If I wanted to get more happiness into my life, I wouldn't do it by
trying to earn more money. I'd concentrate on spending more time with
family and friends and getting more satisfaction from work itself rather
than the money it brings in.
That's because, though money does buy
happiness, it buys far less than we expect it to. It suffers from
rapidly diminishing "marginal utility" - each extra $1000 you spend
brings less satisfaction than the one before.
Since economists are
in the money business, it's surprising how little they know about its
ability to make us happy. They don't study it, they just assume more
money equals more "utility" or satisfaction.
The professionals who
study the relationship between money and happiness are the
psychologists. And three of them, Elizabeth Dunn, Daniel Gilbert and
Timothy Wilson, of the universities of British Columbia, Harvard and
Virginia respectively, have published, in the Journal of Consumer
Psychology, a useful guide to their profession's finding on how to get
more satisfaction from your spending.
"Money is an opportunity for
happiness, but it is an opportunity that people routinely squander
because the things they think will make them happy often don't," they
say.
Why not? Because humans turn out to be quite bad at
"affective forecasting" - predicting how happy or unhappy particular
events will make them feel. We tend to overestimate how good we'll feel
about good things and how bad we'll feel about bad things.
That's
mainly because we underestimate our ability to adapt to positive and
negative events. We quickly adapt to some improvement in our
circumstances and take it for granted. Fortunately, it also works the
other way: we soon come to accept, possibly major, setbacks in our
circumstances.
But another reason our forecasting goes astray is
that how we're feeling at the time we make the forecast has too much
influence on how we imagine we'll feel at the time it happens. Haven't
you noticed? If it's cold when you're packing for a summer holiday, you
tend to take too many warm clothes.
The authors use
well-established research findings to offer some tips on how to get more
satisfaction from spending. One is to buy experiences instead of
things. "Experiential purchases" are those made with the intention of
acquiring a life experience; an event, or series of events, we live
through.
One reason experiences are better is it takes longer to
adapt to them. Objects don't change after you've bought them, but each
session of a year-long cooking class is different. Experiences offer
more scope for pleasurable anticipation and, particularly, remembering
them fondly. It's easier to tell your friends about a great holiday than
to boast about a new car.
Another tip is to help others instead
of yourself. Humans are the most social animal on our planet, the
authors say. We have highly complex social networks that include people
who aren't related to us. So it's not surprising the quality of our
social relationships is a strong determinant of our happiness.
Almost
anything we do to improve our connections with others tends to improve
our happiness. And studies show that people who devote more money to
"pro-social" spending - gifts to others or to charities - are happier,
even after allowing for how high their incomes are.
A third tip is
to buy many small pleasures instead of a few big ones. "As long as
money is limited by its failure to grow on trees," the authors say, "we
may be better off devoting our finite financial resources to purchasing
frequent doses of lovely things rather than infrequent doses of lovelier
things."
In many areas of life, happiness is more strongly associated
with the frequency than the intensity of people's positive experiences.
Another tip is to be wary of comparison shopping. Economists
are great believers in shopping around to find the best deal. Indeed,
competition doesn't work very well unless consumers are willing to shift
their business.
But the psychologists have a different take. "By
altering the psychological context in which decisions are made,
comparison shopping may distract consumers from attributes of a product
that will be important for their happiness, focusing their attention
instead on attributes that distinguish the available opinions," the
authors say.
The comparisons we make when we are shopping are not
the same comparisons we will make when we consume what we shopped for.
Their final tip is another odd one: follow the herd instead of your
head. Research suggests that the best way to predict how much we
will enjoy an experience is not to evaluate its characteristics
ourselves, but to see how much other people liked it.
We're usually not so different from them and, in any case, most people like having plenty of company.
