The effects of the gap between actual and expected income on individuals’ happiness

According to the Pigouvian approach, utility (or satisfaction) is positively affected by income level. A higher income allows for more tangible goods and intangible services, thereby ‘elevating’ individuals’ happiness. This article departs from the traditional Pigouvian approach and implements concepts found in ancient religious and historical sources. Accordingly, individuals’ well-being or utility are affected not only by income but also by the gap between fulfilment and desire that is derived from individuals’ income. By decreasing desires and educating individuals to be satisfied with fewer resources, they gain more satisfaction.