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Keeping up with the Joneses

In a previous article I wrote about the importance of context. It is an absolutely human trait to use relative values, rather than absolute values when it comes to making decisions. Now there is one phenomenon where this is even more evident than when simply selecting products, and that phenomenon is known as “Keeping up with the Joneses”.

Now please don’t panic if you don’t know, do know or are a person with the surname Jones. This name was rather arbitrarily selected as it was and still is a common surname in America. The phenomenon in itself is quite simple: as long as you can keep up with your neighbours, who might not necessarily be called Jones, you are doing well and are happy and content. If you are doing (slightly) better than your neighbours you are ecstatic. But if you are doing worse than your neighbours you experience negative feelings of sadness, anger, envy and insecurity. Ultimately, the “Joneses” are used as a measurement of your own relative success compared to that of your immediate environment. This type of measurement is known in psychology as social comparison.

Social comparison is a useful feat in an evolutionary sense. It could establish whether an animal was at the bottom or the top of the food chain. This was especially important in packs or groups of animals living closely together, as each of the different “ranks” carried its own behaviours. For example, the strongest wolf is the alpha, they eat first, they fight most, they have first choice of mating partner(s). The lowest ranked wolf eats last, they tend to be the weakest and therefore they have to be smarter to ensure survival and procreation. Correct social comparison ensured survival.

Now us humans have evolved beyond the animal kingdom, and survival is no longer the key function of social comparison. To some there is something worse than physical death, and that is social death. Social death, or just any form of social exclusion can come at the hands of many things. It could be having a less fancy car, a lower salary, a smaller house, a degree from a lower ranked institution etc. Being on the lower end of the spectrum in your immediate environment is a great stressor for people. A lot of people are afraid that their worth and status are mainly dependent on their belongings and are therefore seen as “less” compared to people who do have the bigger houses, fancier cars and what not.

It should be mentioned that it is not the absolute values that matter. Having a big house provides a lot of people with great utility, a sense of pride and fulfilment and overall happiness. Until your neighbour has a slightly bigger, better house. All of a sudden your utility decreases, and you are less satisfied with your house. It works the other way as well. If your neighbour were to have a slightly smaller house than you, your utility derived from your own house increases. Yet nothing about the absolute value of your house has changed in either scenario!

Science proves that it is in fact relativity that supports social comparison, and not absolute values. Research by Boyce et al (2010) showed that it was relative (ranked) income, and not the absolute value of the income, that determined life satisfaction. They argue that even if the absolute value of income was increased, this would have no effect on utility if the rank of the income compared to others did not change. To put in context: if your boss were to double your income, whereas the income of all your colleagues stayed the same, you’d be the highest ranked in your direct environment and derive a great increase in utility (and happiness) from this increased income. However, if your boss decides you and all of your colleagues have done such a great job everyone’s income gets doubled, your relative income compared to your colleagues does not change. As a result, Boyce et al (2010) predict that you will not derive any increase in utility from this.

I have to clarify that the relativity used in the income example is in relation to your colleagues and not to anyone else. Once the individual with their doubled salary leaves their workplace and goes to the neighbourhood where they live, their change in salary might move them up relatively compared to their neighbours. If this is the case, an increase in utility will still be experienced, but in a different social setting. The effects of social comparison are dependent on which social setting is being used to do the comparison in.

Although social comparison sounds a bit extreme and at sometimes superficial, it can come with great benefits. People can use upward social comparison, comparing themselves to those above them, to find motivation to reach a similar position. For example, you can socially compare yourself to your boss, and find the motivation to become like him/her, because they have a position or qualities you admire. People also engage in downward social comparison, where they compare themselves to people who are lower ranked than them. This can be done as a way to feel better in a current situation or to analyse how far a person has come. The most preferable form of social comparison is often found on “inspirational” Tumbl posts. These posts state that an individual should only compare themselves to who they were the day before, and all progress reviewed should be that of their own. An admirable way of using social comparison, but unfortunately not how the human animal works.

Overall, social comparison need not be bad. It can provide a sense of pride and privilege or motivation and drive to do better. However, social comparison does come with some serious drawbacks if people latch on to the wrong qualities to aspire after, or compare themselves with ideals and unrealistic standards. This is something I will discuss in a next article.

References Boyce, C. J., Brown, G. D., & Moore, S. C. (2010). Money and happiness: Rank of income, not income, affects life satisfaction. Psychological Science, 21(4), 471-475.


Behavioural Science

Personal Finance



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