So relative wealth is more important in influencing happiness than the actual level of wealth -- I guess that makes sense. Your sense of how well you're doing tends to be determined by what you're comparing yourself to. I dug up a draft of the paper (PDF), summarizing their fascinating research. The articles reporting on the research overemphasize the effect of overall wealth on happiness, but the paper goes much deeper into interesting territory:
"That is, if your consumption lowers my happiness, then I must consume more to keep up. As a result, we all end up consuming more than is socially optimal. Because consumption uses up resources, we would all be better off if we consumed less and released those resources for other purposes that more effectively promote our happiness, such as more resources deveoted to community endeavors, or more time spent with friends and family. The consequences for society are perverse, then, when relative income effects dominate."I've been bumping into that exact issue, and obviously it's not an easy one. I was also nodding along with one of their concluding statements that asks the best question:
"Given that most individuals spend a substantial fraction of their adult lives working to earn income -- some at jobs they dislike -- one wonders why income does not have a greater effect on happiness. Neither the absolute nor the relative income effect is very large. Why do we work so hard to earn money if there is no guarantee that riches bring happiness?"