Our preference for positional success over absolute success

Product & Experience

A few years ago, students at Harvard University were asked to make a seemingly straightforward choice: which would they prefer, a job where they made $50,000 a year (option A) or one where they made $100,000 a year (option B)?

Seems like a no-brainer, right? Everyone should take option B. But there was one catch. In option A, the students would get paid twice as much as others, who would only get $25,000. In option B, they would get paid half as much as others, who would get $200,000. So option B would make the students more money overall, but they would be doing worse than others around them.

What did the majority of people choose?

Option A. They preferred to do better than others, even if it meant getting less for themselves. They chose the option that was worse in absolute terms but better in relative terms.

A pay rise can make somebody poorer in the only currency they are watching: rank.

That sounds petty until you notice how much business runs on comparison. A salesperson beats last quarter and sulks because a colleague beat them. A perfectly decent house develops a mysterious shortage of bedrooms after dinner at a friend’s place. A product’s middle tier looks affordable only because the premium tier has been parked beside it like a Range Rover.

Absolute value matters, obviously. Fifty thousand extra pounds buys things that being top of a sad little league table cannot. Yet designing rewards as if humans experience outcomes in isolation is economic cosplay. People ask: compared with whom, compared with what, and why did they get more? Employers make this worse with secrecy and arbitrary exceptions. Mystery invites people to invent the least flattering explanation. A fair system should make the relevant comparison legible: scope, contribution, market, progression. Not every difference needs eliminating, but unexplained differences become stories about status.

The useful move is to choose reference points rather than pretend none exist. Show progress against a person’s starting point. Use peer comparisons only where competition helps the work rather than poisoning cooperation. On pricing pages, ensure the anchor clarifies fit instead of humiliating the cheap plan.

People do not merely consume rewards. They read them as messages about position. Ignore that and an objectively generous offer can land like a beautifully wrapped insult.