A recent report on “Relative Income and Happiness: Are Americans on a Hedonic Treadmill?” by Glenn Firebaugh, Pennsylvania State University, and graduate student Laura Tach, Harvard University, where happiness of an individual is in direct proportion of the income of his peers of a similar age. Firebaugh determines absolute and relative happiness determined when income is kept aside the correlates of happiness.
As per Firebaugh:
We find with and without controls for age, physical health, education, and other correlates of happiness 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.
