Income, comparison, and the meaning of success

A opens with a puzzle. At a given time, richer people in a society report greater happiness than poorer people. But as an advanced society becomes richer over time, it does not necessarily become happier. How could both be true? Maybe people judge their income against a moving comparison point, rather than simply asking how much money they have.

That is the explanation A develops. The comparison point rises through habituation and rivalry. Habituation means getting used to what we have. A raise feels good initially, but the new income becomes normal. The amount someone considers sufficient tends to rise along with actual income, so reaching an earlier target doesn't necessarily end the desire for more.

Picture someone earning $70,000 who thinks $100,000 would be enough, then reaching $100,000 and setting a new target. The point is not that every person chooses those exact amounts. It is that improved circumstances can become the new baseline. The finding about rapidly rising wages adds a related comparison with our own past: satisfaction can depend on how quickly income is changing, not merely its current level.

A also notes a cost of failing to anticipate that adjustment. People put too much into acquiring possessions at the expense of leisure. They may expect the initial satisfaction from a purchase to last longer than it does.

Rivalry gives us the comparison with other people. In the Solnick and Hemenway study, most participants preferred earning $50,000 when others earned $25,000 to earning $100,000 when others earned $200,000. Prices are held constant. We cannot explain the preference by saying the smaller income would buy more; the trade is less money for a better relative position.

The East Germany example makes the reference group's importance especially clear. Living standards rose, but happiness fell as people began comparing themselves with West Germans instead of people in other Soviet bloc countries. Better absolute circumstances can coexist with a worse-feeling comparison.

A's main point: Income affects happiness through comparisons with accustomed standards and other people, so rising wealth alone need not produce lasting increases in happiness.

B takes up the same study but asks what the preference means. Is it simply a desire to beat other people, perhaps inherited from competition for mates? That explanation is introduced for evaluation. B then says the evidence better supports a different account, so we must not attribute the opening biological theory to B as its conclusion.

The preferred explanation is success. Relative prosperity makes people feel they have created value. Money matters as a sign of that accomplishment, rather than as the direct source of happiness. B makes the distinction explicit with two people who feel equally successful: they can be equally happy despite greatly different incomes.

I can understand that idea without assuming that every wealthy person feels successful or every poorer person feels unsuccessful. B says higher earners generally see themselves as successful. The proposed connection runs through the person's sense of achievement. Nor does presenting this account automatically prove that evolution could play no role; B's stated comparison is about which explanation the evidence better supports.

B's main point: Relative prosperity brings happiness by signaling success in creating value, making the desire to earn more socially beneficial rather than merely a wish to outdo others.

Both accounts connect income with happiness, but they interpret comparison differently. A emphasizes moving standards and rivalry. B offers a more favorable explanation for wanting relative prosperity: people want evidence that they have accomplished something valuable.