Poke the Box: The Downside of Envy

Mental Model of the Week: Envy

“It is not greed that drives the world, but envy,” said Warren Buffett many years ago.

Recently, Farhan and Raju validated this in the movie 3 Idiots…

We often evaluate our own situation by comparing what we have with what others have.

The rigours of modern life – and the social necessity of keeping up with the Joneses – makes this weakness even more pronounced.

Here is an excerpt from Dan Ariely’s “Predictably Irrational” that I’m sure you would relate with your own life (like I could)…

A few years ago, for instance, I met with one of the top executives of one of the big investment companies. Over the course of our conversation he mentioned that one of his employees had recently come to him to complain about his salary.

“How long have you been with the firm?” the executive asked the young man.

“Three years. I came straight from college,” was the answer.

“And when you joined us, how much did you expect to be making in three years?”

“I was hoping to be making about a hundred thousand.”

The executive eyed him curiously.

“And now you are making almost three hundred thousand, so how can you possibly complain?” he asked.

“Well,” the young man stammered, “it’s just that a couple of the guys at the desks next to me, they’re not any better than I am, and they are making three hundred ten.”

The executive shook his head.

You see, envy is a tricky emotion. It exists on the edges of our consciousness. We don’t like to admit that we envy someone, especially if that someone is someone we don’t like or to whom we feel superior.

Subsequently, we’re as likely to deny we’re in the grip of envy not only to others but to ourselves. And that’s when it becomes a deadly sin, even as far as investing is concerned.

Like, look at this friend of mine who sold off his HUL shares a few months back at Rs 450, and then bought them again recently at Rs 700.

“Why?” I asked him in a sense of intrigue and disgust.

“Because I didn’t wanted to miss out on gains like others have made recently,” he revealed.

This reminded me of the story of Newton and his tryst with the stock of South Sea Company in 1720…

I find a lot of such Newtons around me…and often in the mirror! 🙂

Financial historian Charles Kindleberger wrote in “Manias, Panics, and Crashes” – “There is nothing so disturbing to one’s well-being and judgment as to see a friend get rich.”

It was for good reason, after all, that the Ten Commandments admonished – “Neither shall you desire your neighbor’s house nor field, or male or female slave, or donkey or anything that belongs to your neighbor.”

Now, how do you get over your envy?

You can’t…simply because human nature makes us compare ourselves with others all the time. That’s the way our brains have been wired.

But you can still try. How?

• Never envy your neighbour and never be owned by pride.
• Remind yourself this each day – “I will not run a rat race because even if I win, I will still be a rat.”
• Don’t try to mimic what those around you are doing. They may have a totally different purpose in life.
• If someone else is getting richer faster than you by, for example, investing in risky stocks, so what? Someone will always be getting richer faster than you. This is not a tragedy. (Indian CEOs eyeing the “Forbes Richest” list need to read this!)

Finally, remember what Charlie Munger said – “Envy is a really stupid sin because it’s the only one you could never possibly have any fun at. There’s a lot of pain and no fun. Why would you want to get on that trolley?”