Money CAN buy you happiness ... but only if you earn more than your friends

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Money CAN buy you happiness ... but only if you earn more than your friends

 

 

By Daily Mail Reporter

Last updated at 1:48 PM on 22nd March 2010

 

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Earning more money only makes people happier if they feel richer than their friends, neighbours and colleagues, a study has found.

 

Even bumper banker-style pay packets and the flash lifestyle that goes with them have no effect on people's contentment unless it sets them above their peers, the study found.

 

Researchers at Warwick and Cardiff universities said their findings could explain why rising economic prosperity over the last 40 years has not increased overall levels of happiness.

 

 

Happy: But money counts for little unless you are richer than your friends

 

The study, published in the journal Psychological Science, looked at data on earnings and life satisfaction from seven years of the British Household Panel Survey carried out by the Institute for Social and Economic Research.

 

Comparing individuals' happiness with others of the same sex, age and level of education, or from the same geographical area, the researchers found that money makes people happier only if it improves their social rank.

 

Psychologist Dr Chris Boyce, who led the study, said: 'Earning £1million a year appears to be not enough to make you happy if you know your friends all earn £2million a year.

 

'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.'

 

Dr Boyce went on: 'The standard of living has gone up for each individual over the past 40 years but it has gone up for everyone.

 

'So our cars are faster now but our neighbours have faster cars too, so they haven't got that advantage over people close to you.

 

'Without the biggest home, or the fastest car then it doesn't give you that same excitement as it would have.'

 

The researcher added that pursuit of wealth alone was a vicious circle because people had to continually work hard to keep up with the Joneses.

 

'A rise in income may benefit one person but it has a detrimental effect on others. If I jump up two places in the rank, then the people I jumped ahead of go backwards,' he said.

 

'So a person does not just have to increase their rank they have to work hard just to keep up with rather than passing the Joneses.'

 

Dr Boyce said the study found that relentless pursuit of economic growth would produce a wealthier society but not a happier one.

 

'Making everybody in society richer will not necessarily increase overall happiness because it is only having a higher income than other people that matters,' he said.

 

Dr Boyce said there was a danger that people will focus on the pursuit of money at the expense of building strong relationships with family and friends.

 

'If people are putting income and ranking first then other things may get sacrificed such as family and friends,' he said.

 

Dr Boyce said the findings were a good discussion point about the kind of society British people wanted to live in, and that the study raises questions about whether the relentless pursuit of economic growth was a good thing for the nation.