QUESTION TEXT: A study of 20,000 20- to 64-year-olds found that…
QUESTION TYPE: Most Strongly Supported
- Satisfaction with income mostly depends on how much you make relative to your neighbors.
ANALYSIS: The stimulus does not say that earning more money is irrelevant to happiness. Earning more money can definitely affect happiness, but only by comparison with what your neighbors make.
Lets assume that if you make the same as your neighbors, you feel neutral about your income.
So if you earn $50,000, and your neighbors earn $50,000, you’ll be very happy if you suddenly get $30,000 more per year.
Whereas if you earn $80,000, but your neighbors earn $200,000, you won’t be very happy even if you suddenly get $40,000 more per year.
An individual will feel happier if they get richer. But an entire country or neighborhood won’t feel happier if they all get richer. Happiness only depends on how rich we are compared to others.
- This answer ignores neighborhoods. If high income people live with other high income people, then they won’t be more satisfied than middle income people.
- We have no idea. This would only be true if older people were more likely to have higher incomes than their neighbors.
- This is wrong. Neighborhoods often contain people with similar incomes. In that case, satisfaction would be about the same in all neighborhoods.
- This isn’t true. The stimulus actually says that more money will make you happier, if it means you earn more than your neighbors.
- CORRECT. Money only makes you happier if it makes you richer than your neighbors. So if everyone gets richer, then no one will be happier.
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