Study says money only makes you happy if it makes you richer than
your neighbors
Tuesday, March 23, 2010
A study by researchers at the University of Warwick and Cardiff
University has found that money only makes people happier if it
improves their social rank. The researchers found that simply being
highly paid wasn't enough – to be happy, people must perceive
themselves as being more highly paid than their friends and work
colleagues.
The researchers were seeking to explain why people in rich nations
have not become any happier on average over the last 40 years even
though economic growth has led to substantial increases in average
incomes.
Lead researcher on the paper Chris Boyce from the University of
Warwick's Department of Psychology said:
"Our study found that the ranked position of an individual's income
best predicted general life satisfaction, while the actual amount
of income and the average income of others appear to have no
significant effect. Earning a million pounds a year appears to be
not enough to make you happy if you know your friends all earn 2
million a year"
The study entitled "Money and Happiness: Rank of Income, Not
Income, Affects Life Satisfaction" will be published in the
journal Psychological Science. The researchers looked
at data on earnings and life satisfaction from seven years of the
British Household Panel Survey (BHPS), which is a representative
longitudinal sample of British households.
First they examined how life satisfaction was related to how much
money each person earned. They found however that satisfaction was
much more strongly related to the ranked position of the person's
income (compared to people of the same gender, age, level of
education, or from the same geographical area).
The results explain why making everybody in society richer will not
necessarily increase overall happiness – because it is only having
a higher income than other people that matters.
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Thanks to University of Warwick for this article.