts I've been having about the notion of the decreasing marginal value of money. The key to my perplexity is found in one phrase in the quote from David Friedman I included in that post: "... the reason we want money is to buy goods with it." This is true, but not the whole truth. Some people value money for reasons other than "to buy goods with it." I conclude this from a commonplace observation I have encountered over the years about a certain kind of person who's had a great deal of financial success -- that such people continue to strive for financial gain long after they have amassed a fortune far in excess of what any person could want or need for themeselves or their families. In some cases such people continue to work hard because of non-monetary rewards their occupations provide, and their behavior presents no challenge to the notion of the decreasing marginal value of money. But for some people, it is the money for which they continue to strive. From my observation, there is a kind of person who doesn't derive particularly great satisfaction from their work, but who nonetheless continue to work very hard for the money they make from their work, despite already having a great fortune. For such people, money does not seem to have a decreasing marginal value. If anything, it appears to me that money actually has an increasing marginal value for these folks.
Now, the immediate response to this observation by some is that money actually serves a different purpose in the instances I'm describing. For some people, money is a signal of social status, wholly apart from its function as a medium of economic exchange. Perhaps this does account for the cases in which people seem to have an increasing motivation from money as their fortunes grow -- for them, it counts as a growing indicator of their superior social status, even if in no other way than in their own self-perception.
If the key is status, then in some cases, the status function must be one of self-perception, because some people who experience an upward rather than a downward motivation from marginal increases in wealth don't share the information of their increasing wealth beyond the smallest of circles. Usually, people who enjoy the experience of high status do so as a function of some relevant social group. What to make of those who don't advertise their wealth, but still pursue it for its own sake? To me, it seems like some kind of pathology -- monkey-posturing gone mad.
GB, THHotA
posted by Greg 10:33 AM
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