Exploring the Motivations Behind Extreme Wealth
As the number of millionaires and billionaires continues to rise, it begs the question: what do they do with all that money? Surprisingly, once they reach a certain level of wealth, simply having more money doesn’t change their lifestyle in any significant way. So, why do they keep pursuing more?
According to Harvard Business School professor Michael Norton, who has extensively researched the relationship between wealth and happiness, there are two fundamental questions that people ask themselves when assessing their satisfaction in life: “Am I doing better than I was before?” and “Am I doing better than others?” These questions apply not only to wealth but also to appearance, status, and other areas of concern.
However, Norton points out that many of the things that truly matter in life are difficult to measure. For example, it’s challenging to determine if you’re a better parent now than you were a year ago, or if you’re a better parent than your neighbors. To compensate for this, people often turn to quantifiable measures of comparison, and money is an obvious one. People ask themselves questions like, “Am I making more money?” or “Does my house have more square footage?” or “Do I own more properties than before?”
This inherent need for comparison doesn’t disappear even when individuals amass obscene amounts of wealth. Norton explains that the problem lies in the fact that the question, “Am I doing better than I was?” only moves people in one direction: up. If a family accumulates $50 million but surrounds themselves with peers who also possess that level of wealth or even more, they feel significantly less rich than they did when their peers had significantly less money. This shifting goalpost perpetuates a continuous pursuit of wealth and fulfillment.
Norton’s research on this phenomenon is rather disheartening. In a recent study, he surveyed over 2,000 individuals with a net worth of at least $1 million and asked them to rate their happiness on a scale of one to ten. He then asked them how much more money they would need to reach a perfect score of ten. Surprisingly, almost everyone, regardless of their already substantial wealth, claimed that they would require two or three times more money to achieve perfect happiness.
But where did Norton find these wealthy individuals for his study? While the initial participants were high-net-worth clients connected to an investment bank, he also interviewed a group of Dutch millionaires who willingly shared their thoughts in exchange for a small fee. Norton acknowledges that running surveys on average individuals is relatively inexpensive, while gaining insights from the ultra-wealthy is far more challenging.
Northwestern University government professor Jeffrey Winters suggests another motivation for the super-rich to accumulate even more wealth: the thrill of multiplying their fortune through investments and business acquisitions. While most individuals relate earning money to covering expenses like mortgages and healthcare, the ultra-wealthy view money as a means of further enriching themselves and enhancing their status.
However, these two perspectives on the use of money—covering expenses versus amassing wealth—bring diminishing returns with respect to happiness. If someone desires a mega-yacht and six mansions worldwide, a couple of hundred million dollars may be more than sufficient. But for those who continuously seek to accumulate more, there is no amount of money that will ever be “enough.” Every billionaire, according to Winters, becomes exhilarated by each additional increment of wealth they acquire.
Another expert, Brooke Harrington, a professor at Copenhagen Business School who has extensively studied the habits of the super-wealthy, highlights that the question the rich often ask themselves isn’t, “Do I have enough money to buy this expensive thing?” but rather, “Do I have as much as, or more than, the people I compare myself to?” Feeling rich, Harrington explains, is all about comparing oneself to others within their reference group, rather than fulfilling specific material desires.
Author Gary Shteyngart, in his book “Lake Success,” delves into the psyche of the super-rich through his protagonist, a New York investor. He discovered that these individuals, despite having more money than they could ever spend, were highly competitive. They constantly competed against each other in various aspects of their lives, including charitable donations. Shteyngart suggests that this competitiveness stems from a desire to appear smarter and more accomplished than their peers, as their wealth alone might not be sufficient proof of their intelligence.
Moreover, Shteyngart observed that these hedge fund managers regarded money as a scorecard, comparing themselves not to bestseller lists or awards but rather to the ever-increasing number displayed on their financial statements.
In conclusion, while it’s easy to assume that extreme wealth brings boundless happiness, the reality is quite different. The super-rich experience an insatiable drive for more money and continuously compare themselves to others in their financial stratum. This hamster wheel of wealth and status can be rather bleak, leaving even the wealthy dissatisfied in their pursuit of an ever-elusive sense of “having enough.”
