The man in the car paradox wasn’t invented by Morgan Housel, but his popular book The Psychology of Money certainly did bring more attention to the paradox in recent years.
What is the man in the car paradox?
The man in the car paradox simply says that you think having a fancy car would make people like you more, but when you think of that fancy car, even you don’t think about the person in that car.
Instead, you think about how the car would make other people view you.
That’s the paradox.
You’re not thinking about the man in the car, yet you think by having a fancy car, other people will think of you.
They won’t. They’ll also think of the car.
That’s the man in the car paradox.
The Psychology of Money Excerpt
Here is a great excerpt from Housel’s book The Psychology of Money that illustrates the man in the car paradox:
The man in the car paradox – when you see someone driving a nice car, you rarely think, “Wow, that guy driving that car is cool.” Instead, you think, “wow, if I had that car people would think I’m cool.” Subconscious or not, this is how people think. The paradox here is: people tend to want wealth to signal to others that they should be liked or admired. But in reality, those other people often bypass admiring you, not because they don’t think wealth is admirable, but because they use your wealth as a benchmark for their own desire to be liked and admired.Morgan Housel, The Psychology of Money
Does that mean you should never buy a fancy car or something that is “flashy?” Absolutely not.
What this is teaching you is that you should buy the item because you want it, not because you think it’ll make other people like you.
In his book, Housel hits this well with a simple quote, “No one is more impressed with your stuff than you are.”
I’ve raced vehicles with engines since I was four years old. Because of that, I’ve always dreamed of having one of the most impressively engineered vehicles in the world: a supercar.
Is it nice that other people will like the car too? Sure.
Is that the reason I want it? Not at all.
I love everything about supercars (except the price tag) – how it drives, its speed, performance, handling, and sound. I want it because I like it.
For you, what you might want may be a watch, a house, a certain wardrobe, a handbag, or something else. If you can afford it, there’s nothing wrong with buying something nice. Just be sure you buy it because you want it, not because you think it’ll make people like you.
Don’t fall into the man in the car paradox.