Happiness Is … Making More Money Than the Next Guy

One key to happiness might be whether you make more than your peers, regardless of whether that income is six figures or just a mediocre take-home, a new study finds.

This concept of "doing better than the Joneses" is well established among children: A toy gets ditched as soon as a shinier toy in the hands of another child is spotted. But some researchers have often thought that when it comes to adults and money, things works differently, in that the more money one has, regardless of how it stacks up, the more resources can be acquired to generate happiness.

However, the new study suggests income and happiness are indeed like child's play.

We tend to be happy "as long as we've got more than the people around us," said study researcher Christopher Boyce in the Department of Psychology at the University of Warwick in England. "You might buy a new car. But if your neighbor has just bought the very same car, that new car doesn't seem as good as it once was if you were the only one to have that car."

I make more than you do…

Past research has suggested that income rank, not just absolute income, is important, but previous large-scale studies looked only at satisfaction with economic conditions rather than overall life satisfaction, the researchers say.

Boyce and his colleagues used data collected between 1997 and 2004 in the British Household Panel Survey, in which more than 80,000 participants rated how dissatisfied or satisfied they were with their life overall. Household incomes were adjusted for regional differences in living costs and for number of individuals in a household. The resulting figure represented the amount of spending power a person would have.

Then, they took the ranked position of each person's income within the entire sample in a given year and compared it with the individual's absolute income. Statistical tests were run to determine how that rank predicated a person's life satisfaction. While a person's life satisfaction went up with higher absolute pay, when ranked income was taken into account, the absolute numbers were no longer linked to happiness levels.

Then the researchers grouped participants and compared their income with various reference groups, including geographical region, gender and education, and age, as people might do in real life. In each case, incomes were ranked relative to that particular reference group. Again, a person's life satisfaction was mostly explained by income rank within each peer group.

They also found that people are 1.75 times more likely to compare themselves to those above them in income than to those below.

That makes sense from an evolutionary perspective, because it would behoove someone to gather information about the higher-ups in order to improve oneself to ultimately get there, Boyce explained. "But that results in low satisfaction with your current standing," he added.

Happy nations

The results could explain why as national economies grow, average happiness levels haven't followed suit. "It's about having more than everyone else," Boyce said, "which is why our nations are not increasing in happiness on average."

Even if a nation's financial waistline bulges, that doesn't mean the individuals within that economy will become happier. There's only one guy at the top.

"Our study underlines concerns regarding the pursuit of economic growth. There are fixed amounts of rank in society — only one individual can be the highest earner," Boyce and his colleagues write in a recent online edition of the journal Psychological Science. "Thus, pursuing economic growth, although it remains a key political goal, might not make people any happier."

Boyce figures the study results can be explained by status, and all things associated with being "better than," including the best mates.

"Biologically, people are going to be more attracted to people at the top of the social hierarchy," Boyce told LiveScience.

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