Middle class Americans don’t live like kings—they live better than kings.
If you showed Henry VIII the average American’s living conditions, he would be awe-struck. While most Americans do not have giant castles or huge armies, we have luxuries that the royalty of yesteryear could scarcely dream about: big screen TVs and the Internet, fast cars and even faster planes, indoor plumbing and innerspring mattresses, and vastly improved medical care. Despite this incredible standard of living, most of us don’t feel like kings. Instead, we feel like paupers because of relative deprivation.
Relative deprivation is that idea that people feel disadvantaged when they lack the resources or opportunities of another person or social group. An American living in a trailer park has an objective high standard of living compared with the rest of the world and the long tail of human history: they have creature comforts, substantial freedom of choice, and significant safety. Nevertheless, they feel deprived because they compare their lives with glamorous celebrities and super-rich businessmen. Relative deprivation tells us that social and financial status is more a feeling rather a fact, spelling trouble for traditional economics.
Economists largely agree that economic growth is good for everyone. In lifting the profits of corporations and the salaries of CEOs, the engine of capitalism also pulls up the lifestyle of everyone else. Although this idea is objectively true—standards of living are generally higher when the free market reigns—it is subjectively false. When everyone gets richer, no one feels better off because, well, everyone gets richer. What people really want is to feel richer than everyone else.
Consider an experiment done by economist Robert Frank. He asked people to choose between two worlds. In World 1, you make $110,000/year and everyone else makes $200,000; in World 2, you make $100,000/year and everyone else makes $85,000. Although people have more objective purchasing power in World 1, most people chose World 2 to feel relatively richer than others.
The yearning for relative status seems irrational, but it makes sense from an evolutionary perspective. We evolved in small groups where relative status determined everything, including how much you could eat, and whether you could procreate. Although most Americans can now eat and procreate with impunity, we haven’t lost that gnawing sensitivity to status. If anything, our relative status is now more important. Because our basic needs are met, we have a hard time determining whether we’re doing well, and so we judge ourselves based upon our place in the hierarchy.
Relative deprivation can make sense of many curious human behaviors, such as why exposure to the rich makes middle class people get sick and take dangerous risks. It also helps to understand the election of 2016.
Society today is economically more powerful than it was in the 1950s, with our money buying much more. In 1950, a 13” color TV cost over $8,000 (adjusting for inflation), whereas today a 40” LCD TV costs less than $200. Despite this objective improvement, one demographic group—white men without a college diploma—has seen a substantial relative decrease in their economic position since the 1950s. It is this relatively deprived group who really wanted to Make America Great Again—not to have expensive TVs, but to relive the days when they had a greater status than other groups.
The real problem with relative deprivation is that—while it can be pushed around—it can never be truly solved. When one group rises in relative richness, another group feels worse because of it. When your neighbors get an addition or a new convertible, your house and your car inevitably look inadequate. When uneducated white men feel better, then women, professors, and people of color inevitably feel worse. Relative deprivation suggests that economic advancement is less like a rising tide and more like see-saw.
Of course, one easy trick around relative deprivation is to change your perspective; each of us can look around for someone who is relatively less successful. Unfortunately, there’s always someone at the very bottom and they’re looking straight up, wishing that they lived like a king.