Happiness and Keeping Ahead of the Joneses

Imagine that the Internal Revenue Service in your country claimed that you owe $1000 plus in tax arrears.

You dispute this, and you challenge the tax people in court, but the court rules that they're right. Especially if you're a person of substantial means, you'd pay up with a shrug of the shoulders. "Too bad," you'll comfort yourself, "you can't win all the time!" and you'll put the matter out of your mind fairly quickly.

Now let's assume that instead of the government, an acquaintance, or even a good friend, alleges that you're in his debt, for whatever reason, for the same sum of money.

Again, you go to court.

Your alleged creditor pleads his case, you plead yours. Eventually, the judge decides in his favor, and even explains to you very patiently why the money rightfully belongs to your opponent.

How do you react to your loss now?

Probably, even if you're very wealthy, you're not about to shrug it off so quickly this time!

Why not? Because somebody else is gaining at your expense! If there's anything worse than a property loss, it's an Ego loss. Now, for most of us, that's really a heavy burden to bear!

What brings this kind of scenario to mind is some recent research into an interesting social paradox. Over the past 50 or 60 years, developed countries have been growing progressively richer, but their people, on the whole, don't seem to have become much happier.

Yes, more rich people, proportionately speaking, claim to be happier at any given time than do poorer people. This should lead you to the conclusion that as incomes rise and a country as a whole grows richer, both the relatively rich and the relatively poor would become happier.

But this isn't the case, apparently. It may still be axiomatic that an individual who becomes richer becomes happier, or at least claims to be. But when society as a whole gets wealthier, nobody seems more pleased with their lot. Why?

In a series of lectures at the London School of Economics this year, Richard Layard, an economics professor at the School, reviewed the evidence from several disciplines in an attempt to solve this paradox.

The real problem, he suggests, is that people are in the habit of comparing their lot with others. If I have a million but you have two million, I have to be feeling miserable. My million is almost worthless to me.