A few years ago, I moved from one of the most expensive neighbourhoods in Stockholm, the Old Town, to one of the cheaper ones, Hökarängen. I moved because I was about to start a period in my life of no income, and I needed cheaper living arrangements. What I didn't expect, was that I would love living in Hökarängen, and that I would prefer it to Old Town.
Our social status in relation with society at large does not affect our happiness levels that much, research shows. What has a larger effect though, is our status in face-to-face groups, like among our friends we hang out with or our neighbours. Feelings of social acceptance and power within groups that we meet face-to-face has been shown to significantly predict happiness and subjective well-being. This is called the “local ladder effect,” a term coined in the research paper discovering it, published in 2012 by a group of scientists in California. This effect was something I learned about just a year ago. But I think it might be the explanation for why I felt so good during the years I lived in Hökarängen. Having a lot of people around you who aren't that well off, reminds you every day how well off you are yourself.
So if you want to optimize life for maximum happiness, I think you might be doing yourself a disservice by living in the poshest neighbourhood you can afford, as many people tend to do. It puts you in a social context where you are guaranteed to always be far from the "top," which automatically makes you a victim to the local ladder effect. Even if only at a subconscious level, you will constantly be spending a lot of time and energy to try to "keep up" with your neighbours. Better then to move to a cheaper neighbourhood. Not only will you be a happier person, you will also have lot more money to spend after paying your living expenses.
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