They may have less money but also more time for things they care about, and less burden and stress in daily life.

So it is going to be a feeling. Is their smaller income going much farther now in how it benefits them, if so they feel better-off

I think the heart of what they're getting at is that while on paper they are bringing in less income, they have gotten off the hedonistic treadmill, and as a result, quality of life per dollar has increased dramatically. They are less stressed about finances than they were prior, even though their income is lower.

Sentiment is an important barometer in this case.

On some level the feeling matters more than the reality, past a certain survival threshold.