The reason why the assumption that a large income means more happiness does not reflect reality is because we have forgotten that economics includes a dominant human element. It is a complex element, not an exact science. And most of all, it is hard to measure the human element.
Behavioral economics has already proven that man is not a rational machine. In 1979, Professors Daniel Kahneman and Amos Tversky presented the “Prospect” theory, for which Kahneman won the Nobel Prize in economics (six years after Tversky’s death). Their research showed that people are incapable of analyzing complex decision situations when the future consequence is uncertain. Instead, they rely on short cuts that seem to make sense, or rules-of-thumb, with few people evaluating their underlying probability [48].
The above-mentioned studies of Hemenway and Solnick, as well as many other studies, indicate that economics concerns human relations just as much as it explores how humans conduct their business.