Leisure class gives way to workaholic elite scrambling to maintain their place in life
Being rich used to get you into the leisure class. Money meant freedom -- from work, money worries, household chores and screaming kids (via boarding school).
Now, however, the wealthy seem to be as besieged as ever. The leisure class has given way to what I call the workaholic wealthy -- an elite of BlackBerry-crazed, network-obsessed, peripatetic travelers who have to keep scrambling to maintain their place in life.
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According to research by Daniel Kahneman, the Nobel Prize-winning behavioral economist, quoted in an article in the Washington Post, "being wealthy is often a powerful predictor that people spend less time doing pleasurable things and more time doing compulsory things and feeling stressed."
People who make less than $20,000 a year, for instance, spent more than a third of their time in passive leisure, like kicking back and watching TV. By contrast, those making more than $100,000 a year (I would call them affluent, not wealthy), spent less than a fifth of their time in passive leisure. "The richest people spent nearly twice as much time as the poorest people in leisure activities that were structured and often stressful -- shopping, child care and exercise."
In short, stereotypes about the leisure class no longer hold true. "In reality," Mr. Kahneman and his colleagues wrote in a paper they published in the journal Science, "they should think of spending a lot more time working and commuting and a lot less time engaged in passive leisure."
Definitions are key here. Personally, I wouldn't classify exercise as compulsory or stressful. And the true rich ($10 million or more), may be exceeding their less-wealthy peers in true indolence. But my experience suggests that the rich are as stressed and un-relaxed as the merely affluent.
Why? Globalization and competition are probably the big reasons. People with top jobs and businesses -- i.e., the wealthy -- have to work harder than ever to remain competitive. Big investors also have to work more in ever-more-complicated financial markets to maintain their dinosaur-size nest eggs. Add to that the increasing complexity of life at the top -- constant requests for money, overseeing wealth managers, lawyers and household staff -- and the good life becomes its own management job.
Maybe being rich isn't as relaxing as it seems.
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Affluent Brits Want 'Memorable Meals'
One of the biggest trends in the high-end economy these days is "experience." Cars, boats, planes, homes and other traditional status goods have become commonplace for the Richistan crowd. What the wealthy really want today is a unique experience, such as a trip, a class and a conversation with top thinkers.
A new study by American Express of their U.K. Centurion card holders (read: titanium-toting superrich) found that "self-fulfillment and learning" is the second-most-important priority for high-end vacationers. Number one was "value for money."
It also found that 46% of the wealthy plan to spend more in 2008 on new learning experiences. That exceeded planned spending on technology products, home furnishings, charities and fashion.
Gastro luxury is a top subsector of the new experience economy: A whopping 85% of the Centurion card holders plan to travel abroad for a memorable meal. Memorable doesn't necessarily mean expensive: It could be the roasted duck breast at Arpege in Paris or the apricot-smoked duck from a beloved food stall in Beijing.
More than three-quarters of the card holders plan to hire a personal chef in the future, while a surprisingly high 40% plan to grow their own food and rear livestock. Billionaires rearing their own pigs: Now that's an experience.
Of course, Americans lean more toward basic bling than the Brits. But the same fondness for feeding the mind, body and spirit seems to be taking hold here. As Guy Salter, deputy chairman of British luxury-brands firm Walpole, says in the report, "We are seeing the growth in what could be termed a new aristocracy. Their emphasis on the home and family, on personal fulfillment and the environment are all testament to this new way of thinking."
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Superyacht Market Remains Strong
A new Superyachting Index shows that the top end of the yachting market is still holding firm -- at least for now.
The index, which is compiled by the Luxury Institute and Camper & Nicholsons International -- the yacht broker and charter company -- found that new orders for yachts over 40 meters are up 18% in 2008. There were 254 new orders for yachts longer than 40 meters last year, up from 134 in 2005.
The report also puts into perspective the astounding growth rate over the past decade for jumbo yachts. In 1997, there were just 241 yachts of 24 meters or more under construction around the world. Last year, there were 916 such boats being built.
The average price for motor-yachts longer than 30 meters was $10.3 million in 2007. The average price for sailing yachts of the same length was $9 million (although, to the dismay of traditionalists, sailing yachts now make up a tiny fraction of the large yacht market).
Ironically, the biggest constraint to the industry's growth isn't the economy -- it's staffing. The report says that about 25,000 crewmembers are necessary for today's fleet of superyachts, but only about 15,000 currently work aboard yachts. Shortages of captains and engineers, it notes, are especially acute.
All of this sounds encouraging. And the superyacht market likely won't face the same crash it experienced in previous downturns, since it's so global. Just a decade ago, the vast majority of big boats were being purchased by Americans and Europeans. Now, Russian, Indian and Middle Eastern buyers are fueling the market.
Still, after talking with several yacht brokers about the market, I believe the market -- at least in the U.S. -- is poised for a slowdown. A year ago, buyers could order a new boat knowing that, in the worst case, they could flip it for a quick profit. Now they're more hesitant.
"With the American market especially, people are waiting for more certainty in financial markets before make a big decision," said Jonathan Beckett, CEO of Burgess.
Either way, The Wealth Report will be sure to check back with the Superyacht Index in a few months.
Write to Robert Frank at email@example.com