We know that money doesn't buy happiness. But the search for happiness is certainly enriching a lot of people. The feel-good industry is flour- ishing. Sales of self-help books and CDs that promise a more fulfilling life have never been higher. This month, One Happy Movie - a cinema documentary that includes interviews with 400 Americans about their happiness - comes out in the US. There are already more counsellors than GPs in the UK. And life coaches will certainly outnumber dentists. Indeed, a disillusioned dentist might be advised to take up life-coaching, given that people seem readier to pay up to £100 an hour to talk to unqualified strangers about how to transform their lives, relationships and careers than they are to pay a trained dentist.

Self-help books, it is estimated (it depends what you include in the genre), generate roughly £80m a year in Britain. In the more established US market, they were worth more than $600m in 2000, or roughly 6 per cent of the entire book market. Look on the bestseller lists on either side of the Atlantic and you will nearly always see at least one book offering a blueprint for happiness, and raking in the cash as it does so.

Here, Change Your Life in 7 Days, a book and CD by the television hypnotist Paul McKenna, has been at or near the top of the non-fiction bestseller list since the beginning of the year, selling more than 200,000 copies at £7.99 each. If it follows the course of the most successful examples of the genre it will make millions for its author and publisher. For example, in the US, The 7 Habits of Highly Effective People, first published in 1989, has become a mini-industry. FranklinCovey, the public company formed by the author Stephen Covey, recorded sales of $333m in 2002. Spin-offs have included lecture tours, seminars and further 7 Habits titles, including The 7 Habits of Highly Effective Teens, itself a bestseller, from Covey's son Sean.

The latest blockbuster is Rich Karlgaard's Life 2.0, on the traditional theme of Americans reinventing themselves (in this case "finding the where of their happiness"). Now 22 in the top 100 bestselling US books, it will doubtless reach Britain soon.

The sheer dottiness of these titles (and their content) may be entertaining, but their sustained popularity in the rich world suggests a serious gullibility among their mainly well-educated, middle-class readership. Did the 30 million predominantly female readers worldwide who bought John Gray's bestseller really find illumination from his thesis that Men Are From Mars, Women Are From Venus? And why this insatiable demand for books offering comfort (Chicken Soup for the Soul), support (Susan Jeffers's Feel the Fear and Do It Anyway) and transformation (The Little Book of Happiness or The Little Book of Bliss)?

Yet, lucrative as it is for gurus, bibliotherapy (as it is some- times known) is still a relatively cheap option for would-be self-improvers, compared with life-coaching. This mushrooming, unregulated field adds charlatans with no qualifications (but good publicity skills) to the already crowded and poorly regulated world of psychotherapy.

In the past, the talking therapies were used mainly to resolve depression, neuroses and anxiety - in other words, to ameliorate negative aspects of people's lives. Now, the fastest-growing sector is positive psychology, which "aims to increase well-being, to put people in charge of their lives", according to Ilona Boniwell, a research psychologist and the first chair of the European Network of Positive Psychology. Boniwell is a qualified practitioner, and one of 350 psychotherapists who attended the most recent European conference on the subject in July this year. But she is alarmed by the growth in numbers of people offering "happiness coaching" on the basis of reading one book about neurolinguistic programming. These self-styled "coaches", who can charge up to £300 an hour - against about £40 an hour which qualified practitioners and therapists charge - are often engaged by employers in the belief that happy workers are productive workers. "When companies are paying the bills," says Nash Popovic, a psychologist and educational consultant, "coaches may not be doing the best for the individual clients."

Popovic has no doubt, however, that positive psychology has a secure future. Never has an age been so certain that it deserves not just freedom from distress, but positive well-being. In the rich world, where poverty and the diseases of deprivation are all but conquered, we readily throw money and energy into the struggle to cure what we perceive to be emotional or spiritual deficiencies.

And, where necessary, we turn to the magic pills. The pharmaceutical companies have been especially creative in exploiting modern insecurities. Profits are not by curing life-threatening diseases (which tend now mainly to persecute the poor) but by catering for the discomforts of the rich. The title of one market research report is revealing: Lifestyle Drugs Outlook to 2008: unlocking new value in well-being.

Pharmaceutical companies see the drugs of the future not curing disease but responding to lifestyle concerns. The big research and development money is in finding cures for such "illnesses" as social anxiety or drugs that enhance mental performance or memory. By far the industry's biggest growth sector is in drugs that change behaviour and emotions. Worldwide, "depression" medication now generates roughly $17bn a year. With other behavioural drugs, the (legal) lifestyle-drugs market as a whole is reckoned to be worth $23bn annually.

This is not, we can be certain, a response to a sudden explosion in depression, though the pharmaceutical industry has done much to encourage the idea that all worries and anxieties can be cured by antidepressants. Listen to how people describe their own experiences (and in the era of reality television the opportunities to do so are legion) and it becomes clear that most of us believe ourselves entitled to relief from every dissatisfaction and worry. Note, for example, that hurt feelings attract substantially larger damages in court cases than hurt bodies. An employer must take far greater care about the former.

The new-generation drugs are selective serotonin reuptake inhibitors or SSRIs. (Serotonin is the brain chemical associated with happiness.) In Britain in 1995, 13.2 million prescriptions were written for antidepressants. By 2002, double that number were written for SSRIs alone.

In their book Medicines Out of Control?, published earlier this year, Charles Medawar and Anita Hardon of Social Audit argue that pharmaceutical firms have reinforced people's sense of their own neediness, so that during the 1990s "depression" became redefined as a serotonin-deficiency disease (that is to say, in need of an SSRI) - "a convenient and seductive, but deeply simplistic view", they write.

The worried well with a belief in their right to feel good are a lucrative market. Even "cures" currently being developed for such ailments as "oppositional defiant disorder" in children are clearly less to do with curing children than improving the lifestyle of their parents. Viagra (the erection-enhancing properties of which were an accidental by-product of some other medical research) is now used recreationally for improving sexual performance rather than for those with a medical condition that causes impotence. Not having much energy in bed is recast as a disease in need of a drug. Already marketed furiously via the internet, it will surely soon be available over the counter.

David Healy, author of The Anti-depressant Era and a controversial chronicler of the pharmaceutical industry, argues that the pharmaceutical companies are not just marketing pills, "they are marketing the illnesses". In other words, by encouraging people to think they are suffering "generalised anxiety disorder" or "post-traumatic stress syndrome", they create markets for their products (which is not to deny the value of some antidepressants to some seriously ill people).

The aggressive marketing would matter less if the drug companies were more ready to acknowledge past errors or to publish their trial findings. At the end of August, GlaxoSmithKline finally agreed to publish details of drug trials relating to Seroxat and children. It had been accused of suppressing highly damaging information that the drug was associated with suicide and was in any case ineffective. Earlier it had had to admit that problems of withdrawal were greater than at first stated. The episode should send shivers of fear through the drug companies.

Fortunately for them, however, millions of men and women worldwide are still willing to act as guinea pigs for the new behavioural drugs. Any that promise better sex, better mental performance, lower anxiety, lower weight or younger skin are sure to find a ready market - via the internet if doctors are cautious about prescribing them.

Caught between the Scylla and Charybdis of psychobabble and happy pills, is our pursuit of happiness futile? Not necessarily, though a growing body of academic research suggests that there might be safer - and more co-operative - ways of getting there.

Most studies concur that increasing wealth does not make the citizens of a country happier. People in rich nations such as Britain and the US may be three times better off and healthier than they were 50 years ago, but they are only minimally happier. A global study published at the end of last year (World Values Survey), which tracked the attitudes of people in 65 countries over 12 years to 2001, found that beyond the relatively low threshold of $13,000 (at 1995 purchasing power) extra money does not make people significantly happier. Being poor does make you miserable but, once basic needs are provided, money doesn't have much impact. As the table (left) shows, nearly all the saddest countries are poor, but the world's richest country, the US, is only the 13th happiest.

Other studies suggest that great income disparities within nations make people particularly miserable. Governments, including the UK government, are starting to take an interest in such work. The policy implications are not difficult to fathom. If money does not bring much pleasure, and inequality positively upsets us, we should surely be using the tax system to relieve the rich of their burden of wealth.

Anyone doubting the significance of the happiness industry need only look at last year's Nobel prize for economics. This went not to an economist but to Daniel Kahneman, professor of psychology and public affairs at Princeton University, for his work on "hedonics". This, among other things, has shown that humankind is very bad at predicting what will make it happy. Given a choice between making love or being tortured we know what to choose. But we can't predict how long we will get pleasure from, say, eating ice cream. Which is why we persist in believing, against considerable evidence to the contrary, that we can transform our lives in seven days, that bliss can be bought on the internet and that winning the Lottery will end all our woes.

The truth, that we are more likely to find happiness in a fairer society, is rather more satisfactory.

Additional research by Daniel Pimlott and Golnar Motevalli

Help yourself

167AD Meditations Marcus Aurelius
1859 Self-help Samuel Smiles
1936 How to Win Friends and Influence People Dale Carnegie
1990 The 7 Habits of Highly Effective People Stephen Covey
1992 Men Are From Mars, Women Are From Venus John Gray
1995 Emotional Intelligence Daniel Goleman
1997 Don't Sweat the Small Stuff Richard Carlson
2004 Change Your Life in 7 Days Paul McKenna