How much would you like to get paid? The obvious answer seems to be: as much as possible. Virtually everyone would prefer a higher wage over a lower one because we assume that in some sense we would be more satisfied with a higher wage. Research on happiness – or subjective well-being as it is commonly called in such studies -indicates that this relation between a higher wage and a higher level of satisfaction is far from obvious (cf. Lane 2000: 59–76). There seems to be a fairly clear relation between these factors in poor societies, but as societies get richer, this relation between levels of income and satisfaction becomes weaker. In the richest societies, there is hardly any relation between the two at all, except for the very poorest people in those societies. There are some studies that indicate a slight increase in happiness with higher income, but it makes virtually no impact compared to other factors, such as health and personal relationships. This holds for both the rich and those with moderate incomes in rich societies. It is clearly a case of diminishing returns: the more you make, the less difference additional income will make.

Habituation also plays a significant role here. As a student, I managed on £7,000-£8,000 a year. That was sufficient for rent, clothes, books, food, alcohol and cigarettes. When I became a research fellow on a scholarship, I suddenly made nearly £25,000 a year, and for the first couple of months I felt that I was virtually swimming in money; that did not last long, and I became accustomed to that level of income pretty quickly.