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When I was 12 years old, my parents bought a new house — the cheapest house in an expensive neighborhood.

From an economic standpoint, buying this house was the wisest financial decision my family ever made. Over the years, the house soared in value.

But this was a foolish decision, many scholars studying happiness would say.

We all compare ourselves with others. In the new neighborhood, we were always comparing ourselves to people with a lot more money than we had. We felt poor.

“The reference group effect” is what psychologists call this phenomenon. Whether or not we are happy depends not as much as what we have but what group of people we are comparing ourselves to.

When a friend of mine learned he was going to be deployed to Iraq, for example, he was miserable at being separated from his family for many months. When he got to Iraq and found that other soldiers had far longer rotations, he felt far happier.

Economic growth can create unhappiness if some people do far better than others, even when it makes almost everyone better off.

“Post-Soviet Russia is an example of this phenomenon,” argues economist Arthur Brooks in his 2008 book, Gross National Happiness.

“In the 1990s, after the fall of the Soviet Empire, a few entrepreneurs made vast fortunes in markets for oil and other primary resources.

“Yet post-Soviet Russia is a miserable place in which only about one in five citizens say they are very happy about their lives.

“Some development economists believe that case of a few lucky entrepreneurs suddenly amassing large fortunes raised unreasonable expectations among ordinary Russians, creating a sense of extreme unfairness and leaving them deeply dissatisfied with their meager lot.”

At the University of Alaska, in a year when the budget was tight and nobody got a pay raise, few people complained. But in another year, some people got big raises while others got very little. That was the year people complained a lot about their salaries.

Scientists have demonstrated the reference group effect in their laboratories.

In one experiment, people were presented with two employment choices, both at magazines, Brooks writes. At the first magazine, they were told that they would earn $35,000 while others doing the same work earned $38,000.

At the second magazine, they were told they would earn $33,000 while others doing the same work would earn $30,000.

Two-thirds of the people chose the second magazine. They would rather have more money relative to other people than more income.

Another study made the income advantage even higher. People could pick a job where they earned $50,000 a year while others like them earned only $25,000. Or they could choose a job where they made $100,00 a year while others like them made $200,000.

Most people (56 percent) chose the job where they earned more than others, even though they lost $50,000 a year.

Those who earn billions of dollars, on the other hand, don’t make us unhappy. We admire Bill Gates and Warren Buffett and we feel no jealousy at Oprah’s phenomenal wealth.

The reason is we don’t compare ourselves to such superstars. We compare ourselves to other people at work or to our neighbors or to our high school and college friends — people like us.

So how can we overcome the “reference group” phenomenon and prevent others’ success from eating away at us?

1. Do work that meets your own criteria for success. When we are doing what we consider useful and enjoyable for its own sake, we don’t think much about how we stack up against others.

2. Think about how fortunate you are. When you find out more about the people you envy, you usually find out that they have suffered problems far worse than you imagined.

3. Admire other people for virtues like kindness and character. Such people don’t inspire envy, they inspire respect.

You can’t get away from comparisons but you can compare yourself on what matters.