The tricky relationship between money and happiness; What's more important pleasure or satisfaction?

"What matters more: dollar amount or relative amount?"

This question posed by Gretchen Rubin is trickier than you might think.

Consider this:

Imagine you have a choice between earning $50,000 a year while other people make $25,000 or earning $100,000 a year while other people get $250,000. Prices of goods and services are the same. Which would you prefer? Surprisingly, studies show that the majority of people select the first option. As H. L. Mencken is said to have quipped, "A wealthy man is one who earns $100 a year more than his wife's sister's husband."

This seemingly illogical preference is just one of the puzzles that people like Rubin (not to mention scores of scientists, economists, and psychiatrists) are trying to solve in an attempt to tackle exactly what makes us happy and the related question of why more people aren't happy?

Rubin notes that according to studies on the topic, the a important factor "is how much money you have relative to the people around you. Absolute dollar figures do matter, but comparison matters a lot."

A survey of 16,000 workers in a range of industries showed that people's reported job satisfaction was less tied to their salaries than it was to how their salaries compared to their co-workers' salaries.

This helps explain how we as a people are no happier today than we were in 1950 despite a doubling of average incomes not to mention more and bigger of pretty much everything in our lives. Furthermore, it's not just material things such as cars, houses, salaries, that has improved but our health is better and our work weeks are shorter.

Researchers believe that once average annual income is above $20,000 a head, higher pay brings no greater happiness [London School of Economics economist Richard Lay­ard]. How could this be so? Well, our genes account for roughly half of our predisposition to be happy or unhappy, and two, our wants are relative to what other people have, not to some absolute measure.

Per Rubin:

"The importance of relativity is one reason people didn't get a huge boost of happiness from the general rise in prosperity in the U.S. over the last few decades. If everyone is better off, people's relative positions don't change, people adapt to the changes in conditions, and no one feels "richer."

Rubin further notes that money can in fact buy happiness depending what kind of person you are, how you spend you money, and how much money you have compared to people around you. (The one factor she left out is how much money you have to start off with. Money that raises you out of poverty will, in fact, make you happier.)

This brings us to our second question, "What is more important, the quest for satisfaction or the quest for pleasure?"

It turns out there is an answer for this question as well.

According to Emory University psychiatrist Gregory Berns:

"Happiness is better equated with satisfaction than pleasure because the pursuit of pleasure lands us on a never-ending hedonic treadmill that paradoxically leads to misery. Satisfaction is an emotion that captures the uniquely human need to impart meaning to one's activities. While you might find pleasure by happenstance--winning the lottery, possessing the genes for a sunny temperament, or having the luck not to live in poverty--satisfaction can arise only by the conscious decision to do something. And this makes all the difference in the world, because it is only your own actions for which you may take responsibility and credit."

This last line is perhaps the most important for those who aspire to be happy (and if you do not aspire to be happy there in lies the problem!). Anyway, looking at Rubin's comments and the work of happiness researchers and scientists, the process of elimination gets to you this point. You can't change your genes and you can't change what the people around you have (at least on moral grounds), this leaves your actions as the one happiness factor that is in your control--perhaps exactly the way it should be.