Way money can buy happiness

Researchers at the University of Warwick and Cardiff University said the findings may explain why rising economic prosperity over the last 40 years has not increased overall levels of happiness.

The study, published in the journal Psychological Science, examined data on earnings and life satisfaction from seven years of the British Household Panel Survey carried out by the Institute for Social and Economic Research.

Comparing individuals' happiness with others of the same gender, age, level of education, or from the same geographical area, the study found money only makes people happier if it improves their social rank.

The study's lead researcher, Chris Boyce, from the University of Warwick's Department of Psychology, said: "Earning 1m a year appears to be not enough to make you happy if you know your friends all earn 2m a year.

"Our study found that the ranked position of an individual's income best predicted general life satisfaction."