5 ms·
Regardless of any competitive or status-based desires, income relative to your neighbours (everyone in your city) is a big part of actual purchasing power. In
by ProblemFactory 13y ago
Regardless of any competitive or status-based desires, income relative to your neighbours (everyone in your city) is a big part of actual purchasing power.
In most cities, housing prices are based on land value, not construction costs. And land value is entirely based on demand: what your neighbours are willing to pay for the same lot.
And most services are priced based on the salaries of your neighbours - the more you earn relative to them, the more of their time you can afford.
- finnw 13y agoThis does not necessarily conflict with the diminishing returns theory. If you are 4x as rich as your neighbours, you will probably want to move to a more affluent area. At which point you will have richer neighbours (i.e. stronger competition.) There's a good chance you will again be dissatisfied with your relative wealth and be motivated to increase it further.