The theory that happiness is relative is based on three postulates: (1) happiness results from comparison, (2) standards of comparison adjust, and (3) standards of comparison are arbitrary constructs. This theory predicts that happiness does not depend on real quality of life, that changes in living conditions have only a short-lived effect on happiness, that people are happier after hard times, and that people are typically neutral about their life. These inferences imply that happiness is both evasive and inconsequential, conflicting with core beliefs in modern welfare societies. Recent studies on happiness claim support for this theory, suggesting that happiness is high in poor countries as well as in rich ones, and that it is not affected by stable living conditions. However, these claims are found to be untrue. It is shown that people tend to be unhappy under adverse conditions, that improvements or deteriorations in living conditions can have lasting effects on happiness, that earlier hardship does not lead to greater happiness, and that people are typically positive about their lives rather than neutral. The theory mixes up 'overall happiness' with 'contentment'. Contentment is based on comparing life-as-it-is to standards of how-life-should-be, but overall happiness also depends on affective feelings and the satisfaction of basic bio-psychological needs. These innate needs do not adjust to all conditions and mark the limits of human adaptability. Therefore, happiness is not relative to the extent it depends on need-gratification. The theory that happiness is relative is widely discussed in philosophy, economics, political science, sociology, and psychology. It is seen as futile and evasive, as happiness is not necessarily a good life and standards tend to rise with success. Despite its intellectual respect, this theory is seldom followed in practice. People try to improve their situations to become happier, and society believes that social progress will make life more satisfying. This article examines the flaws in the theory and the misunderstandings that contribute to its persistence.The theory that happiness is relative is based on three postulates: (1) happiness results from comparison, (2) standards of comparison adjust, and (3) standards of comparison are arbitrary constructs. This theory predicts that happiness does not depend on real quality of life, that changes in living conditions have only a short-lived effect on happiness, that people are happier after hard times, and that people are typically neutral about their life. These inferences imply that happiness is both evasive and inconsequential, conflicting with core beliefs in modern welfare societies. Recent studies on happiness claim support for this theory, suggesting that happiness is high in poor countries as well as in rich ones, and that it is not affected by stable living conditions. However, these claims are found to be untrue. It is shown that people tend to be unhappy under adverse conditions, that improvements or deteriorations in living conditions can have lasting effects on happiness, that earlier hardship does not lead to greater happiness, and that people are typically positive about their lives rather than neutral. The theory mixes up 'overall happiness' with 'contentment'. Contentment is based on comparing life-as-it-is to standards of how-life-should-be, but overall happiness also depends on affective feelings and the satisfaction of basic bio-psychological needs. These innate needs do not adjust to all conditions and mark the limits of human adaptability. Therefore, happiness is not relative to the extent it depends on need-gratification. The theory that happiness is relative is widely discussed in philosophy, economics, political science, sociology, and psychology. It is seen as futile and evasive, as happiness is not necessarily a good life and standards tend to rise with success. Despite its intellectual respect, this theory is seldom followed in practice. People try to improve their situations to become happier, and society believes that social progress will make life more satisfying. This article examines the flaws in the theory and the misunderstandings that contribute to its persistence.