1) Imagine you have the choice of living in two worlds. In World A you have a five-bedroom house and everyone you know has a six-bedroom house. In World B you have a four-bedroom house and all your friends have three-bedroom houses. Which world would you prefer?
2) You can live in World C, where you get five weeks’ holiday a year and your friends get six. Or you can choose World D where you get four weeks’ holiday a year and everyone else gets three. Which do you choose?
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Most people, when asked these questions, chose worlds B and C. In other words, with property (at least above a certain size), it is the relative size of a house that matters more: with holiday time, it is the absolute amount that appeals. In economic vocabulary, this suggests leisure is an absolute good whereas larger homes are a positional good — whose value comes more from the relative status they confer than from an intrinsic improvement in quality of life.
This thought experiment appears in Robert H.
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