When we compare income levels in different countries, it is evident that the average income per person is less than $15,000 a year, in other words, where many people are near the breadline.

Extra Income really does make people happier and improves their lifestyle. But countries which have average income above the normal subsistence level of approximately $15,000 a year, happiness seems to be income independent. For example, an average American ranks richer than an average Indian or an Austrian, but also less happy.

Why does this happen? People always look at their income relatively with some norm or the other and the norm keeps rising all the time.  And this norm is what increases the spending, more or less in direct proportion to the income. (more…)