When money does not buy happiness: The case of “frustrated achievers”

An increase in real per capita income is generally expected to be associated with nonnegative variations in life satisfaction. The alternative (association with negative changes) is generally defined as “frustrated achievement” [Graham, C., Pettinato, S., 2002. Happiness and Hardship: Opportunity and Insecurity in New Market Economies. The Brookings Institution Press, Washington, D.C.].We investigate the determinants of “frustrated achievement” in the German socioeconomic panel on more than 30,000 individuals collected between 1992 and 2004. We observe a parallel reduction in self-declared life satisfaction corresponding to almost one-third of yearly increases in (equalised) real household income.Our econometric findings show that the lack of a full-time job, health deterioration, relative income effects, marital status shocks and poorer social life are the main factors associated with this phenomenon.