In a recent post, I wrote about Richard Easterlin’s latest book on happiness. The book covers the 50 years or so of research into happiness conducted by the noted economist. You’ve perhaps heard of Easterlin from his eponymous Easterlin Paradox, which states that if we look at any particular point in time, people are generally happier when they have more income. This is generally contradicted however when you look over a period of time.
“It’s the time series relationship that’s relevant to questions like ‘would more money make me happy?’” Easterlin explains. “You’re thinking, ‘what’s going to happen over time as I get more money, will I become happier? And the answer to that is quite consistently ‘no.’”
Making comparisons
At the heart of this counterintuitive finding is that we tend to like comparing ourselves to others, whether in terms of our income, our health, our love life, and so on. It’s this comparison that regulates our overall happiness.
“We make judgments about our own income based upon what others are getting, and if others are doing a lot better than us, we tend to be less happy,” Easterlin says. “It’s true that the increase in your own income by itself will make you happier. But what happens in practice is that, on average, as your income goes up, everybody else’s goes up, and the result is that nobody is happier.”
So comparing ourselves to others is generally the root of unhappiness, right? New research from the University of Illinois Urbana-Champaign begs to differ. It argues that in places with high-income inequality, the happiest place to be is that which affords you the greatest ability to compare yourself to others.
The authors argue that our ability to compare ourselves to those of a similar background plays a fundamental role in how our income affects our happiness.
“Contrary to popular belief, more income does not necessarily make people happier. The actual amount a person earns doesn’t matter much in terms of happiness,” they explain. “People who can make both upward and downward comparisons—especially with others in the same gender and ethno-racial group—are in the best position as far as their subjective well-being.”
Social vantage point
The study suggests that in states where income equality is pretty high, our happiness was less affected by our income because our economic positions are less clearly defined, which makes social comparisons less important.
The researchers set out to explore how important our place in the income distribution was to our overall happiness, and indeed how important it was that we could make such comparisons and the kind of people we use when making those comparisons.
The study utilized data from two national surveys conducted in 2013, both of which used many of the same respondents. The surveys provided a measure for the happiness of each respondent via a time diary for a single day, during which they rated how happy they felt when performing various routine activities.
“Assessing a person’s happiness as they go about their daily activities—a concept social scientists call ‘experienced happiness’ – may more accurately reflect their overall contentment with life than their responding to survey questions that ask them to rate how happy they are in general subjective terms,” the researchers explain.
Income inequality was then modeled using the annual income and demographic data of each participant to provide an understanding not only at the state level but also the individual level. This allowed for comparisons to be made of the annual income of people within both their gender, ethno-racial, and gender/ethno-racial groups in their state.
Who we look to
The analysis suggests that we tend to look most often to our gender/ethno-racial group when making social comparisons. Within such groups, those with higher inequality scores compared to our peers were the least happy.
Interestingly, however, this doesn’t mean that those with lower incomes than their peers were the least happy, but rather those whose incomes were either significantly higher or lower than their peers were the most unhappy. The authors argue that this is because those people could only make social comparisons either up or down rather than in both directions.
The researchers argue that their findings highlight the key role social comparison plays in our happiness and also in our understanding of the role income inequality plays in society.
