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Really Perverse Way to Be Truly Happy
 The No. 1 predictor of happiness is good health, followed by income. But perversely it's not how much money we make that counts. It's how much money we make compared with our family and friends who are close to our age.
The best predictors of happiness are, in order, physical health, income, education and marital status. A new study from Pennsylvania State University and Harvard University concludes that rich people are happier than poor people. But "rich" and "poor" are relative. It turns out that money makes us happy not because of the material things that money can buy, but because we can use the size of our bank accounts to compare our wealth to that of our friends and family who are close to our own age. When we realize we're richer than they are, it makes us happy.
This may amuse you, but think about it. It's like being on a financial treadmill. If happiness depends on you being richer than the neighbors, then you have to work harder and harder to keep that upwardly mobile status. "If income effects are entirely relative, then continued income growth in rich countries today is irrelevant to how happy people are on the whole," said lead study author Glenn Firebaugh of Penn State. "Rather than promoting overall happiness, continued income growth could promote an ongoing consumption race where individuals consume more and more just to maintain a constant level of happiness."
Firebaugh calls this the hedonic treadmill where "keeping up with the Joneses" means continually increasing one's own income, because we can be sure that the Joneses are increasing theirs. "We find with and without controls for age, physical health, education and other correlates of happiness," said Firebaugh, "that the higher the income of others in one's age group, the lower one's happiness. Families whose income earners are in jobs with flat income trajectories are likely to become less happy over time. Thus the relative income effect observed here implies adverse effects for some individuals over the working years of their life cycles."
The study findings were presented to the annual meeting of the American Sociological Association.
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