The Hidden Truth of Luxury: The Man in the Car Paradox Revealed

With my personal takeaways

9/8/20232 min read

red ferrari 458 italia on road during daytime
red ferrari 458 italia on road during daytime

Last week, I reread one of my favorite books, “The Psychology of Money” by Morgan Housel. In this book, the author shared an interesting example that has since become widely known as the “Man in the Car Paradox.”

In this article, I would like to explain the paradox through my personal experience.

When you see someone driving a nice car, you rarely think, “Wow, the guy driving that car is cool.” Instead, you think, “Wow, if I had that car, people would think I’m cool.” Whether subconscious or not, this is how people tend to think.

Morgan Housel, in his early twenties, worked as a valet and had the opportunity to drive some of the fanciest cars, like Ferraris. He always had the dream of owning those fancy cars, but later he realized that he only admired the beauty of the cars and never paid attention to the drivers who were driving them.

People often imagine that having luxurious possessions makes them appear wealthy in front of others. In reality, others only focus on your possessions and not on you, because they desire to own similar things in the future to appear wealthy themselves.

Let me share a short story. One of my friends bought his favorite second-hand car after researching and negotiating for almost a year. He was so happy that he had purchased his dream car at the best price.

One day, he travelled with his family in his car to visit a temple. In the parking area, he saw a beautiful new red car passing by, which caught his attention. Later that evening, he began to regret his decision to buy a second-hand car and imagined how it would be if he had bought that fancy red car instead.

I really connected with this story while reading the book. This happens to all of us. How many times do we buy something new and later regret that decision?

Often, people want to showcase their wealth to others, especially with their friends and family, so they buy new luxury items and later regret their purchasing decisions.

Similarly, people often imagine buying luxury items, thinking that purchasing those things will make them look cool and rich in front of others. Sadly, very few people actually think that way. Most often, others are thinking about owning the same item in the future and never care about you.

My Takeaways

· Buying luxury items solely to signal to others that you are wealthy doesn’t work the way you think. People don’t truly care about you; they only care about the possessions you have.

· Before making any purchases, ask yourself, ‘Is this product really necessary right now?’ and ‘Will there be any significant difference if I buy this product later?’

· Material possessions alone do not define or determine your true wealth.

Thank You!