Frank, Robert. 1985. Choosing the Right Pond: Human Behavior and the Quest for Status. New York: Oxford University Press.
There are important properties about contests:
1. For any contest to have a winner, there must also be a loser.
2. Measures the provide equal advantages or disadvantages to all contestants do not affect the expected outcome of a contest.
3. Participation in many important contests is voluntary.
Many of the prizes in life are positional goods, goods that are more valuable by their scarcity and relative worth vs others. People are also more concerned with the relative level of their income than i's level on an absolute sense.
Some things will always remain positional goods. There will always be competition for the top 10% in jobs because there can only be 10% of jobs in that position. Something our nature makes us concerned about rank. Rankings closer in time and space have more relevance and motivating value. But our needs depend strongly on the identities with whom we choose to associate closely.
Caring about local status and having freedom to choose causes us to stratify into homogeneous groups. We tend to form into leagues. People could move from a low status in a high ranking group to a higher status in a low ranking group, but moving has it's own associated costs. In effect status within groups emerges as a commodity that can be traded in the "marketplace".
No matter what group we choose to associate with, there will be contests for scare resources. But often we erect rules withing these groups to make sure the competition doesn't get out of hand and the stakes are reasonable. These rules don't stop competition, but just regulate it.
But the result of this is that not all groups will get what they want (due to this positional factor).
Chapter 2: Local Status
We naturally tend to imitate, especially when we don't know exactly what to do and there are other people who seem to know and are doing it. But we must pick good role models, and often that are people positioned above us on whatever "index" of success we find important. "Our tendency to behave as others do may spring less from a desire to be similar to them than from a very rational fear that their information is better than ours". p. 19
We seem to be programmed through evolution to "do the best we can" and try to maximize our status in the social hierarchy. Over time people discover what they are good at. Over time people with an inherant concern about position also seem to be better bargainers.
People seem to have physiological effects caused by social position. Studies have shown that people have higher blood pressure and heart rates dealing with higher ranking people than lower ranking people. Certain blood components are higher for leaders than for the rank and file. Testosterone levels rise with status attainment in males.
One's level of happiness also seems a function of status attainment, mostly in local comparisons. National comparisons come into play with increased contact. This fits with an evolutionary theory -- survival of the fittest only applies to the local environment. They respond more the vividness of the immediate environment.
Performance is strongly affected by self-perceptions. Local environments that support positive self-assessments can favorably affect performance.
Chapter Eight: Collective Protection of Inconspicuous Consumption
Marginal utility suggest that a high income person will experience a relatively smaller increase in satisfaction than a person who starts with relatively little. The same positional expenditure will produce a larger status gain for low income than for high income persons. People are bunched together more closely nearer the bottom of the economic ladder and so a given change will result in a bigger status gain.
Based on this Frank believes that the share of income a consumer saves
should rise with his level of income, as buying positional goods at high
income has less of an effect. The low-income groups are thus trying to
"keep up with the Joneses".