Most people believe having a bit more money coming in would make them happier, but Princeton University researchers have found this does not necessarily hold true in actual experience.

According to economist Alan Krueger and psychologist Daniel Kahneman, people with varying incomes quizzed about their happiness and that of others tended to overstate the impact of income on well-being. Although income is widely assumed to be a good measure of the good life, the researchers found its role is less significant than was anticipated. In fact, those with higher incomes don’t necessarily enjoy life more than do more modest earners, they maintain.

The pair collaborated with colleagues from three other universities on the study, which is based people’s ratings of their actual experiences instead of a judgment of their lives as a whole.

The researchers developed a tool to measure people’s quality of daily life — the Day Reconstruction Method, which creates an “enjoyment scale” by requiring people to record the previous day’s activities in a short diary form and describe their feelings about the experiences.

The experiment built on previous studies in which people exhibited a “focusing illusion” when asked about certain factors contributing to their happiness — attributing greater importance to those items once they were highlighted. For example, when asked to describe their general happiness and then asked how many dates they had in the past month, people’s answers showed little correlation. But when the order of the questions was reversed for another group, the link between love lives and general happiness became greater.

To test whether this illusion applied to income, a group of women were asked to report the percentage of time they had spent in a bad mood the previous day. They were then asked to estimate how much time people of certain income levels were likely to be in a bad mood.

Respondents expected those who earned less than $20,000 a year to spend 32% more of their time in a bad mood than those who earned more than $100,000 a year. In reality, people earning less than $20,000 a year reported spending only 12% more of their time in a funk than those who earned more than $100,000.

Finally, researchers examined data from a nationwide U.S. Bureau of Labor Statistics survey on how people of varying household income levels spend their time. These data show people with higher incomes devote relatively more time to work, shopping, child care and other “obligatory” activities rather than on leisure activities.

High-income individuals are often focused on goals, which can bring satisfaction. But working toward achievements is different from experiencing things that are enjoyable in themselves, such as close personal relationships and relaxing leisure activities, the researchers maintain.

The difference is significant. Both men and women making more than $100,000 a year spend roughly 20% of their time on leisure pursuits, compared with 35% for those making less than $20,000, they note.

And sometimes happiness is all about keeping up with the Joneses. A study by Glenn Firebaugh of Pennsylvania State University and Laura Tach of Harvard University suggests even affluent people are often most unhappy when living around those who are better off.

Mining 30 years of survey data on well-being, they sorted working-age Americans by income and then by how happy they claimed to be. The data also covered age, health, marital status, education, race and gender, so the researchers were able to compare individuals with otherwise similar profiles.

Firebaugh argues that individuals, in evaluating their own income, compare themselves with peers of the same age. In other words, it’s not how much you make or have, but how you measure up that drives people’s emotions. Even a society-wide rise in the absolute level of wealth wouldn’t boost happiness as much as relative financial gains, he maintains.

Income is important in determining happiness, but Firebaugh found physical health was the best predictor of happiness, followed by education and marital status. IE