What’s the relationship between money, ambition, and happiness?

A specially designed household survey for rural China is used to analyse the determinants of aspirations for income, proxied by reported minimum income need, and the determinants of subjective well-being, both satisfaction with life and satisfaction with income. It is found that aspiration income is a positive function of actual income and reference income, and that subjective well-being is raised by actual income but lowered by aspiration income. These findings suggests the existence of a partial hedonic treadmill, and can help to explain why subjective well-being in China appears not to have risen despite rapid economic growth.

Source: “Income, Aspirations and the Hedonic Treadmill in a Poor Society” from University of Oxford, Department of Economics, Working Papers #468.

Quick and dirty, in English:

1. How much money you make vs how much your friends make determines how much money you desire to make.
2. How much money you make increases happiness. How much money you want to make lowers happiness.

My takeaway:

1. Wanna be happy? Focus on what you have.
2. Wanna be miserable? Increase your wants and desires.
3. Comparing what you have to what others have is probably going to lead to unhappiness.

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