While it has been proven that an active investor's machinations over his portfolio probably won't help his returns, a recent study has shown that it won't help his happiness, either. The Gallup World Poll of 132 nations and more than 136,000 respondents reveals that the United States, although it's the richest nation on earth, is losing out to poorer nations when it comes to personal contentment.

According to the study, Latin American countries trounced the United States in day-to-day happiness even though their income levels fall far short. Why is that? After basic human needs are addressed, happiness appears to increase based on rewarding relationships and a strong sense of community—not greater wealth.

Researchers found two categories of happiness that correlate to wealth. One relates to an individual's overall assessment of his life. This form of happiness is rooted in how a person compares himself with his peers and establishes an internal sense of accomplishment. The greater one's wealth, the higher that individual will tend to rate their satisfaction with their place in the world.

The second type of happiness is day-to-day contentment as measured by behaviors and feelings, including laughter, smiling, a sense of joy, and what researchers call "social-psychological well-being." Shockingly, any income increase over $75,000 a year had little to no correlation to increased day-to-day happiness.

One of the more revealing findings was that the more a person thinks about money, the lower his happiness rating. When researchers exposed subjects to pictures of large amounts of dollars or euros, their savory rating (a measurement of how good the subject felt about images of a sunset, panorama, and the like) substantially decreased.

This has clear implications for investing styles and underscores the value of passive asset allocation over stock picking and active forms of management.

Asset allocation frees your time and your mind for more important things. When you know your money is diversified and your assets are safe, you can leave your computer monitor behind and get busy with the truly valuable things in life. You'll be thinking less about your money and more about the people around you. And contrary to what some might believe, most friends and family members really don't want to hear about your recent stock or option conquest.

When a person has a sense that their life is financially secure, he or she will score higher in terms of day-to-day happiness. As Dr. Ed Diener of the University of Illinois pointed out, one individual may have a motor home while another a mansion. If the person with the motor home feels secure that their home will never be taken, their happiness rating will be higher than the person in a mansion who is fearful of losing their home.

This security principle underscores the importance of living within one's budget and not putting retirement capital at unnecessary risk. Active management requires increasing risk in the never-ending search for increasing returns. While index investing has proven to beat active management over long time horizons, asset allocation has been proven to lower risk, providing much greater stability to your portfolio.

When it comes to the active-versus-passive money management debate, understand that there is more to this discussion than annualized returns. Both economics and psychology have now demonstrated that passive asset allocation beats active management in both financial and emotional returns.