Harvard professor Mike Norton on Why Money Should Make You Happy
In this interview I talk to Harvard professor of Marketing Mike Norton on how to be happy.
I am very excited about your new book Happy Money: The Science of Smarter Spending. As you know (well okay, I told you) I organized a symposium in 2007 called A Market for Happiness. One of the coolest ideas there was by professor Ruut Veenhoven: he was pleading for Happiness Tested Goods. Similar to energy saving labels and others tests done by for example Consumer Reports, products would have a label where it says how much your happiness would increase when you would buy the product.
One ambition of your book is to get people to focus on getting as much happiness as possible for their money when buying products.
Happiness is such a subjective thing, how should people (or organizations) operationalize this?
Happiness is a quirky concept because it’s both very subjective (what does it mean to feel “8” happy on a 10 point scale?) but also very objective (the more you smile — an easy and objective thing to measure — the happier you are).
For individuals, we try to encourage them to think about spending their time and using their money in ways that research has shown improve their well-being, from making them smile more to making them worry less to helping them sleep better. It turns out that even though we can’t be sure what a “8” happy means, we do know that if you move up to a 9 happy your life is improving, and if you drop to a 5 it’s time to make some changes.
Organizations should think in much the same way: do my customers have mainly positive or mainly negative experiences with products and services? Are my employees eager to come to work or pining for Saturday? If it’s more positivity and eagerness, organizations know they are performing well; if it’s more negativity and pining, changes need to be made.
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In your book you write that experience rather than more stuff makes people happier. Another thing is that buying something for someone else is more satisfying than buying for yourself. Next to good advice to consumers, this sounds like great advice to marketers as well. You are after all also a marketing professor.
What kind of impact do you want your research to have on the marketing discipline?
We increasingly see smart companies attempting to design better experiences for their customers. One of my favorite examples is Charmin’s Potty Palooza, which attempts the seemingly impossible: turning toilet paper into a luxury experience. How? Charmin created high-end port-o-potties — with hardwood floors and skylights — to turn public restrooms from a disaster into a safe haven, and in the process turning toilet paper from mundane to experiential.
Similarly, savvy marketers realize the power of allowing consumers to do good via their consumption. Companies like Tom’s Shoes and Warby Parker — which allow customers to send a pair of shoes or glasses for each pair purchased — turn the attractiveness of investing in other people into a convincing competitive advantage.
Let’s talk about marketing for governments for a moment. In a recent NYT article you mention how the American government has a marketing problem. Similar to other governments I would say. Especially when it comes to how people perceive taxes. You write that Americans have the tendency to view taxes as the root of all unhappiness. That’s pretty bad. And you are proposing a new way of framing taxes that might even make people happy. We — the Dutch- are very liberal, and we pay a lot of tax, and in general we don’t mind it that much. But happy…
How do you want to make people satisfied with paying taxes? And why is it important?
We are well aware that making people happy with their taxes — overjoyed at having to pay that bill — is likely an impossible challenge. But we do think that one reason that many people have such a strong dislike of taxes is that they simply don’t see them as doing any good, for themselves or for their fellow citizens.
None of us would like giving a retailer money and not getting any products or services in return, and for many people taxes feel like this. Of course, this issue arises in part because many of the services that government provides are somewhat invisible: the roads are almost always paved, and government does that using our taxes, but we focus on the occasional pothole as evidence that government does nothing.
Feeling that government provides no value has consequences for civic engagement (e.g., voting, volunteering) more generally. We hope that by helping people see the good that their taxes can do, we can reengage them in the political process.
Finishing up with some advice on my own happiness. What I’ve understood from your book is that how you use our money matters as much or even more than how much of it we’ve got. Say that our company goes for a Series A round of investment. And we get it.
What should I do with my first million dollars?
Despite the fact that Happy Money is primarily about how to spend your money in order to get the most happiness bang for your buck, one of the very best things you can do when you earn more money is one of the most boring: save it.
In our view, though, saving is not just good for your economic well-being, but also for your subjective well-being. We encourage people to think about saving for retirement as investing in their future happiness. So spending some money now — on experiences, on giving to charities and friends — is good for happiness, but saving gives us the opportunity to continue to engage in happy spending in the longer term.
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Originally published at www.sciencerockstars.com.