Are rich people as happy as they think? Psychologists Daniel Kahneman and Angus Deaton might have the answer. They surveyed more than 450,000 US residents in 2008 and 2009. They published the results in their 2010 paper "High income improves evaluation of life but not emotional wellbeing".
They learned that happiness increases with levels of income until our basic needs are met. But once our basic needs are met, happiness plateaus.
Kahneman and Deaton break happiness into two categories: experienced happiness and reflective happiness. Experienced happiness is more important. It gauges our day-to-day moods. Reflective happiness has little or no impact on our day-to-day lives. Instead, it’s what we feel when we’re asked to compare ourselves to someone less fortunate.
The rich might think they’re happier. That’s based on their reflective happiness. In other words, when rich people are
asked to compare their level of wealth with those of others, they report feeling happier. But this doesn’t carry over to their day-to-day mood.
Wealthy people don’t think "wow, I had a great day because I’ve been thinking about my car and home, and they’re so much better than yours!" Instead, people get used to what they own. They rarely reflect on their good fortune and allow it to boost their mood.
Behavioural researchers call this the Hedonic Treadmill. It does not take long to get used to a new iPhone, a new car or a new home.
For the upper middle class, pursuing more money or higher status things won’t make their lives any better. If they’re happy now, then having a Ferrari and a mansion won’t make any difference. If they’re miserable, and already part of that upper middle class, more money and things won’t make them tap dance to work or smile a little more.