You've Got To Spend It On Something

A blog about business and economics.
March 20 2012 11:42 AM

You've Got To Spend It On Something

Adam Davidson has an awesome column on the economics of super-expensive nannies (many of whom seem to be dual-hatted as cooks) some of whom command salaries of $85,000 a year and even one who gets "around $180,000 a year — plus a Christmas bonus and a $3,000-a-month apartment on Central Park West."

He makes a lot of great points about this, but an additional one worth driving home is simply that when very rich people have a lot of money—which they increasingly do—that money has to go somewhere. Diminishing returns set in very quickly when it comes to additional fancy cars. The modern say super-rich person isn't an aristocrat living off land rents, he needs to show up to the office and work long hours so there are limits to how many vacation houses he can use. Ultimately what you're trying to do is keep ahead of the Joneses, but in a way that seems praiseworthy rather than ridiculous. Anything you do is open to the criticism of being wasteful, but spending vast sums of money on your children's education seems less ridiculous than spending it on the world's most lavish birthday party for yourself. That's why tuition at Dalton is more expensive than Harvard. This all goes back to Robert Frank's point that if you levvied a surtax on rich people's consumption the welfare loss to the rich people themselves would be tiny.

Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.


The Slatest

Ben Bradlee Dead at 93

The legendary Washington Post editor presided over the paper’s Watergate coverage.

This Scene From All The President’s Men Captures Ben Bradlee’s Genius

Renée Zellweger’s New Face Is Too Real

Sleater-Kinney Was Once America’s Best Rock Band

Can it be again?

Whole Foods Is Desperate for Customers to Feel Warm and Fuzzy Again

The XX Factor

I’m 25. I Have $250.03.

My doctors want me to freeze my eggs.

The XX Factor
Oct. 20 2014 6:17 PM I’m 25. I Have $250.03. My doctors want me to freeze my eggs.

Forget Oculus Rift

This $25 cardboard box turns your phone into an incredibly fun virtual reality experience.

George Tiller’s Murderer Threatens Another Abortion Provider, Claims Free Speech

The Congressional Republican Digging Through Scientists’ Grant Proposals

  News & Politics
The World
Oct. 21 2014 3:13 PM Why Countries Make Human Rights Pledges They Have No Intention of Honoring
Oct. 21 2014 5:57 PM Soda and Fries Have Lost Their Charm for Both Consumers and Investors
The Vault
Oct. 21 2014 2:23 PM A Data-Packed Map of American Immigration in 1903
  Double X
The XX Factor
Oct. 20 2014 1:10 PM Women Are Still Losing Jobs for Getting Pregnant
  Slate Plus
Behind the Scenes
Oct. 21 2014 1:02 PM Where Are Slate Plus Members From? This Weird Cartogram Explains. A weird-looking cartogram of Slate Plus memberships by state.
Oct. 21 2014 12:05 PM Same-Sex Couples at Home With Themselves in 1980s America
Oct. 21 2014 11:44 PM Driving in Circles The autonomous Google car may never actually happen.
  Health & Science
Medical Examiner
Oct. 20 2014 11:46 AM Is Anybody Watching My Do-Gooding? The difference between being a hero and being an altruist.
Sports Nut
Oct. 20 2014 5:09 PM Keepaway, on Three. Ready—Break! On his record-breaking touchdown pass, Peyton Manning couldn’t even leave the celebration to chance.