Can money buy happiness? Study says yes!

Financially richer people tend to be happier than poorer people, according to sociological researcher Glenn Firebaugh, Pennsylvania State University, and graduate student Laura Tach, Harvard University. Their research is focused on whether the income effect on happiness results largely from the things money can buy (absolute income effect) or from comparing one's income to the income of others (relative income effect).

They present their research in a session paper, titled "Relative Income and Happiness: Are Americans on a Hedonic Treadmill?," at the American Sociological Association Centennial Annual Meeting on August 14.

Firebaugh argues that, in evaluating their own incomes, individuals compare themselves to their peers of the same age. Therefore a person's reported level of happiness depends on how his or her income compares to others in the same age group.

Using comparison groups on the basis of age, the researchers find evidence of both relative and absolute effects, but relative income is more important than absolute income in determining the happiness of individuals in the United States. This may result in a self-indulgent treadmill, because incomes in the United States rise over most of the adult lifespan, reports Medical News Today.

Glen Firebaugh, said: "We find, with and without controls, 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."

Relative income was much more important than absolute income when determining the happiness of individual Americans.

Because of the relative effect, continued income growth within rich countries such as the US is irrelevant to overall happiness, according to Mr Firebaugh, reports Scotsman.

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