It’s a common sentiment that happiness isn’t for sale and that money can buy things, but not contentment. But, is this actually true? To the contrary, numerous studies into human happiness suggest that money can indeed make us happy, but only if we know how to use it. And, unfortunately, most people do not. Why is this? Well, there are many reasons, but perhaps the most essential is that the human brain is not very good at predicting what will make it happy in the future. Thus, relying on impulse spending decisions may not be an effective strategy for joy attainment. So, to help provide some guidance, here, adapted from the literature – in particular Dunn et al’s aptly titled article in the Journal of Consumer Psychology “If money doesn't make you happy, then you probably aren't spending it right,” - are ten tips on monetizing happiness.
1) Research shows that people become more rapidly accustomed to new objects than they do to pleasant memories. For example, that contemporary granite countertop looks great for a few days but quickly becomes integrated into the daily experience, whereas the memories from the Colorado River rafting trip last a very long time. Of course, some goods, like a kick-ass mountain bike, can be very helpful in providing enriching memories.
2) If you can't travel, another option is to spend money on others. The act of gifting has been associated with increased satisfaction. For example, Dunn notes a Canadian study where individuals on a college campus were handed either a $5 or $20 bill and randomly asked to either, over the course of the day, spend the money on themselves or others. When participants were later surveyed, those who had spent their windfall on others reported greater happiness than those who had spent it on themselves.
3) The majority of people automatically exercise what psychologists call “hedonic adaptation,” which is the tendency to adapt to positive situations – such as getting a new promotion or winning the lottery – and rather rapidly return to a baseline level of happiness. However, an exception to this hedonic adaptation rule may be found in relationships. Humans are communal creatures and have a strong impulse to seek in-group commonality. To the extent that resources can allow us to make and keep new friends, wealth is much better spent on relationships than on creating more wealth.
4) This may be anathema to the rebel-minded, but evidence suggests that the best way to predict whether you will like something (a book, movie, restaurant, vehicle, etc.) is whether other people like it. So, when it comes to matters of entertainment and comfort, following the herd (while boring) may lead to greater satisfaction.
5) My mother often says, “The fun is in the planning.” And for many of us, this is true. Although we have a hard time predicting what will actually make us happy in the moment, we are pretty good at predicting pleasant anticipation. So, rather than purchase a massive TV at Costco and be shocked by the credit card bill later, perhaps book a vacation to the islands months in advance and then wallow in the lovely glow of expectation.
6) Comparison-shopping may not make us comparatively much happier. In fact, when presented with too many options, the brain can not only get stressed and unhappy, it can also make a choice (like buying more house than one can really afford) that leads to much more unhappiness down the road. As we all know from our daily ED practice, decision fatigue can be both draining and paralyzing.
7) Use money to limit daily annoyances and de-clutter rather than add stuff that creates headaches. Researchers have shown that minor moments of unhappiness over the course of the day are better predictors of contentment (and lack thereof) than an overall assortment of assets or things. Next holiday season consider giving your loved one the ultimate de-cluttering tool; a dumpster.
8) A basketball coach once told me “Go big or go home.” But, when it comes to the pleasures in life – food, drink, relaxation – smaller is better if it allows for greater frequency. This gets back to hedonic adaptation - we quickly adapt to the pleasure of eating a large piece of cake at one sitting whereas spreading out the consumption over the course of the day will give us numerous little dopamine squirts of joy.
9) Good health is good for the psyche and preventive care is good for preserving health. So, to the extent that wealth can preserve health, it is money well spent. For some of us this may mean giving up some salary in order to limit our monthly allotment of night shifts.
10) Much as we tend to adapt quickly to favorable situations, we humans also become accustomed to negative situations. This so-called “psychological immunity” has its basis not only in numerous anecdotes (folks who “carry on” despite illness or loss) but also in numerous experiments on the expected and actual effects of gains, losses and ownership. Psychologist Dan Ariely demonstrated this with an experiment involving 100 Duke University basketball fans who’d entered a lottery for Final Four tickets. After the lottery results, Ariely asked those who received tickets and those who had not to assess their value. Those individuals who obtained tickets via lottery put a far greater monetary value on them than those who had lost out – by an order of over ten times! Lesson here; we tend to over value what we own – so don’t let a “valued” possession or position hold you back from activities that may lead to greater happiness.
So, there you are – two hands worth of common-sense suggestions with the potential to improve your quality of life. If you keep these in mind, your happiness may just begin with your next paycheck.