I probably shouldn't say so in these censorious times, but I have a little sympathy for Sir Malcolm Rifkind's desire "to have the standard of living that my professional background would normally entitle me to have."

Of course, an MP's salary of £67,060pa is high from most perspectives; it's more than 94% of us earn. But put yourself in his shoes. He's surrounded by senior journalists, lobbyists, businessmen and lawyers many of whom get six-figure salaries, sometimes on the basis of less than astonishing ability. Mightn't an experienced MP feel underpaid relative to them?

In making such comparisons, Sir Malcolm is conforming to a widespread and longstanding pattern - of judging his income relative to his peers, and judging himself accordingly. This is what Adam Smith meant when he said that our desire for wealth arises not so much from a desire for goods but from vanity: the rich man enjoys the attention and sympathy of the world, whilst the poor one feels shame. It's what H.L.Mencken meant when he defined a rich man as one with an income "that is at least one hundred dollars more a year than the income of one's wife's sister's husband." It's what bankers feel when their bonus, however big in itself, is smaller than their peers'. And it's what the (perhaps apocryphal) worker meant when, on being refused a pay rise, asked his boss: "can't you instead give everyone else a pay cut?"

It's widely agreed that relative (pdf) income matters for our well-being - at least among older people. In one of my favorite books on happynomics, Bruno Frey writes:

People are concerned about their position on the income ladder. It is not the absolute level of income that matters most, but rather one's position relative to other individuals (Happiness, p31).

However, there are some things we can do to mitigate the unhappiness we feel about others' high incomes, for example:

1. Remember that what we don't see can be as important as what we do. The businessman's and barrister's high income is visible. What's not so visible, though, is their stress and long hours. But on these dimensions, Sir Malcolm has the advantage; as he said, he has time on his hands.

2. Realize that higher income has only modest effects upon happiness. As Smith said of the ambitious man:

It is in the last dregs of life, his body wasted with toil and diseases, his mind galled and ruffled by the memory of a thousand injuries and disappointments which he imagines he has met with from the injustice of his enemies, or from the perfidy and ingratitude of his friends, that he begins at last to find that wealth and greatness are mere trinkets of frivolous utility.

3. Change your reference group. Dan Ariely writes: "we can sometimes control the 'circles' around us, moving toward smaller circles that boost our relative happiness (Predictably Irrational, p19). We don't need to physically move to do this. We can do it in our minds. Here's Smith again:

The difference between the most dissimilar characters, between a philosopher and a common street porter, for example, seems to arise not so much from nature, as from habit, custom, and education. When they came into the world, and for the first six or eight years of their existence, they were perhaps,very much alike.

Why, then, not compare your income to the porter's?

4. Remember that income is not a measure of merit, and so a low income, relative to others, is not a sign of low personal worth. In saying this, I'm not making a leftist point.It was Hayek who said that, in a market economy, "the return to people's efforts do not correspond to recognizable merit." (Law, Legislation & Liberty vol II p72)

Sir Malcolm, however, seems not to have adopted these coping strategies. Instead, he tried to solve the problem by scrabbling about for a few quid and in doing so has lost dignity and esteem. For this reason, he deserves a little sympathy.