'Rich? Who, us?'

Last Modified: 28 Jan 2008
By: Ruth Brown

A tenth of Britons are now classed as 'rich' - but do they feel wealthy? Not a jot. So what's going on?

Being rich is not as clear cut as it used to be. Although one in 10 British households rake in almost three times as much as the national household income (£33,000 a year), only 10 per cent of these actually feel well off.

That's according to a survey of 1,000 "AB" professionals conducted by insurer Hiscox, which found 90 per cent of those classed as socio-economically 'wealthy' didn't think they were so - despite taking an average of two foreign holidays a year and having over 20,000 pounds-worth of disposable annual income.

So what's going on? Economists have long theorised over a strange socio-economic phenomenon known as 'pollution'. Essentially, the harder you work, the more you earn, and the more you earn, the more others within your social group feel compelled to do the same.

The LSE's Professor Richard Layard puts it like this: "The rat race is for income and when each of us works more and earns more, this imposes a genuine loss of happiness on others. It is a form of pollution."

Wealth, as it turns out, is a peculiarly psychological affair. There's no doubt that a household earning nearly £90,000 a year is wealthier than one bringing in just a third of that, but some economists suggest that this doesn't necessarily make you happier.

Why? Well, as your lifestyle swells to match your income and the lifestyles of others in your socio-economic group, you are left wanting more.

So as we tighten our belts amidst growing fears over the credit crunch, falling house prices and rising fuel costs, perhaps some comfort can be drawn from this research which seems to show that real wealth really is all in the mind.

Indeed, when the professionals surveyed were asked what they thought would make them feel as wealthy as they are perceived, they said they would need to earn around 150,000 pounds per household, have paid off their mortgage, own more than one property or a holiday home and send their children to private school. Not entirely modest demands...

It would appear that no matter how much we earn, we will always want more; our aspirations simply move up a gear.

Some economists working in the fields of happiness and well-being now suggest that the age-old saying that money doesn't make you happier may in fact be true after all.

Their findings suggest that we need a certain level of income to have a comfortable life - this amount is, surprisingly, not far off the national average. Any amount we earn over and above this nominal sum has, they suggest, little or no effect on our overall levels of happiness.

So as we tighten our belts amidst growing fears over the credit crunch, falling house prices and rising fuel costs, perhaps some comfort can be drawn from this research which seems to show that real wealth really is all in the mind.