Have you ever wondered why that raise you got at work didn’t make you as happy as you thought it would? Well, according to a study from Journal of Economic Behaviour & Organisation, it’s all about those pesky income aspirations!

You see, the past decade has seen a lot of interest in understanding the science of happiness and economists have been particularly keen on figuring out how our income and aspirations are related to our overall happiness.

Now, before you start thinking that money can’t buy happiness, it’s important to note that studies have shown that a boost in income does indeed make us happier, at least temporarily. But here’s the catch, as our income goes up, so do our aspirations.

These aspirations tend to rise faster than our income, which can eventually offset the initial happiness we felt from that raise. So while more money is better for happiness in the short term, it’s not a clear cut answer in the long run.

Aspirations

So, what’s behind this rise in aspirations?

Well, according to this study, there are three main factors at play. Firstly, our aspirations are positively affected by our past income. The higher our past income, the higher our aspirations and the lower our reported happiness. Secondly, our aspirations are positively affected by the income of those we compare ourselves to.

So, if our friends and colleagues start getting raises and promotions, it can decrease our happiness. And finally, our aspirations are positively affected by our expected future income. So, if we’re expecting a big promotion or raise, it can affect our reported happiness.

Methodology

This study aimed to examine how income, aspirations, and happiness are related by focusing on the role of three factors that drive aspirations: past outcomes, social comparisons, and expectations. The study used an experimental approach in a laboratory environment to identify, control, and measure these factors.

The study found that expectations and social comparisons significantly affect reported satisfaction. Additionally, it was found that subjects tend to compare themselves with similar subjects when possible.

Past dictates new aspirations?

The research also found that an individual’s aspiration level positively depends on her past outcomes, such that higher past incomes trigger higher aspirations and lower levels of reported happiness. It was also found that an individual’s aspirations depend positively on the outcomes of others in her comparison group, such that an improvement in others’ incomes decreases her happiness. They also found that her aspirations depend positively on her expected outcome, such that a higher expected income affects reported happiness.

Overall, these findings support the idea that aspirations play a significant role in determining happiness. The study’s results indicate that the relationship between income and happiness is not a simple one and that aspirations, which are influenced by past outcomes, social comparisons, and expectations, play a crucial role in this relationship.

These findings could be used to develop effective strategies to improve individuals’ overall well-being and happiness. To understand these factors better, the study was conducted in a laboratory environment.

This, in turn, allowed the researchers to identify, control and measure the three mechanisms that drive aspirations. Not only did this study provide evidence for the role of aspirations in the income-happiness relationship, but it also showed that these factors play a major role in aspiration formation.

So, next time you’re feeling down after getting that raise, remember it’s not just about the money. Aspirations play a big role in our overall happiness, and it’s important to keep that in mind as we strive for more.