The Wiki Man: Class system

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?

•••

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.

Most popular

Matthew Parris

What if Trump is just bonkers?

This thought experiment appears in Robert H. Frank’s book The Darwin Economy, one of the most interesting books published last year. Professor Frank is an economist who believes that it is impossible to understand human economic behaviour through Adam Smith alone: you also need Darwin, and his understanding of how the individual competitive instinct in all living things can sometimes be to the detriment of the wider group — or even of the individual competing.

In nature, to compete for mates, bull elks have evolved insanely cumbersome antlers. Male peacocks have evolved unwieldy tails. And female humans have evolved the £4,000 bag.

Now here’s a question. Is education an absolute good or a positional good? I only ask because if education is an absolute good, to be prized for its own sake, shouldn’t we be celebrating an educational revolution by now?

The possibilities for lifelong, voluntary self-improvement are many hundreds of times greater today than 20 years ago.