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“These days, not even the rich feel rich. According to a recent survey by the financial-advisory firm Ameriprise Financial, only 13 percent of American millionaires classify themselves as wealthy. Even some of those surveyed who had more than $5 million across their bank accounts, investments, and retirement accounts said they didn’t feel rich. If multimillionaires don’t feel wealthy, who does?
I decided to go to Elizabeth Dunn, a psychology professor at the University of British Columbia and a co-author of Happy Money: The Science of Happier Spending, with my question: Once people have enough money to cover their basic needs and then some, what would make them feel satisfied—happy, even—with what they have? Dunn said she didn’t know of any academic studies that addressed this question head-on, but she did point to some related research that provides possible answers.
First: “Social comparison, we know, is critical,” she told me, meaning, roughly, that if a person is richer than the people he compares himself with, he’s going to feel rich. One 2005 study based on data from Germany looked at how people’s incomes compared with those of people who were similar in terms of age, education, and region of residence, and found that “individuals are happier the larger their income is in comparison with the income of the reference group.” In fact, the study found that “the income of the reference group is about as important as [one’s] own income for individual happiness.” Similarly, a more recent paper found that middle-income people were less satisfied financially if they lived in American states with higher levels of income inequality.”
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