It is one of the great paradoxes of our time: Americans have never been richer — or more negative about the economy.

More people are upper-middle class than ever, and even lower-income Americans are richer by almost every measure compared to previous generations. And yet more than three in five Americans say the economy is not working for them.

Some of this can be explained by the fact that, yes, aspects of the economy do not work for a lot of Americans. And some of it is not based on the economy at all. When it comes to overall life satisfaction, research shows Americans tend to overrate the importance of money. Regardless, this perspective matters, because if greater prosperity does not make people feel better about the economy, that can become a self-fulfilling prophecy.

Economists have puzzled over the relationship between income and happiness for decades. Easterlin’s paradox, named for development economist Richard Easterlin, is that wealthier people tend to be happier than poor people, but richer countries don’t feel much happier.

There are several possible explanations for why this might be. It could be that today’s America is already so rich that gains in income no longer pack the same punch. Once we got to the point where we weren’t starving, have a place to live and long life expectancy, the benefits of a new iPhone or a better AI chatbot don’t matter that much. Or, as economists Daniel Kahneman and Angus Deaton have famously argued, there are diminishing returns to income. Their 2010 paper showed that income above $75,000 a year — in 2026 dollars, it would be more than $115,000 — does not add much to happiness.

This is a time of material abundance. Americans can get anything they want delivered to their door, sometimes the same day. Flat-screen TVs, dishwashers, airplane travel, and air-conditioning are no longer available only to the wealthy. Yet even for the affluent, some critical services — housing, childcare, education, cutting-edge medicine — are still very expensive. These costs can be especially burdensome to middle-class Americans who earn too much to get government assistance. Meanwhile, the inflation of the last few years has introduced more economic uncertainty into people’s lives.

Then there are the constantly rising expectations for what is considered an acceptable living standard, which outpace Americans’ (also rising) incomes. No matter how comfortable someone is, there is always a set of people with more wealth and prestige. Americans still do better economically than their parents, once you control for inflation and family size. But there is a population of “downwardly mobile “ elites who come from wealthy families and may be upper middle class, but are not quite as successful as their parents and are priced out of many goods and services their parents had. Resentment between the top 19% and the top 1% is not, by definition, a problem that afflicts most Americans. But that top 20% has outsized political and cultural power, especially in urban areas.

Technology is also fueling a feeling of dissatisfaction. Social media is full of people posting about their luxury vacations or expensive handbags, or even just their expensive little cakes, and most Americans can’t afford these things.

A sense of belonging and community is also a big component of happiness. Studies of the Easterlin paradox find that it’s important for everyone, rich and poor, to have a community they can rely on. It’s not just about economic security. The China shock did destroy jobs in some parts of America, even as it created new jobs in other parts and made goods cheaper. If you just cared about jobs and income, you could argue it was worth it. But trade and technology also broke up communities and economic ecosystems. The change left people more isolated and self-reliant.

There are policies, like zoning reform to make housing cheaper, that can address some of the anxiety about the economy. But much of the dissatisfaction has non-economic roots, and politicians are feeling pressured to respond with policies that purport to take control over the economy and provide a sense of safety — price controls, immigration restrictions, tariffs and so on.

Americans should be wary. If these are the solutions, soon they will not only be unhappy, but poorer too.

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This column reflects the personal views of the author and does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Allison Schrager is a Bloomberg Opinion columnist covering economics. A senior fellow at the Manhattan Institute, she is author of “An Economist Walks Into a Brothel: And Other Unexpected Places to Understand Risk.”

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