Remember the “Man in the Car Paradox” When You’re About to Make an Expensive Mistake
Imagine that (during a time without COVID) you are waiting outside to be seated at a really nice restaurant. As you pass the time, your attention is grabbed by the roar of an engine. You look up and see a beautiful red Ferrari pull up to the valet. Normally you aren’t impressed with cars, but this one is an artful blend of classic design with a modern edge. It’s that perfect hot rod red.
In spite of yourself, you start dreaming about owning such a vehicle.
Surely, if you owned a car like that, you would be the center of attention when you pulled up. Every eye would be on you, and the car would command feelings of respect and admiration. Everyone would know that you are something special.
You might not have spotted the fundamental paradox in that mental image, so let’s call attention to it: I never mentioned (and you never imagined) the driver.
The man in the car probably believes all the same things about the car that you do. That it will confer him respect and admiration, that it will make him effortlessly cool.
But no one cares about the man (or woman) in the car.
The paradox of the man in the car is that you believe that if you were the man in the car people would notice and admire you, but you believe this while ignoring the man in the car.
This paradox was formalized by Morgan Housel, author of The Psychology of Money and a former valet attendant who spent a lot of time admiring beautiful cars… and almost no time admiring the drivers of beautiful cars.
Housel recognizes that humans often buy things to impress people, but this approach usually backfires. As he says in one memorable quote:
No one is more impressed with your stuff than you are
This is not to say that you shouldn’t buy a nice car or that it’s never a good idea to impress people, it’s just a reminder that trying to impress people with purchases often has a high cost and a low payoff.
Instead of putting your money towards buying status, you can earn status the old fashioned way — consistently showing up and serving the people in your sphere of influence. This leaves your money free to pursue the best use of money: earning your freedom.