I recently perused this list of life advice books. This genre of book is rife with eye-roll-inducing ideas.
For an example, see Scott Alexander’s entertaining critique of Gottman’s book.
However, I find it better to to approach the genre in terms of expected value.
Incidentally, Annie Duke’s Thinking in Bets is the one book on this list that I loved without reservations and without wanting to constantly quibble with the author’s arguments.
Even if most of the ideas are bad, it only takes one positively compounding idea to change your life’s trajectory dramatically upwards.
That is how I landed on Morgan Housel’s The Rich And The Wealthy. The thesis of the post I couldn’t agree more with: rich is having money to spend on stuff and status; wealth is having enough resources to grant independence and autonomy; so seek wealth.
In general, the post makes its point well
The Vanderbilt example was entertaining and illustrative of the point. I don’t know much about the Vanderbilt history but I will say that I have learned to be suspicious of historical accuracy when I see such a tidy and neat allegory.
all while staying perfectly concise. One of the final supporting examples though committed one of my pet peeves. I am going to post the whole paragraph so you have the bigger context:
The Vanderbilts are an extreme example, but I think they were just a magnified version of what so many regular people deal with today. Average household incomes adjusted for inflation have more than doubled in the last 70 years, but it doesn’t feel that way because expectations have more than doubled. Part of the reason home affordability is lower today than in previous generations is because the average new home is a third larger than it used to be; millions of Americans haven’t saved enough to retire, but just a few generations ago the entire concept of retirement was a dream.
(Emphasis added to the part I take issue with.)
My pet peeve is when someone tries to make a persuasive argument and omits one of the two sides of the same coin: personal responsibility and societal structrue. People making political arguments often ignore personal responsibility.
Unfortunately, this often works to the detriment of the group of people that the person making the argument is nominally trying to help.
Life advice tends to fail in the opposite way: to cite societal ills as examples of failures of personal responsibility and if you just take the life advice the author is selling none of those societal ills will befall you (supposedly).
It is true that on average people elect for bigger houses and that there is an element of zero-sum status competition at play that leads to deadweight loss. So technically when Housel writes “part of the reason” he isn’t wrong.
Viewed in context of the whole post, however, I call bullshit.
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There is deceptive sleight of hand for someone supposedly writing from authority about money. Earlier Housel cites that household income has doubled—inflation adjusted—in the past 70 years. But inflation adjustment calculations are an average of vastly different clases of things. Many things get cheaper (cars, computers, etc.)
This is deeply linked to how we get richer over time in the first place.
but some things are stubbornly resistant to productivity improvements (building construction,
To learn more, I can't recommend Construction Physics enough.
education—more on this in the next point). It is inaccurate to insinuate that we are twice as rich in our ability to afford a home and that the main reason home prices have gone up is status seeking.
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Part of increased house prices is because neighborhoods have become more desirable in a good way (more things to do, less pollution). But frequently an even bigger contributor to the increased prices is a weird market distortion in the US: the house price reflects how good
Here when I say “good” it is in reference to the market decided price. The nuance is that there are places in the US where your kids can get a great education and the house prices are affordable. Seeking out such opportunities is a good life hack.
the school is your child will attend. It is uncharitable to lump wanting a good future for your children with the the motivation of status seeking.
- Personal experience: in some markets, most of the small houses are owned by landlords who rent out the property. The decision of rent vs. buy is its own complicated topic, but for our purposes here I don't think you can attribute most of those reasons to status seeking.
- Speculative: if the amount of profitable land is limited, there is a profit motive (fixed vs. variable costs) for the builder to build larger sq-ft houses at the margin. Because we are richer we can afford that increased price, but I wouldn't assume it is consumer preference that is primarily driving the increased size.
To the extent that status seeking is an explanation for decreased housing affordability, I am pretty sure it is dominated by the above factors and probably other factors I am not even thinking about.