Relative payoffs and happiness: an experimental study

Some current utility models presume that people are concerned with their relative standing in a reference group. Yet how widespread is this influence? Are some types of people more susceptible to it than others are? Using simple binary decisions and self-reported happiness, we investigate both the prevalence of "difference aversion" and whether happiness levels influence the taste for social comparisons. Our decision tasks distinguish between a person's desire to achieve the social optimum, equality, or advantageous relative standing. Most people appear to disregard relative payoffs, instead typically making choices resulting in higher social payoffs. While we do not find a strong general correlation between happiness and concern for relative payoffs, we do observe that a willingness to lower another person's payoff below one's own (competitive preferences) may be correlated with unhappiness. (C) 2001 Elsevier Science B,V. All rights reserved.