Health is our most valuable asset, according to research estimating the monetary value of happiness.

The study looked at what life events such as marriage, divorce and widowhood were worth in financial terms.

Conducted by Professor Andrew Oswald and Andrew Clark, of the University of Warwick, the study found marriage brings the same amount of happiness as £70,000 a year in income.

Widowhood brings a degree of unhappiness that would take additional income of £170,000 per year to offset and separation would take an additional income of £132,000.

Worst of all, a major decline in health is equivalent to a loss of £500,000 a year.

The monetary values were calculated by analysing data from the British Household Panel Survey, using a statistical method that brings together economics and psychology.

The authors found the factor most strongly related to happiness is health.

Professor Oswald said the amounts are calculated by looking at a large sample of people across Britain and measuring their well-being every year, as influenced by good and bad events in their lives.

People's reactions to pay rises are also looked at and then compared against reactions to life events.

Prof Oswald said he was surprised by the results.

He said: "I did not think the cost of a decline in health would be that much."

Practical applications for the method include court cases which have to assess the impact of events and calculate a financial compensation.

Prof Oswald added: "It can also be used by politicians to allocate resources in a country because ultimately politicians have to make choices about where to put their money."