After graduating from Harvard, I would really hope that I make what I earn that has nothing to do with anybody else, but I know that everybody else will earn a lot because we have the same education
@@jeniusguy3540the question was not to provide every guy in the world a salary of 200k, but just a select few along with the students. That isn't a number big enough to cause changes in the value of dollar lmao
@@pranavpattar-qn5pu they asked them not because they're going to give them really that money. They asked them as if they're the whole society to see if they're going to think as the way they learned all these years . maybe ofc .
Except harvard grads are take up negligible portion of the society that 200k for each won't cause noticeable inflation that brings purchasing power of 200k down to 160k.
Imagine this scenario. If you are better than others then top companies will hire you, you get best of everything, government wants you with them to make policies. If you are last, then there is some problem in you. You might have a hbs degree but no future perks out of it. The winner gets all is up there. They don't serve mediocrity up there in the top 1 percent.
This is what I was thinking but all the other comments seem to be more analytical about the economic value rather than what it says about how well-versed you are in your subject in comparison to others
@@MLGRDRi don't think , just because someone earns 10 k , more than the others than that person would be necessarily better . plus it's just higher than the average not the best of the lot , thus there can be graduates who earn higher.
Maybe they choose A because if let's say all that people earn 220k then, perhaps the inflation may rise especially in the city where most Harvard graduates would want to work. I know you can say few people earning 20k more than you will not make inflation rise. But we are just speaking from a hypothetical pov. Earning less than most people may make your value seems less when you want to change job. After a certain years, 160k and 200k wouldn't make that much of a difference in terms of spending or worth. A 200k and 300k would. There's a difference between money and value.
@@georgesmithers5999 not of the entire country but may be mainly the top job opportunity cities. Like how the rental price or even food sometimes differs per state.
This is like getting a 200,000 salary and paying $40,000 each year to make sure everyone else is capped at $150,000. Over ten years that is $400,000 you walked away from.
Already rich or will have more than enough is one good point. The question also only asked “upon graduation” so unclear what cumulative difference they thought they were choosing.
It’s about how they rank & purchase power over competition; not the amount. The top part of Maslow’s pyramid explains that. It’s actually a lot more rational than most people would think.
A lot of people at Harvard are rich… even if their income is less than yours, they can ask their parents for more money than you. Most of them could cover that 10k difference with a single phone call to their parents just choose the 200k
I think it might be because, even though the nominal money ($200k) is more in scenario B, if everyone else is getting more, then the real value of that money will be less. This is because, everyone will have more money, their demand will increase, which will cause the prices and hence inflation to rise. So, the real value of that 200k would be less. And it might turn out that if enough people are there getting more than them at $200k, the real value of the $160k in scenario A might be of more value/may have higher purchasing power.
I thought like that for a second but then again he said the average salary of the graduates which will have close to no effect. I think it’s what would make myself consider it, such as, being judged for being under standards that were set for these people, so in my conclusion it’s ego of people that proven to achieve a lot making their ego probably also above average
@@יובלתלMaybe its the other way around? Because thousands of graduates cannot have significantly less income per output collectively by chace so the inflation of the counrty must've been high in condition b.
@@Dantm928 exactly. If all Harvard students are paid like that, by inference you know the rest of the market, and logically it represents the inflation perspective. The scenario A is not about greed vs your peers, it is a logical choice for more value.
Yes, I was about to come here say this too. Perhaps they realized scenario A has better economical scenario overall in society rather than who is ”winning”. Just another ”study” here making economic students stereotypically selfish. But to be fair this same study could be asked from almost any group with this same result for scenario A (but without understanding of inflation etc).
Isn't money and value relative though? If everyone has more than you then you aren't rich. If everyone has less than you then you are. Also, isn't it quite normal for students to compare with their classmates and direct contemporaries rather than the average of a population or some other far removed statistic? Depending on what is considered, $160K in one scenario may seem more valuable than 200K in another in terms of purchasing power. Ego probably isn't the main thing they were thinking about.
The value of the dollar changes depending on what those around you are earning. Scenario A. You’re making the most thus you have the maximum amount of purchasing power. Scenario B. You’re making more than scenario A but have the least amount of purchasing power thus your dollar is actually worth less than your dollar in scenario A.
You americans are shocking. I don't know what they teach you in school. A single cohort of student will not change the global economy in a significant way. Option B does not mean your money is worth less in absolute terms unless everybody else on the market is getting paid that much which is obviously not the case.
There is a interesting paper about this. Basically saying that people hate being disadvantaged compared to others more than being ahead in the same situation.
I'd also actually choose 160k. Bc in case of 200k , everybody else getting 220k will sooner or later result in inflation, and the things rest of them will be able to afford, I wouldn't. Like who knows what may happen tomorrow. Also you can't compromise on your victory
Not quite, the samples are too small, the choice applies only for the graduating ones in that college. Wouldn't make a difference. Rather, it's a matter of ego, 'cause if u get more than everyone, it means you are the best
If inflation is held equal that of course choose 200k. But there is an implication that "everyone" is making 220. So you are making below average. In the other scenario 160k is above "everyone" therefore has more relative buying power.
After graduating from Harvard, I would really hope that I make what I earn that has nothing to do with anybody else, but I know that everybody else will earn a lot because we have the same education
Another way to put this is would you rather be slightly lower class in 2023 or upperclass in 1850? Which will make you happier? Chances are, most people would choose upperclass in 1850 even if they don't have access to modern day things, because it's not about what you have/don't have, it's about what you have/don't have relative to others (unfortunately) that makes you happier or not
They chose A to make sure that their economy was the strongest economy in the room.. no one wanted to be the weakest link even if it mean having more money. That’s what a lot of investment firms strive for, power and control.
Salary also reflects inflation and economic situation. Thus, $200k a year could be lower than $160k since it is lower than average salary and vice versa. The worth of the money changes under different inflation rates.
Less money but more than others is better than more money but less than others. It wasn't greed or envy speaking. It was basic facts. If everyone makes more than you, the cost of life will go up and now you are broke and below the average. If the opposite happens, you will live above average with less money. It's basic common sense. Harvard students did get it right
Actually it makes sense when it’s applied on a global scale. If the medial salary in the place I live is 60k and I make 120k that’s good. If the median salary is 200k and I make 180k it isn’t good even though I make 60k more as the 120k you make when the median is 60k is worth more than the 180k you make when 200k is the median. They say money is not a zero sum game which is not entirely true.
Companies are ready to pay the majority of cohort 220k means the global economy is suffering Inflation. His point will be valid when the prevailing situation in both the choices are the same.
It is all about sustainability and greed. I'm a first year Economics student and all I can say is wow... Studying Economics is not easy, but it teaches you so much more than finance, politics and economics.
A lot of people are missing the key word: “on average” which is present in both scenarios. If you’re in group A and are making 160 relative to the AVERAGE of 150, you’d only typically be in the upper 40% or so of class earners if we assume a normal distribution. In group B with your earning being 200 relative to the AVERAGE of 220, I’d assume a similar situation due to the normal distribution curve but just flipped- you’d be in the lower 40% of earners for the class. Bottom line is you aren’t beating everyone in scenario A, and not everyone is better than you in scenario B. With the value of dollar being constant, I don’t see why anyone wouldn’t choose B.
@ExcisionsX You're over thinking this. He explained it to you in the video. They want to make more than the rest of their class. It doesn't matter the amount or the logic. Fundamentally, they are driven by having more than the rest not having more for themselves.
See,that doesn't matter... Because 40k a year is a good chunk of money...Even If I'm down 20k from the others of group A I wouldn't be unhappy about it..I can invest and grow it more because I'll be having more than I could If I was choosing B..Besides,being the bottom G in the top 40% club is pretty good for you even in this age inflation...and It's not money that brings happiness but it's what you can do with money that...More money means I can live a bit more comfortably So I guess It's not at all a loss
They're aware that the numeric value of fiat currency is arbitrary and chose "I want to be better off than the people around me". More telling is that the survey excluded an option of "I want myself and my peers to be equally prosperous".
If you are in top 1 percent of the class then all top companies want you with unlimited opportunity. If you are last then no company wants you. Maybe inflation is also high so that money is no good.
Im 13 years old and i would chose option A. Option B you are below the average salary but in option A you are above the average salary. This will help you in the long term.
Would you rather make more than the average Harvard grad or less? It isn't about having a fragile ego or greed. The kids chose correctly. The quality of the average graduate doesn't change. The higher salaries are just inflated. The value of money is relative to the amount of money in an economy. Ppl in the comments are dunking on kids for choosing to have better purchasing power lmao 😂.
Exactly. More scalability over time. Over time you could go from 160k- 250 or 300k after years in that field. While starting with the higher amount could lead to less advances in pay in the long run for massive gains in the short term. Its easier to demand a higher salary from 160k than 220k.
Option A puts them at the top of their class while Option B puts them at the bottom of their class. When you think of it in these terms it starts to make more sense.
If you're taking the perspective of "Having" and wanting to maximise welfare with the subset, any rational economist would choose option B as you are maximising your own position. Economist are not all the same, the elite who comes to these top-tier schools are also more prone to ideology and left-leaning bias, this is supported by the fact economics is very much intertwined with politics in today's age.
There are two economies. Each person earns average salary of 150000 and that's their purchasing power and you get more purchasing power than others. In second situation, everyone except you have more purchasing power. If everyone can use 220000 dollars then that economy has higher inflation rate then the first one,means scenerio a is a good choice, maybe.
I remember that this was different and the students had chose A because of different reasons and I think he misremembered or said something wrong about the equation because it doesn't make sense for students to get 160k instead of 200k. Only those graduated in that year is not going to change economy for us to talk about inflation or other matters
Money loses value when abundant. If all other students get $220k, your $200k wouldn’t be worth as much. If they all get $150k, your $160k will be worth as much. It’s about purchasing power and the value of the dollar, not the number itself without relating it to the external world. Money is relative.
Yeah but lets be real the world isn't filled with harvard business school graduates so the loss in purchasing power is completely negligible. Instead the graduates seek the status of being the "best performing graduate".
I’m nowhere near University or College in terms of intelligence, but I would rather take option B, because it’s a big chunk of money and I would continue to focus on myself and forge my economic path even further than to worry about others as competition, resulting in unnecessary envy which can cloud both my focus and judgement to try and achieve further success.
If the economy is paying more for a large group and your the only one getting paid less, then that large group, due to their higher earning has more buying power. Groceries become expensive, cars, property ect. Thats inflation in the sense of higher demand due to higher buying power. So earning less while everyone else more means in every aspect in life, you lose by that small $20k increase, where In the grand scheme of things, since everyone else is earning that, then its a massive thing. It's not so much my win is your loss, it's common sense.
If the rest make more money, it shows that I am underperforming on average to my peers at that top level, which could also pain a greater picture on the economical value of the dollar. If I make less but over perform against my peers at that level it shows the reverse. It’s not about dollar amount but value, which is based on relativity. 100k was worth a lot 50 years ago because less had it and in turn, it bought you a lot.
Our wealth is relative to the wealth of those around us. If everyone else is making more, costs for everything will correlate to the average wealth, thus disadvantaging those making less, regardless of their take home pay. I think many know this intuitively. Perhaps this is along the lines of what some students were thinking.
If everyone else earns more than you, then indirectly your purchasing power decreases. If your salary doubles and rests' salary triples, you would be poor. Harvard students made the right decision.
So I'm doing my undergrad in economics and i did the behavioral economics course. People choosing option A is what we see every other day in different situations because every individual wants to be better off compared to another. But there's still my utility maximization, and my utility lies in the $20000, because by getting less than others I'm getting more myself. I'll gladly choose option B without thinking much.
If you make more money than everyone else then you have more buying power. Just because in scenario B you make more money, doesn’t been you have more buying power. It’s not about envy or greed.
no they chose the smart move. you knoww money has value, its not just paper. and its just a replacment for rare things that humans value and do trade. if you have more of it then anyone esle than you are on the clear, but if you have it less than other people , you will strugle. no matter what the amount, dollar, millions or billions they are just numbers.
yeh thats what i thought. i feel like he didnt give a lot of context, information was missing, yet he blamed the students for getting the question 'wrong'
first, he totally made that incident up. second, the population is not simply your classmates, when you get the $200,000 It's relative value to the entire population
I would have chosen that too , see money is more of relative game , if all the people are earning more than me than that means I can be easily replace by all of them.
What I got from this is they’re actually smart. It doesn’t matter how much ur being paid if you’re being underpaid when everyone else’s pay is inflated, you’re gonna have to pay society’s inflation prices due to excess of money and less of supply so you’re not gonna be able to get the stuff necessary compared to others. Obvs I’m talking from the perspective that the whole cohort is in this case the whole society but u get the gist.
Assuming these students would be living in similar areas 160k vs others making 150k annually might actually be better. When everyone has more money, inflation reduces the relative value of money.
Harvard business school is easy to get into, if you’re paying or got someone who will pay you can easily get an MBA, same is true for Wharton. The Doctoral Economics programs are a different story. You won’t be cross enrolling there
They actually thought of it as a case of inflation, where having a higher income than others is better than the opposite, where even if the other dimple is lower than others, it is actually of the same value if you have a lower income but higher than average.
Would you rather be with a girl who’s a 6 and all your friends have girlfriends who are 5’s, OR be with a girl who’s a 7, while all of your friends have girls who are 8’s?
@BENNY-THE-DOG That doesn’t answer the question. I’m curious to know why you couldn’t just replace the term “girlfriend” with “partner,” and then answer.
Value is relative. If you have the least, but for some reason, all salaries are higher, this may reflect trends of inflation, more money in the economy, etc. In any case, your money may simply be worth less. It is true that many people in this major are self-motivated, but it's also true that he failed to include the magic words: ceteris peribus (holding all else constant). These are people who will be wondering the reason for the higher wages. For instance, if you frame this in a real economics problem, such as the incoming of high skilled immigrant labor, many will opt for the 200k, because they understand the reason why.
I don't think you guys realise this. Envy isnt their only deciding factor. There is also inflation. If everyone makes more than you then no matter what you earn, inflation will catch up on you.
"And I saw that all toil and all achievement spring from one person’s envy of another. This too is meaningless, a chasing after the wind." -Ecclesiastes 4:4
I'd pick B knowing that i chose a degree/field that paid my cohort so much money, and that there's room for growth and opportunity to increase my salary. Now, if my degree was in sociology, I'd be a little puzzled.😂
I mean it depends. Is ur pay higher than the rest because you are doing something that is more important which others can’t? So in that way 160k may have more leverage than even 200k because it shows that you’re more important to the workplace, thus you can probably negotiate for a higher salary if switching companies.
a 150k $ job has way less expectations than a 250,000$ job and regardless the job is just a platform to start your real assets as in stocks, real estate, or even owned businesses
"The modern economy isn't driven by greed, it's driven by envy."
-Charlie Munger
it doesnt have to be one or another, its starter by envy and finished off by greed
Lies again? NASCAR GrabCar USD SGD
Yeah that aged well today
Absolutely not.
Its both
“I’m not winning if someone’s not losing”
- Dodgeball movie
The zero sum mindset is for the selfish
@@lynako2546Nice guys finish last. The zero sum G R I N D S E T is for winners. 🦾❤️😸
What part of the movie is that? Must’ve been White Goodman😂
After graduating from Harvard, I would really hope that I make what I earn that has nothing to do with anybody else, but I know that everybody else will earn a lot because we have the same education
Are you harvard business school students@@Literallyarealhuman
It's not about money it's about having more than others
For me it's just money, I love money. Don't care about others.
Bruh they really took 160k over 200k 😂
They are not like you
@@Smart_Sohamwe should be more like him then
@@jeniusguy3540bro you think you're sounding 'uncommon and smart' but whatever you just said was plain stupid. Reevaluate your reply please
@@jeniusguy3540the question was not to provide every guy in the world a salary of 200k, but just a select few along with the students. That isn't a number big enough to cause changes in the value of dollar lmao
@@Smart_Soham they don't know me son
I’ll choose 200k I don’t care about others , plus 20k difference is less than 40k loss …
More money doesn't mean more value
There’s a reason why you’re not at harvard
@@hellheaven4167in this case it does. More money = more money. This scenario isnt enough to change the value of the dollar
@@Devonte-w8o I know it not gonna to make any change but it's smart minds
now think of this figures in billion or trillion if you want and the 87% of other people are more capable of you
“ Excess of demand over supply causes inflation “
~ A harvard student
but they still make less than perhaps people from other colleges???
@@pranavpattar-qn5pu they asked them not because they're going to give them really that money. They asked them as if they're the whole society to see if they're going to think as the way they learned all these years . maybe ofc .
Except harvard grads are take up negligible portion of the society that 200k for each won't cause noticeable inflation that brings purchasing power of 200k down to 160k.
At the start he mentioned that ' if all the dollars were constant ' meaning a scenario where inflation did not exist.
@@maphangafxgood point forgot about this, thank you
Imagine this scenario. If you are better than others then top companies will hire you, you get best of everything, government wants you with them to make policies.
If you are last, then there is some problem in you. You might have a hbs degree but no future perks out of it.
The winner gets all is up there. They don't serve mediocrity up there in the top 1 percent.
This is what I was thinking but all the other comments seem to be more analytical about the economic value rather than what it says about how well-versed you are in your subject in comparison to others
@@MLGRDRi don't think , just because someone earns 10 k , more than the others than that person would be necessarily better . plus it's just higher than the average not the best of the lot , thus there can be graduates who earn higher.
@@MLGRDR Makes no sense, google doesn't care about who makes 20k more... unless it's the ceo.
So they chose less money cause theyre egos cant handle someone having more than them
Maybe they choose A because if let's say all that people earn 220k then, perhaps the inflation may rise especially in the city where most Harvard graduates would want to work. I know you can say few people earning 20k more than you will not make inflation rise. But we are just speaking from a hypothetical pov. Earning less than most people may make your value seems less when you want to change job. After a certain years, 160k and 200k wouldn't make that much of a difference in terms of spending or worth. A 200k and 300k would. There's a difference between money and value.
@@riyahayden4292 you think a few hundred people are going to single-handedly change inflation...
@@georgesmithers5999 not of the entire country but may be mainly the top job opportunity cities. Like how the rental price or even food sometimes differs per state.
Harvard is hard to get into, most Harvard students are extremely competitive and egotistical
Why else would they go to harvard
This is like getting a 200,000 salary and paying $40,000 each year to make sure everyone else is capped at $150,000. Over ten years that is $400,000 you walked away from.
You think harvard graduates with their rich parents give a single F about 400k?
@@kcnl2522not all are that rich
Over 100 years its 4Million @@kcnl2522
Already rich or will have more than enough is one good point. The question also only asked “upon graduation” so unclear what cumulative difference they thought they were choosing.
I don't tell people my salary, and I don't ask theirs. I'm happy getting more money even if I'm low man.
It’s about how they rank & purchase power over competition; not the amount. The top part of Maslow’s pyramid explains that. It’s actually a lot more rational than most people would think.
A lot of people at Harvard are rich… even if their income is less than yours, they can ask their parents for more money than you. Most of them could cover that 10k difference with a single phone call to their parents just choose the 200k
You just proved the Envy.
I’d pick A just cause the latter is probably a way more stressful position
I think it might be because, even though the nominal money ($200k) is more in scenario B, if everyone else is getting more, then the real value of that money will be less. This is because, everyone will have more money, their demand will increase, which will cause the prices and hence inflation to rise. So, the real value of that 200k would be less. And it might turn out that if enough people are there getting more than them at $200k, the real value of the $160k in scenario A might be of more value/may have higher purchasing power.
I thought like that for a second but then again he said the average salary of the graduates which will have close to no effect.
I think it’s what would make myself consider it, such as, being judged for being under standards that were set for these people, so in my conclusion it’s ego of people that proven to achieve a lot making their ego probably also above average
@@יובלתלMaybe its the other way around? Because thousands of graduates cannot have significantly less income per output collectively by chace so the inflation of the counrty must've been high in condition b.
That’s not enough to cause any economic shift so no
If I am better paid than others (market rate) then it will look good on my resume. I GET MORE BECAUSE I AM BETTER, therefore pay me some more.
@@Dantm928 exactly. If all Harvard students are paid like that, by inference you know the rest of the market, and logically it represents the inflation perspective. The scenario A is not about greed vs your peers, it is a logical choice for more value.
The issue is there’s implied inflation in the question, which they probs considered
Yes, I was about to come here say this too. Perhaps they realized scenario A has better economical scenario overall in society rather than who is ”winning”. Just another ”study” here making economic students stereotypically selfish. But to be fair this same study could be asked from almost any group with this same result for scenario A (but without understanding of inflation etc).
Almost a good point… but the hypothetical was for a single class… that’ll hardly make a dent on inflation
You make more than the average Harvard graduate or less is probably how the question came across
that’s why he said “all dollars are constant” … to disregard that issue
are u serious
Excellent lesson on humility vs egotistical pride! Working for/with people who are better than you is the way towards growth.
Isn't money and value relative though? If everyone has more than you then you aren't rich. If everyone has less than you then you are. Also, isn't it quite normal for students to compare with their classmates and direct contemporaries rather than the average of a population or some other far removed statistic? Depending on what is considered, $160K in one scenario may seem more valuable than 200K in another in terms of purchasing power. Ego probably isn't the main thing they were thinking about.
lol are u serious
If you ain't first, you're last
- Ricky Bobby (and Ricky Bobby's Dad)
Defining attitude of modern economic climate
The value of the dollar changes depending on what those around you are earning. Scenario A. You’re making the most thus you have the maximum amount of purchasing power.
Scenario B.
You’re making more than scenario A but have the least amount of purchasing power thus your dollar is actually worth less than your dollar in scenario A.
you failed to pay attention both in economics class and to the hypothetical; "all dollars are constant".
You americans are shocking. I don't know what they teach you in school. A single cohort of student will not change the global economy in a significant way. Option B does not mean your money is worth less in absolute terms unless everybody else on the market is getting paid that much which is obviously not the case.
There is a interesting paper about this. Basically saying that people hate being disadvantaged compared to others more than being ahead in the same situation.
I'd also actually choose 160k.
Bc in case of 200k , everybody else getting 220k will sooner or later result in inflation, and the things rest of them will be able to afford, I wouldn't. Like who knows what may happen tomorrow. Also you can't compromise on your victory
Not quite, the samples are too small, the choice applies only for the graduating ones in that college. Wouldn't make a difference. Rather, it's a matter of ego, 'cause if u get more than everyone, it means you are the best
He literally said "all dollars are constant" in the beginning
If inflation is held equal that of course choose 200k. But there is an implication that "everyone" is making 220. So you are making below average. In the other scenario 160k is above "everyone" therefore has more relative buying power.
After graduating from Harvard, I would really hope that I make what I earn that has nothing to do with anybody else, but I know that everybody else will earn a lot because we have the same education
Another way to put this is would you rather be slightly lower class in 2023 or upperclass in 1850?
Which will make you happier?
Chances are, most people would choose upperclass in 1850 even if they don't have access to modern day things, because it's not about what you have/don't have, it's about what you have/don't have relative to others (unfortunately) that makes you happier or not
They chose A to make sure that their economy was the strongest economy in the room.. no one wanted to be the weakest link even if it mean having more money. That’s what a lot of investment firms strive for, power and control.
Its all about doing relatively better than peers
Salary also reflects inflation and economic situation. Thus, $200k a year could be lower than $160k since it is lower than average salary and vice versa. The worth of the money changes under different inflation rates.
he quite literally said “all dollars are constant” bro…
Less money but more than others is better than more money but less than others.
It wasn't greed or envy speaking. It was basic facts.
If everyone makes more than you, the cost of life will go up and now you are broke and below the average.
If the opposite happens, you will live above average with less money.
It's basic common sense. Harvard students did get it right
The question was about other students in the cohort, not everyone else in the country. Your premise makes no sense. Inflation is not a factor here.
Actually it makes sense when it’s applied on a global scale. If the medial salary in the place I live is 60k and I make 120k that’s good. If the median salary is 200k and I make 180k it isn’t good even though I make 60k more as the 120k you make when the median is 60k is worth more than the 180k you make when 200k is the median. They say money is not a zero sum game which is not entirely true.
Companies are ready to pay the majority of cohort 220k means the global economy is suffering Inflation. His point will be valid when the prevailing situation in both the choices are the same.
Wealth is a relative concept, not absolute. Because we compete for resources.
No, it’s the prestige. It’s the honour. It’s the high end thing that you got . Everything can’t be bought with money.
It is all about sustainability and greed. I'm a first year Economics student and all I can say is wow... Studying Economics is not easy, but it teaches you so much more than finance, politics and economics.
A lot of people are missing the key word: “on average” which is present in both scenarios.
If you’re in group A and are making 160 relative to the AVERAGE of 150, you’d only typically be in the upper 40% or so of class earners if we assume a normal distribution.
In group B with your earning being 200 relative to the AVERAGE of 220, I’d assume a similar situation due to the normal distribution curve but just flipped- you’d be in the lower 40% of earners for the class.
Bottom line is you aren’t beating everyone in scenario A, and not everyone is better than you in scenario B. With the value of dollar being constant, I don’t see why anyone wouldn’t choose B.
@ExcisionsX You're over thinking this. He explained it to you in the video. They want to make more than the rest of their class. It doesn't matter the amount or the logic. Fundamentally, they are driven by having more than the rest not having more for themselves.
See,that doesn't matter... Because 40k a year is a good chunk of money...Even If I'm down 20k from the others of group A I wouldn't be unhappy about it..I can invest and grow it more because I'll be having more than I could If I was choosing B..Besides,being the bottom G in the top 40% club is pretty good for you even in this age inflation...and It's not money that brings happiness but it's what you can do with money that...More money means I can live a bit more comfortably
So I guess It's not at all a loss
You must be a Harvard alumni
Thats cuz if u earn more than the entire class of HBS means your somebody and you can go far
They're aware that the numeric value of fiat currency is arbitrary and chose "I want to be better off than the people around me". More telling is that the survey excluded an option of "I want myself and my peers to be equally prosperous".
"value lies in comparison". READ THAT OVER N OVER UNTIL YOU GET IT.
comparison is the thief of joy
Scenario a makes sense from the standpoint of one upsmanship
If you are in top 1 percent of the class then all top companies want you with unlimited opportunity.
If you are last then no company wants you. Maybe inflation is also high so that money is no good.
lol are you serious
It's about status. This question is like asking "Would you like to have more or less status than your peers?".
Im 13 years old and i would chose option A. Option B you are below the average salary but in option A you are above the average salary. This will help you in the long term.
Would you rather make more than the average Harvard grad or less?
It isn't about having a fragile ego or greed. The kids chose correctly. The quality of the average graduate doesn't change. The higher salaries are just inflated. The value of money is relative to the amount of money in an economy.
Ppl in the comments are dunking on kids for choosing to have better purchasing power lmao 😂.
I would choose A because it has potential to keep bringing money in rather than having it right now
Exactly. More scalability over time. Over time you could go from 160k- 250 or 300k after years in that field. While starting with the higher amount could lead to less advances in pay in the long run for massive gains in the short term. Its easier to demand a higher salary from 160k than 220k.
Many of these kids will become people who have a profound effect on lives.
Source? Could not find any information that confirms this.
Option A puts them at the top of their class while Option B puts them at the bottom of their class. When you think of it in these terms it starts to make more sense.
Reputation is more important than money
are you poor
They've chosen right. Purchasing power parity wise they are richer with scenario A than B
well no not even close
Not unless everyone in the example is like the entire population.
If you're taking the perspective of "Having" and wanting to maximise welfare with the subset, any rational economist would choose option B as you are maximising your own position.
Economist are not all the same, the elite who comes to these top-tier schools are also more prone to ideology and left-leaning bias, this is supported by the fact economics is very much intertwined with politics in today's age.
Smart doesn’t mean they can outthink or overcome their feelings…that’s why few people beat the market. It’s hard.
Exactly , there is huge lack of creativity, in schools teachers deduct marks for steps 😂😂
There are two economies. Each person earns average salary of 150000 and that's their purchasing power and you get more purchasing power than others. In second situation, everyone except you have more purchasing power. If everyone can use 220000 dollars then that economy has higher inflation rate then the first one,means scenerio a is a good choice, maybe.
It's not enough that I should succeed. Others must fail.
87% thought it was a trick question.
I m not surprised at all. They got into Harvard because they were competitive
I remember that this was different and the students had chose A because of different reasons and I think he misremembered or said something wrong about the equation because it doesn't make sense for students to get 160k instead of 200k. Only those graduated in that year is not going to change economy for us to talk about inflation or other matters
Money loses value when abundant. If all other students get $220k, your $200k wouldn’t be worth as much. If they all get $150k, your $160k will be worth as much. It’s about purchasing power and the value of the dollar, not the number itself without relating it to the external world. Money is relative.
Yeah but lets be real the world isn't filled with harvard business school graduates so the loss in purchasing power is completely negligible. Instead the graduates seek the status of being the "best performing graduate".
I’m nowhere near University or College in terms of intelligence, but I would rather take option B, because it’s a big chunk of money and I would continue to focus on myself and forge my economic path even further than to worry about others as competition, resulting in unnecessary envy which can cloud both my focus and judgement to try and achieve further success.
If the economy is paying more for a large group and your the only one getting paid less, then that large group, due to their higher earning has more buying power. Groceries become expensive, cars, property ect. Thats inflation in the sense of higher demand due to higher buying power. So earning less while everyone else more means in every aspect in life, you lose by that small $20k increase, where In the grand scheme of things, since everyone else is earning that, then its a massive thing. It's not so much my win is your loss, it's common sense.
I prefer A too
If the rest make more money, it shows that I am underperforming on average to my peers at that top level, which could also pain a greater picture on the economical value of the dollar.
If I make less but over perform against my peers at that level it shows the reverse. It’s not about dollar amount but value, which is based on relativity. 100k was worth a lot 50 years ago because less had it and in turn, it bought you a lot.
Our wealth is relative to the wealth of those around us. If everyone else is making more, costs for everything will correlate to the average wealth, thus disadvantaging those making less, regardless of their take home pay. I think many know this intuitively. Perhaps this is along the lines of what some students were thinking.
If everyone else earns more than you, then indirectly your purchasing power decreases. If your salary doubles and rests' salary triples, you would be poor. Harvard students made the right decision.
Exactly. I dont know why its so dufficult for people to geasp this basic concept.
So I'm doing my undergrad in economics and i did the behavioral economics course. People choosing option A is what we see every other day in different situations because every individual wants to be better off compared to another. But there's still my utility maximization, and my utility lies in the $20000, because by getting less than others I'm getting more myself. I'll gladly choose option B without thinking much.
I’m thinking of doing an Econ degree. How rigorous is it ?
If you earn more than your peers, then you have better purchasing power even though you are quantitatively earning less money.
If you make more money than everyone else then you have more buying power. Just because in scenario B you make more money, doesn’t been you have more buying power. It’s not about envy or greed.
Most people value status very highly
no they chose the smart move. you knoww money has value, its not just paper. and its just a replacment for rare things that humans value and do trade. if you have more of it then anyone esle than you are on the clear, but if you have it less than other people , you will strugle. no matter what the amount, dollar, millions or billions they are just numbers.
yeh thats what i thought. i feel like he didnt give a lot of context, information was missing, yet he blamed the students for getting the question 'wrong'
that's such 1 dimensional thinking
no thats 3d thinking bro @@friendsfrenz1944
He said all dollars are constant. The money a class of Harvard graduates earn is not enough to inflate the currency.
first, he totally made that incident up. second, the population is not simply your classmates, when you get the $200,000 It's relative value to the entire population
I would have chosen that too , see money is more of relative game , if all the people are earning more than me than that means I can be easily replace by all of them.
What I got from this is they’re actually smart. It doesn’t matter how much ur being paid if you’re being underpaid when everyone else’s pay is inflated, you’re gonna have to pay society’s inflation prices due to excess of money and less of supply so you’re not gonna be able to get the stuff necessary compared to others. Obvs I’m talking from the perspective that the whole cohort is in this case the whole society but u get the gist.
Assuming these students would be living in similar areas 160k vs others making 150k annually might actually be better. When everyone has more money, inflation reduces the relative value of money.
“You would think these are some of the smartest kids in the world”
Cross-enrolled at HBS. Can confirm this is absolutely not the case.
Harvard business school is easy to get into, if you’re paying or got someone who will pay you can easily get an MBA, same is true for Wharton. The Doctoral Economics programs are a different story. You won’t be cross enrolling there
Quintessential Harvard mentality
But fr in the first try, i chose 200k, but after i thought a lot, it is better to be on top, but with lower money, you feel me???
it's about value not amount
They actually thought of it as a case of inflation, where having a higher income than others is better than the opposite, where even if the other dimple is lower than others, it is actually of the same value if you have a lower income but higher than average.
They considered inflation which is smart of them
Money in Money out!
Would you rather be with a girl who’s a 6 and all your friends have girlfriends who are 5’s,
OR be with a girl who’s a 7, while all of your friends have girls who are 8’s?
@BENNY-THE-DOG That doesn’t answer the question. I’m curious to know why you couldn’t just replace the term “girlfriend” with “partner,” and then answer.
My mom says the importance is: can you handle the job at $220k vs having the the job at $160k as a new grad?
They did not understand game theory , sunk cost theory , and probably price discrimination too .
Value is relative. If you have the least, but for some reason, all salaries are higher, this may reflect trends of inflation, more money in the economy, etc. In any case, your money may simply be worth less. It is true that many people in this major are self-motivated, but it's also true that he failed to include the magic words: ceteris peribus (holding all else constant). These are people who will be wondering the reason for the higher wages. For instance, if you frame this in a real economics problem, such as the incoming of high skilled immigrant labor, many will opt for the 200k, because they understand the reason why.
Those student were some real envious batch of Harvard.
Comparative inflation - more kids with more money means my dollar is worth less
I don't think you guys realise this. Envy isnt their only deciding factor. There is also inflation. If everyone makes more than you then no matter what you earn, inflation will catch up on you.
I think the question is about inflation. If everyone makes less, prices go up slower, and if everyone makes more, prices rise faster.
How can we get the full video?
Link to this study!
Good job🎉🎉
"And I saw that all toil and all achievement spring from one person’s envy of another. This too is meaningless, a chasing after the wind."
-Ecclesiastes 4:4
Because it will increase cost of living and the 200k dollars relative price less than 160🎉
I haven’t gone to a university and would’ve been the 20% who knows how that would positively impact our economy
We need more MBAs out there who can put aside their pride
They know inflation is just coming
I'd pick B knowing that i chose a degree/field that paid my cohort so much money, and that there's room for growth and opportunity to increase my salary.
Now, if my degree was in sociology, I'd be a little puzzled.😂
I mean it depends. Is ur pay higher than the rest because you are doing something that is more important which others can’t? So in that way 160k may have more leverage than even 200k because it shows that you’re more important to the workplace, thus you can probably negotiate for a higher salary if switching companies.
There is always gonna be someone richer than you, just cant keep buying stuff thinking your happy.
a 150k $ job has way less expectations than a 250,000$ job and regardless the job is just a platform to start your real assets as in stocks, real estate, or even owned businesses
At least they are self aware enough to know that they are going to be miserable if they make less than other people.
I Dreamed A professor like that.