It’s not what you earn. It’s that you earn more than your friends.

His ranked-income hypothesis, on the other hand, suggests that utility is based on an individual’s rank among peers. As he describes it, “People might care about whether they are the second-most highly paid person, or the eighth-most highly paid person, in their comparison set.” Gender, age and other factors become very relevant in comparing income, and when an increase in income does not change standing, an increase in income likely won’t increase happiness.

That’s from I’m Happy as Long as I Make More Than You in Miller-McCune.