National belt-tightening could be of more benefit to a country's sense of wellbeing than soaring wealth levels, a study has found.

Complex economic formulas developed by two Canadian professors of economics, Curtis Eaton and Mukesh Eswaran, and published in the Economic Journal, suggest that too much affluence can seriously damage a nation's health.

Using mathematical modelling, the economists advance the theory that once a country reaches a reasonable standard of living there is little further benefit to be had from increasing the wealth of its population. Indeed, it could make people feel worse off.

They believe their work shows that as a nation becomes wealthier, consumption shifts increasingly to buying status symbols with no intrinsic value - such as lavish jewellery, designer clothes and luxury cars.

But they warn: "These goods represent a 'zero-sum game' for society. They satisfy the owners, making them appear wealthy, but everyone else is left feeling worse off."

Their work owes much to economist Thorstein Veblen, who in 1899 coined the term "conspicuous consumption" in his book The Theory of the Leisure Class.

Veblen said people sought status through conspicuous consumption, which derived its value not from the intrinsic worth of what was consumed but from the fact that it permitted people to try to set themselves apart from others.

The Canadian researchers say that as an economy grows, people increasingly choose status symbols or "Veblen goods" over other goods.

"Those with above-average wealth consume Veblen goods with a positive impact on their happiness," they say.

"But those with below average wealth simply cannot afford these goods, so they have a negative impact on their happiness. This is known as 'Veblen competition'. As average wealth rises, people grow richer but not happier."

The pair believe their research helps to explain why empirical studies show that levels of happiness and feelings of community in affluent countries have stagnated, despite growth in real incomes.

There is another downside. As people yearn for more status symbols they have less time or inclination to help others.

This, they say, damages "community and trust", which are vital to an economy because they ensure the smooth running of society.

They conclude: "Conspicuous consumption can have an impact not only on people's wellbeing but also on the growth prospects of the economy."

The belief that a focus on individual wealth creation can be divisive has spread around the worlds of politics, psychology and science.

Clinical psychologist Oliver James has suggested there is an epidemic of "affluenza" throughout the developed world, in which attempts "to keep up with the Joneses" trigger huge increases in depression and anxiety.

Last year a bestselling book by two epidemiologists, Richard Wilkinson and Kate Pickett, called The Spirit Level: Why More Equal Societies Almost Always Do Better, suggested that Britain and the United States were the countries with the widest gulfs between rich and poor in the developed world and as a result had the most health and social problems.

The theory may go some way to explaining the public backlash against the affluent lifestyles of Britain's footballers, bankers and politicians.

Nevertheless, Professor Eaton and Professor Eswaran, from the universities of Calgary and British Columbia respectively, do not believe the developed world's obsession with wealth shows any signs of abating.

They predict that "it is likely that conspicuous consumption will become worse as time progresses".