Introduction
In today’s society, our relationship with wealth is more complex than ever. Do we crave feeling rich – knowing we are wealthier than our peers – or is our motivation rooted in looking rich – being perceived as wealthy by others?
The academic study “Feeling Rich or Looking Rich? Quantifying Self-Image and Social-Image Motives” by Bottan, Perez-Truglia, Shigeoka, and Yamada (NBER Working Paper No. 34094, Aug 2025) tackles this very question, providing rare quantitative insights into the motives driving status preferences.
This post summarizes their methodology, findings, and implications for anyone interested in the psychology of money, social comparison, and economic behavior.
Background: The Double-Edged Sword of Status
Research consistently shows that our well-being is tied not only to absolute income but also to how our income compares to others. Historically, scholars have distinguished between two forces:
- Self-image: The private satisfaction from knowing you are richer than others, independent of anyone else’s perception.
- Social-image: The value found in being seen as rich, gaining psychological and sometimes instrumental benefits from recognition or social favor.
While previous studies acknowledge both forces, little was known about which matters more. Do we want superiority for ourselves, or does status only count when it’s visible?
Experiment Design: Dissecting Status Motives
The researchers innovated upon classical hypothetical discrete choice experiments, where participants typically choose between scenarios that trade off their own income and their peers’ income. They extended these by explicitly adding a third dimension: how others perceive the participant’s income.
A sample question: If you could earn $100,000 and your peers know it, or $90,000 but your peers believe you earn $120,000, which would you choose? The former boosts actual standing (self-image), while the latter boosts perceived status (social-image) but at a cost to real wealth.
To mitigate social desirability bias, the tendency of participants to conceal “vain” preferences, the study used an incentivized prediction task. Instead of stating their own preference, respondents guessed the majority choice, earning rewards for accuracy. This prompted more honest and thoughtful responses.
Main Findings: Social-Image Dominates Self-Image
Across 4,934 representative U.S. participants and five experiments across domains (income, academic achievement, car safety), one result was striking: social-image matters much more than self-image.
- Relative Importance: In the income domain, the self-image motive was at most 19.3% as important as the social-image motive. In other words, people were far more willing to sacrifice real wealth for perceived status than for private satisfaction alone.
- Willingness to Pay:
- On average, participants would give up 0.259% of their own income to boost their perceived income by 1% (social-image).
- They would sacrifice 0.164% of income for a 1% reduction in average peer income (self-image) but even this effect was weak, statistically insignificant when controlling for individual differences.
- Domain Differences: The desire for perceived status is even stronger in academic achievement (“looking smart”) versus income, and weakest in non-social domains like car safety.
Nuances and Heterogeneity: It’s Not One-Size-Fits-All
A fascinating nuance: not everyone plays the same status game.
- Diverse Preferences: Some participants sought to be seen as richer, while a notable minority preferred being perceived as less wealthy; perhaps to avoid envy, requests for financial help, or risk of crime.
- Non-monetary domains: In academics, people more often desired their grades be seen as higher even if their peer group’s grades rose, suggesting positive spillovers (like public goods) outperform status motives in certain contexts.
Social Desirability Bias: Why Disclosure Matters
Non-incentivized experiments (where people answered about themselves) revealed another layer: participants often preferred being perceived as poorer. This paradox highlights a taboo against vanity. People didn’t want to openly admit their craving for status, underlining the importance of study methods that elicit honest answers.
Implications: Understanding Ourselves Beyond Wealth
Why does this matter? The dominance of social-image over self-image explains several real-world phenomena:
- Why conspicuous consumption (status goods) persists even when privately wasteful.
- How workplace satisfaction, neighborhood choice, and social signaling shape our happiness.
- The role of incentives and experimental design in uncovering the truth about status preferences.
For investors, policy makers, and anyone seeking financial independence: understanding the power of social-image can help navigate choices that truly enhance well-being, rather than chasing costly appearances. More importantly, awareness of these psychological levers can foster healthier attitudes toward wealth and status in our communities.
Conclusion
In short, the psychological benefits of looking rich – being seen and recognized – vastly outweigh those of feeling rich when no one is watching. Social-image is a powerful driver of behavior across income and other domains, but don’t underestimate the complexity: status can inspire, but also burden, depending on one’s circumstances and values.
For more on this topic, read the full NBER paper or reflect on your own choices: Are you optimizing for self-image, social-image, or something else altogether?