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Turns out we were right. The Easterlin Paradox held sway only until other researchers began poking at it, using longer-term data sets, testing them across multiple cultures and finding that while happiness may not rise as quickly as income (doubling your salary from $75,000 to $150,000 will not make you twice as happy) there is no such thing as growing numb to money. Indeed, just this April, a study by the Brookings Institution and the Gerald R. Ford School of Public Policy at the University of Michigan analyzed data from 155 countries and found that not only does subjective well-being rise along with income but in wealthy countries the slope is actually sharper than it is in poorer countries. A 10% bump in a $50,000 income, for example, produces a greater happiness boost than a similar percentage increase in a $10,000 income, even though a little extra money at the lower end of the scale ought to have a more life-improving effect. Rich isn't just better; it's much better.
That, at least, is how things shake out at the national and global level. At the individual and community level, it can be much different. If you're rich, your experiences are not the same as every other rich person's, and the same is true if you're poor. "A reporter once asked me, 'Yes or no, does money make people happy? No scientific waffling, just yes or no,'" says psychologist Edward Diener of the University of Illinois. "I hit Delete."
A massive study Diener led that was published last December analyzed the responses of 806,526 people in 135 countries collected over the course of six years. It found that income corresponds more or less directly to happiness but only if a person's wealth and aspirations keep pace. Earning $170,000 per year might put you in the top 5% of American households, but if you're dreaming of a one-percenter's lifestyle, you'll be disappointed. "Money can boost happiness if it allows people to obtain more of the things they need and desire," says Diener. "But when their desires outpace what they can afford, even rising income can be accompanied by falling feelings of well-being."
This is particularly problematic in the modern era. A century ago, everybody knew the names of the country's richest families--the Carnegies, the Vanderbilts, the Astors--but they were little more than icons. You never really saw how they lived, which was just fine, since if you did, your little split-level house or sole-proprietor business would start to look pretty shabby. In an era of paparazzi and reality shows, everyone sees everything and almost all of us suffer by comparison with someone.
"Bertrand Russell used to say, 'Beggars do not envy millionaires, though of course they will envy other beggars who are more successful,'" says psychologist Cameron Anderson of the University of California, Berkeley. Anderson studies the difference between socioeconomic status--a purely arithmetical measure of how much money you make--and sociometric status, which is a measure of how well you compare with the people around you. Before the beggar could see the millionaire, those distinctions were easier to draw. Now the silos have been blown up or at least made transparent, a process that has accelerated dramatically in the era of social media.