Sydney  - Good health, freedom of choice, political liberty, civil rights - these, along with high income, make Australians the most prosperous people in the world, found a study by the Dubai-based Legatum Institute ranking countries according to their prosperity.

The privately-funded think tank noted that there was no direct correlation between wealth and happiness. While it was true that income was a good indicator of wellbeing in very poor countries, earnings did not link with happiness in rich countries.

Study after study has downplayed money as a predictor of how we feel about our lives. It's a finding that comes as no surprise to Melbourne lawyer and academic Mirko Bagaric.

"Once we're above the poverty line, money makes only a small contribution to our level of happiness - and once we reach about the average level of income it makes virtually no difference to our level of contentment," he said. "The things that are conducive to happiness are fit and healthy bodies, realistic goals, self-esteem, optimism, an outgoing personality, a sense of control, close relationships, challenging work and active leisure punctuated by adequate rest and a faith that entails communal support, purpose and acceptance."

Professor Bagaric, who has written extensively on happiness, bemoans that income has become equated with happiness in rich countries.

To cheer up, he says, it would be better to "overdose on time with family and friends, ditch the plan to buy the new plasma TV and latest-model car, disconnect the mobile phone, get a hobby, and buy a dog and walk it lots."

In some very timely research, historian David Potts has been looking at the correlation between happiness and hard times in depression-era Australia.

His thesis in the book, The Myth of the Great Depression, is that the impact of 25 per cent-unemployment on the wellbeing of the masses in the 1930s is greatly overstated.

Those who rode out the bust in shanty towns and even caves around Sydney did not consider themselves all that badly off because the homes they had lost did not have electricity or running water either, Potts argues.

Dirt poor, they were not necessarily unhappy. Little to eat, yes, but no one starved. People grew their own vegetables, but this proved an ennobling experience.

"After the war, these were the people with the courage and the initiative to man the factories and start new industries in Australia," Potts said.

His central argument is that it's a myth to equate lack of money with a life lacking in every other respect.

With the economy set to enter another deep chill, prosperous Australians will have to see how all their other blessings stack up against rising unemployment and falling incomes. (dpa)