How Social Comparison Drives Our Happiness, Wealth, and Social Media Status
When a founder takes their company public, it's an exciting personal achievement. But for Mike Merrill, this was a different experience entirely. His stock ticker? KMIKEM. The public equity? Himself. On January 21st, 2008, Mike Merrill became the first publicly traded person.
Mike sold off 100,000 shares of himself at an initial price of $1 each. And just like any publicly traded equity, shareholders have voting rights for their decisions. He posts this publicly, and shareholders vote in proportion to their shares. It's not quite every decision, but it's not far off. Mike operationalizes this in the following way: if he would ordinarily ask a friend for advice on it, he asks his shareholders.
In this way, owners of KMIKEM vote according to their shares and can vote on a range of topics ranging from - "Should I cancel my Spotify subscription?" to "Should I get a fanny pack?". Mike calls this "community through capitalism." Mike's stock price at any given time reflects the degree to which his shareholders are confident he is on the right track.
As he describes,
I am Mike Merrill, and I am a publicly traded person. I sell shares of myself, and then my shareholders vote on what decisions I should make. When those decisions start to pay off for me, my stock price rises, and everyone is rewarded. Voters will act in their own best interest, which is also my best interest.
Mike Merrill's system is odd and controversial and has attracted a wide range of interpretations scaling from narcissism, to deep insecurity, to market economics going haywire. And he's faced no shortage of criticism, particularly from girlfriends who have not exactly appreciated him putting up questions about their relationship (e.g., should I get a vasectomy?) to the vote of his shareholders.
Most readers will find Mike Merrill's strategy odd and irrational. But when we look closer, we can see an element of Mike Merrill in all of us. And in fact, according to one social psychologist, Mike Merrill's behavior is perfectly reasonable.
Leon Festinger and Social Comparison Theory
Leon Festinger was one of the most influential social psychologists of the 20th Century. He passed away two decades before the IPO, but his theories on social development make perfect sense of Mike Merril's behavior. Festinger pioneered Social Comparison Theory, who’s core idea is this: Each person is fundamentally driven to understand their true value. There's no manual to life, no objective metrics for success or failure. Because of life's inherent ambiguity, we're constantly searching for ways to ensure ourselves that we're on the right track.
By publicly listing himself, Merrill quantified this directly. Anytime he wonders if his life is on the right track, he can simply look at his share price and get the answer. It's a price discovery mechanism, but for his own individual value.
Here's where social comparison comes in. Clearly, very few of us are willing to go to these great lengths of publicly listing ourselves and obtaining personal shareholders. There's stock price for the rest of us. However, this core drive to understand our "true value" remains. We're still motivated to determine how we're doing and whether our life is on the right track. And so what do we do? According to Festinger, we turn to the social world and utilize the next best thing: a social benchmark.
On any one of life's metrics, we can gauge our success by where we fall on the social distribution. It's much less direct than Mike Merrill, much less precise, but equally as pervasive. As we’ll see, it has a significant influence on our happiness, relationship to money, and orientation to social media.
The Connection Between Social Comparison, Happiness, and Wealth
Imagine you're an ambitious student, eager to do well, and you've just gotten the results on a test you spent weeks studying for. You get a "240". Is this a good score or a bad score? Should you be proud, embarrassed, or indifferent? Without knowing the maximum score, the only way to derive meaning from this is to understand where it falls within the class distribution.
If everyone else in the class got scores in the 100s, a 240 is an excellent score. But if most people score in the 300s and 400s, a 240 is terrible! Its value comes directly from its place in the social distribution.
This is precisely how we approach this in our everyday lives. We're constantly getting test scores back without knowing what the numbers mean. How much must we make to have a "good" salary? How much money should we save each year? How much square footage should our house have? For any of these big questions, there's no objective answer. Instead, each comes down to how we feel about where we fall within the social distribution.
This all comes back to Festinger's observation that there are no clear, verifiable metrics for life. It's not a video game, and "success" in life isn't objective. It's all relative. Thus, how we feel about our life is going is socially determined.
This tendency towards social comparison is natural and automatic, and it has significant consequences for our well-being. For example, research by Harvard's Dan Gilbert has uncovered a strong connection between status, happiness, and wealth.
Generally speaking, greater wealth is associated with higher well-being and happiness. However, Gilbert's work has found that it's not the absolute amount of money that matters but how much you have relative to those around you.
If you make $75,000 and everyone in your neighborhood makes $60,000, you feel pretty good about yourself. But if you have the same salary, and everyone makes $90,000, you're much less happy, even when controlling for purchasing power. Countless studies have replicated this same general finding: Even if the absolute amount of money stays the same, the happiness you derive from your wealth depends on the wealth of those around you.
It all comes back to social comparison.
Social Comparison on Social Media
Social comparison is part and parcel of human nature. But the culture and environment we interact in greatly impact how salient this is in our lives. Certain cultures, for example, tend to be more egalitarian, while others are more hierarchical. And specific social circles of friends create a sub-culture that can either dampen or accentuate social comparison.
Beyond all this diversity, one environment galvanizes the tendency to engage in social comparison. You guessed it, social media. It takes the natural flame of social comparison and pours gasoline all over it.
Social comparison is encouraged at every level of the social media experience. From follower counts to engagement metrics, each set of numbers are exactly like getting "240" on a test - utterly meaningless unless you compare them to your social group. Are 50 likes "good" for an IG pic of a delicious-looking brunch? It feels good if you compare it to the 25 likes your friend got for a similar piece of content. But if you compare it to a friend who regularly gets hundreds of engagements? Suddenly, 50 feels mediocre.
And while Instagram tends to get a bad rap for encouraging status-seeking behavior, they're far from the only ones. From TikTok to Facebook, to Twitter, social comparison is everywhere. Even LinkedIn, the buttoned-up grandpa of the social media family, gets in on the act with a range of engagement metrics and visible follower counts. If it's a social platform, social comparison is part of it.
There's much to say about the connection between social comparison, social media, and happiness. The data tells a complex story, but the evidence to date, especially for teenagers, is generally negative. Suffice it to say for now that a healthy distance is worthwhile.
It's also noteworthy that the benchmarks you're comparing yourself to on social media are heavily inflated: scrolling through an IG stocked full of envious vacation photos feels especially deflating if you do so from your cramped apartment while eating oatmeal in your pajamas. But, of course, no one on IG posts pictures of their mundane morning routines. In this way, not only does social media encourage social comparison, but the comparison will almost always be stacked against you.
Connecting Social Comparison and Human Nature
All in all, social comparison feels petty. Why should it matter that someone else has a slightly higher salary? Or slightly more social media followers? I should just be happy with what I have, right?
To a certain extent, there's something to that. Gratitude can serve as an essential antidote to comparison and can help stave off the "pettiness" of these tendencies. However, peeling back a layer, we can quickly see that it's not merely pettiness that drives these comparisons: We're fundamentally driven to understand our "true" value. And as social creatures, we can't help but look to our peers as a benchmark for this.
Social comparison is an unavoidable element of human nature. The best we can do is distance ourselves from the (unrealistic) comparisons of social media, and to broaden the portfolio of metrics we socially compare.
And if all else fails, we can always follow Mike Merrill’s lead and take ourselves public.
Photo by Jeremy Bishop on Unsplash
About the author
Matt Johnson, PhD is a researcher, writer, and consumer neuroscientist focusing on the application of psychology to branding. He is the author of the best-selling consumer psychology book Blindsight, and Branding That Means Business (Economist Books, Fall 2022). Contact Matt for speaking engagements, opportunities to collaborate, or just to say hello
References for The Psychology of Social Comparison and It’s Role in Social Media
Festinger, L. (1957). Social comparison theory. Selective Exposure Theory, 16, 401.
Dunn, E. W., Gilbert, D. T., & Wilson, T. D. (2011). If money doesn't make you happy, then you probably aren't spending it right. Journal of Consumer Psychology, 21(2), 115-125.
Gilbert, D. T., Giesler, R. B., & Morris, K. A. (1995). When comparisons arise. Journal of personality and social psychology, 69(2), 227.
