While it's always nice to have more money, the craving for wealth may damage one's personal happiness, according to an influential 1976 study in which thousands of freshmen students in the US were asked about the importance they attached to personal wealth.

Nineteen years later, at age 37, the former students were re-interviewed. The results indicated that those who cared most about money were less happy with life in general and also with their family life, friendships and jobs.

However, the most important driver of the Easterlin paradox is that individuals compare themselves with those around them. People are happier when they are higher than others on the social or income ladder. Neurologists and psychologists have repeatedly proved that individuals compare themselves with a large number of other people and feel strongly about it.

According to the General Social Survey conducted in the US between 1975 and 2006, regular TV watchers see so many wealthy people on the screen that they underestimate their own incomes and feel worse about their lives.

Comparisons

Verna Liang is a prime example of the scourge of comparison. The office manager at a law firm in Beijing always feels tortured after a day's small talk with her co-workers - lawyers from China and overseas, who all earn far more than she does.

"Every lunchtime, they talk about investing in property in California, buying villas in Shunyi (a popular Beijing suburb), or, at the very least, sending their kids to international schools. Meanwhile, I have to ride the bus home," she said. However, she does wear a Cartier watch.

The tendency to make comparisons comes about because each person is, in a sense, two distinct people. Human beings constantly re-evaluate their lives; periodically one side of a person sits back and reflects, summarizing the events in their lives to date, while the other side experiences everyday life. A combination of the two affects people's moods, stress levels and decision-making abilities, according to some psychological theories.

However, compared with income equality, having an equal opportunity to pursue a better income is more important when it comes to personal happiness. "People hate inequality much more when they think it's unfair," according to the first UN World Happiness Report, published in April 2012.

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