On one hand, status games create counterproductive and absurd behavior (resulting in emotional harm). Erich Fromm deconstucts this phenomon very nicely (“Psychoanalyse & Ethik” 1946):

“Der Mensch, der von [...] Neid [...] oder anderen Formen der Gier getrieben wird, handelt unter Zwang. Sein Handeln ist weder frei noch vernünftig […} sein Verhalten wird mehr und mehr starr und stereotyp. Er ist zwar aktiv, aber doch nicht produktiv.”

At the same time, this status seeking is essential for growth and the raising of standards.

A new innovative product enters the market, resulting in a high status for those who have it. Mass production eventually picks it up, the good becomes cheaper and more available and the signaling effect decreases. This leads to a vacuum in the status game, creating demands for better and more advanced products to fill that gap. This quasi endless cycle of status seeking creates a lot of our economic growth. Emotional harm is a byproduct and influencal variable in this mechanism.

I am not sure if the problem is solved by the avoidance of games that promote extreme status highs and lows.

In competitive settings, someone always looses. If our emphasis is on being better than everyone else, then it does not matter how equal status is distributed. The availability of a small but significant difference in potential status might have the same negative effects.

In contrast, a tenured public school teacher in flyoever America who earns only $65,000 a year can feel very comfortable if she lives modestly. Moreso than a well-paid salesman in Manhattan or LA. But a focus on gross inequalities in wealth will not address these differences and it is misleading to talk about job security as if it’s simply a matter of rich vs. poor.

In today’s world, it is much, much easier for a lower middle class person to save enough to afford a minimally liveable lifestyle than for someone two hundred years ago.

The reason for the insecurity is that there are shifts in valuation of the “relative” minimal lifestyle. But that is partly positional. In absolute terms, someone living off welfare is much more likely to survive than a carpenter in 19th century England. Thus if we assume that technology makes cheap clothing (the Walmart effect) and food even cheaper relative to incomes in the future, then the security of the poor will be greater still.

However, you’ll still feel insecure, because in the world where everyone is thrice as rich, you might feel unhappy to go without a car, not be able to choose which city to live in, and not be able to command the respect of people around you. That is EXACTLY Nye’s point.

The real issue is that the benefits of prestige and status are a socially-created good; hence A should compensate society–as far as practicable–for providing these benefits. Obviously, different “status games” do this to different degrees, and we should aim to encourage the most beneficial activities. It’s not clear that this can be done, but the potential gains are large enough for the effort to be justified.

It seems much more sensible to answer Robert Frank’s argument by questioning the idea that we treat the “harm” caused by these races in the same way we treat normal harm. That is, the “harm” caused by A buying a BMW and thereby making B feel bad about his Honda is certainly of a different moral class than if A pollutes and decreases B’s air quality.

This gets to the general idea that we shouldn’t treat all preferences as equal under the law, especially mutable ones. We wouldn’t forcibly move a small racial minority because they cause severe discomfort to a large racist majority, for the simple reason that the racists preferences of the majority are not ones we should value. Likewise, I think it can be reasonably argued that B’s discomfort–which essentially boils down to envy–shouldn’t be valued.