This paper investigates whether individuals feel worse off when others around them earn more. It finds that higher earnings of neighbors are associated with lower levels of self-reported happiness, even after controlling for individual characteristics including income. The data's panel nature and rich measures of well-being and behavior indicate that this association is not driven by selection or changes in how people define happiness. The negative effect of neighbors' earnings on own well-being is likely due to interpersonal preferences, where people's utility depends on relative consumption. The paper uses panel data from the National Survey of Families and Households (NSFH) to analyze the relationship between relative earnings and well-being. It matches individual-level data with local earnings information, using Public Use Microdata Areas (PUMAs) to estimate local earnings. The results show that higher PUMA-level earnings are associated with lower happiness, controlling for individual characteristics. This effect is robust to changes in specification and highly statistically significant. The paper contributes to the literature by addressing three key issues: (1) whether living in a prosperous area affects one's definition of happiness, (2) whether the inverse relationship between happiness and neighbors' earnings is spurious due to omitted variables, and (3) the mechanism behind the negative relationship between neighbors' earnings and happiness. The findings suggest that interpersonal preferences, rather than other mechanisms, drive the negative association between neighbors' earnings and own well-being. The empirical strategy involves a pooled cross-section OLS regression of self-reported happiness on log predicted PUMA earnings and individual controls. The results show that predicted PUMA earnings have a significantly negative effect on self-reported happiness, controlling for own income and other characteristics. The paper also examines alternative explanations, such as shifts in the definition of happiness or local price levels, and finds no evidence supporting these explanations. The results are robust to various specifications, including the inclusion of individual fixed effects, state-wave fixed effects, and different outcome variables. The findings suggest that higher neighbors' earnings reduce happiness primarily through their effect on satisfaction with one's home, finances, and leisure time. The paper concludes that relative earnings matter for well-being, and that interpersonal preferences, rather than other mechanisms, drive the negative association between neighbors' earnings and own well-being.This paper investigates whether individuals feel worse off when others around them earn more. It finds that higher earnings of neighbors are associated with lower levels of self-reported happiness, even after controlling for individual characteristics including income. The data's panel nature and rich measures of well-being and behavior indicate that this association is not driven by selection or changes in how people define happiness. The negative effect of neighbors' earnings on own well-being is likely due to interpersonal preferences, where people's utility depends on relative consumption. The paper uses panel data from the National Survey of Families and Households (NSFH) to analyze the relationship between relative earnings and well-being. It matches individual-level data with local earnings information, using Public Use Microdata Areas (PUMAs) to estimate local earnings. The results show that higher PUMA-level earnings are associated with lower happiness, controlling for individual characteristics. This effect is robust to changes in specification and highly statistically significant. The paper contributes to the literature by addressing three key issues: (1) whether living in a prosperous area affects one's definition of happiness, (2) whether the inverse relationship between happiness and neighbors' earnings is spurious due to omitted variables, and (3) the mechanism behind the negative relationship between neighbors' earnings and happiness. The findings suggest that interpersonal preferences, rather than other mechanisms, drive the negative association between neighbors' earnings and own well-being. The empirical strategy involves a pooled cross-section OLS regression of self-reported happiness on log predicted PUMA earnings and individual controls. The results show that predicted PUMA earnings have a significantly negative effect on self-reported happiness, controlling for own income and other characteristics. The paper also examines alternative explanations, such as shifts in the definition of happiness or local price levels, and finds no evidence supporting these explanations. The results are robust to various specifications, including the inclusion of individual fixed effects, state-wave fixed effects, and different outcome variables. The findings suggest that higher neighbors' earnings reduce happiness primarily through their effect on satisfaction with one's home, finances, and leisure time. The paper concludes that relative earnings matter for well-being, and that interpersonal preferences, rather than other mechanisms, drive the negative association between neighbors' earnings and own well-being.