The Surprising Difference Between Rich vs. Wealthy
Psych 🧠 - 359/500
Hello Reader,
This research is about why “Money Can't Buy Happiness, But It Can Buy a Better Mindset: The Power of Subjective Wealth”. Let me ask you:
What is it?
This paper explores the concept of "consumer wealth" and how both objective wealth (actual financial resources) and subjective wealth (perceived financial resources) influence consumer behavior.
It highlights the challenges of defining and measuring these concepts and proposes a framework to understand how consumers form their subjective wealth perceptions.
Major findings:
Wealth is a complex and multifaceted concept: It encompasses not just income but also financial inflows, outflows, assets, and liabilities. Objective measures like net worth can be difficult to assess and don't always capture spending ability or future income potential.
Subjective wealth diverges from objective wealth: Individuals with similar financial situations can have very different perceptions of their wealth, and these perceptions are malleable, even without changes in their actual finances.
Three routes to subjective wealth assessments:
Comparative processes: People evaluate their resources relative to reference points (e.g., comparing to others, their past self, or ideal standards).
Identity perceptions: Social groups and roles shape how people perceive their wealth (e.g., identifying as "wealthy" or "poor").
Self-perceptions: Inferences from one's own behaviors (e.g., spending habits) can influence subjective wealth.
Cognitive and affective influences: Factors like uncertainty, causal attributions, perceived malleability of finances, anticipated consequences, and specific emotions all shape how consumers perceive their wealth.
Different measures of subjective wealth are not interchangeable: Measures like financial constraints focus on inadequacy, while financial slack emphasizes adequacy, leading to potential differences in their antecedents and consequences.
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What do I need to know:
Understanding the meaning of wealth is crucial: Both objective and subjective wealth matter in shaping consumer behavior, and they are not always aligned.
Subjective wealth is a dynamic and complex construct: It is shaped by multiple factors beyond just one's income or assets, including social comparisons, personal identity, cognitive biases, and emotional responses.
Context matters: The salience and relevance of different comparands, reference points, and psychological factors will influence how subjective wealth is assessed in different situations.
Source:
https://myscp.onlinelibrary.wiley.com/doi/epdf/10.1002/arcp.1073
The difference between "wealthy" and "rich" as you rightly pointed out is quite distinct in economics but very faded in common language. Especially media such as newspapers and television use the terms in a fairly fluid way. But in addition to an impact from an economic measurement point of view, as you said this difference has implications on people's psychology, even on their personal self-evaluation. The references to identity are very interesting.