DR UBALDINA NORONHA
We often tell ourselves a simple story about happiness. A higher salary, larger assets or a comfortable bank balance will deliver joy. Money is certainly important. It can provide food, healthcare, education, safety and freedom from constant financial worry. Yet the relationship between money and happiness is more complex than we usually imagine.
This complexity is captured by the ‘Easterlin paradox’, proposed by economist Richard Easterlin. The paradox suggests that within a society, richer individuals generally report greater happiness than poorer individuals. However, when the income of an entire country increases over time, average happiness does not necessarily rise in the same proportion.
This idea invites an important psychological question: Is happiness determined by what we possess or by how we interpret what we possess? Imagine two people earning Rs 60,000 a month. One lives in a neighbourhood where most people earn Rs 30,000, while the other lives among people earning Rs 2 lakh. Although their income is identical, the first person may feel secure and successful while the second may feel deprived or unsuccessful.
This illustrates the psychological importance of relative income. We do not evaluate our financial position in isolation. We compare our homes, clothing, holidays, children’s education, professional achievements and lifestyles with those of people around us.
Research on subjective well-being indicates social comparison can strongly influence life satisfaction. Feeling poorer than one’s reference group is often associated with reduced well-being. The problem has become more intense in the age of social media.
Earlier, people compared themselves mainly with neighbours, relatives and colleagues. Today, an individual in Goa or any other part of India may compare daily life with the carefully selected images of people living in Mumbai, Dubai or London. We see the renovated homes, restaurant meals, designer clothing and foreign holidays of others. This creates what psychologists call a comparison trap.
Another psychological process is hedonic adaptation, often called the happiness treadmill. A salary increase may initially bring excitement. We may plan a holiday, purchase something we have postponed or repay a loan. For a short period, the new income improves our mood.
Gradually, however, the improved lifestyle becomes normal. Soon, a new desire appears. We begin to believe that the next financial milestone will finally provide lasting happiness. We continue moving with no arrival point in sight. Adaptation is not a weakness. However, when we depend entirely on consumption for happiness, adaptation can turn into endless dissatisfaction.
The Easterlin paradox should not be misunderstood as saying that money does not matter. Financial resources can increase a person’s sense of control. They can make it possible to leave an unsafe relationship, seek treatment, take rest, support children or plan for the future.
This is why money often has its strongest emotional benefit when it helps meet basic needs and reduces vulnerability. Once essential needs are reasonably secured, the psychological returns from additional income may become smaller or depend more heavily on how the money is used.
Recent debates in happiness research have questioned whether there is a fixed income level beyond which money stops contributing to well-being. The broader finding is that there is no single amount of money that guarantees happiness for everyone. It is sensible to earn, save, invest and plan for the future. Financial responsibility can itself create peace of mind. The difficulty begins when our self-worth becomes attached to income, possessions or social status.
Happiness is not the rejection of money. It is the ability to use financial resources effectively without allowing them to become the sole measure of a successful life.
The Easterlin paradox reminds us that rising income does not automatically create rising happiness. Perhaps the wiser goal is to understand ‘how much is enough’. This approach may lead us away from the endless treadmill and closer to genuine happiness.
(The writer is Associate Professor, Department of Psychology, St Xavier’s College, Mapusa)
