Trying to keep up with the Joneses is a recipe for unhappiness, according to Vani Borooah, an economist at Ulster University, who says politicians should focus more on helping people find satisfaction than on raising incomes.
Having money does not automatically make people happy, Professor Borooah said. Policymakers would be better occupied tackling mental health problems, which are one of the greatest sources of unhappiness, he said.
"Now that we are able to measure what makes people happy, we should be working towards creating those factors rather than working towards income generation," he said.
Professor Borooah studied more than 3,000 interviews from the Poverty and Social Exclusion in Northern Ireland survey. His findings are published in the latest issue of the Journal of Happiness Studies , which describes itself as "devoted to subjective wellbeing".
He found that 41 per cent of those describing themselves as happy thought they had a high standard of living.
"The key to happiness was satisfaction with one's standard of living,"
Professor Borooah said.
"More than the level of money you have to have, you have to feel satisfied with what you have. You could have a great deal of money but not be satisfied with your standard of living and, as a consequence, not be happy.
This happens when you make comparisons with your neighbours."
Some wealthy people could be unhappy because of large debts, while others who were much poorer could be happier because they lived within their means, Professor Borooah said. But happiness is eroded by financial worries. Professor Borooah found that people who were divorced, separated or widowed were more likely to be unhappy because of their financial situation than because they were alone.
Health, and mental health in particular, played a vital role in happiness, he said. People with even mild mental health problems were more likely to be unhappy than people suffering from severe or chronic physical conditions such as heart disease.
"If we want to improve people's capacity for happiness, we should place emphasis on improving their health; in particular, we should focus on mental ill health, the Cinderella of healthcare," Professor Borooah said.
"This might mean focusing on specific groups, such as single mothers, who are particularly vulnerable to mental ill-health."
Professor Borooah found that retired people were more likely to be satisfied with their standard of living than those still working; professional and managerial staff were happier than unskilled workers; and regular church-goers were happier than those who did not worship regularly.