I enjoyed reading Happy Money: The Science of Smarter Spending
Buy Experiences
First of all, we should buy experiences instead of things! We are prone to feel that acquiring things will make us happy but Dunn and Norton report on the many studies that show that it is experiences that we are more likely to receive happiness from. If an experience is particularly dificult we are even more likely to find it increases our happiness.
Make it a Treat
Just as we become acclimated to the smell of the air freshener in our home, our happiness declines with each successive dose of whatever it is that gives us joy. When we ration out our enjoyments we are more likely to gather the greatest satisfaction from them. This is related to the odd behavior that many long time residents of London have never visited some of the local landmarks that most people visit when in England for only a week or two. When we expect something to be around for a while, we do not feel the need to take advantage of it. “Seize the Day” seems to be the appropriate motto, whereby we make a treat of something that would otherwise seem always available.
Buy Time
While this chapter was complicated, that bottom line is that where we can gain time by spending the extra money (by purchasing a roomba to do our vacuuming or by spending more on gasoline at a conveniently local, but slightly more expensive station), we will experience more happiness.
This gets more complicated depending on how we decided to spend the extra time. If we decide to spend the extra time watching excessive television we are not going to receive much happiness. Some television can be enjoyable, but the benefits diminish with the time spent. Also, If we spend more time at the office to pay for the grand home that we bought to benefit our family, we will find that we might have been better served by choosing a more modest home that would allow us to spend more time in socializing with family and friends.
Furthermore, thinking in terms of time, instead of money makes us more likely to socialize with others and enjoy the moment, rather than think we should be doing something else that is more worthwhile.
Pay Now, Consume Later
Dunn and Norton remind us of the satisfaction we feel as we anticipate and prepare for a future vacation, or the purchase of a luxury item. The feeling we have as we imagine ourselves enjoying the coveted item or experience is partly due to the fact that the future is at best cloudy. We can fashion our own experience and savor it, until we actually arrive at that future and find that is might be less than we had anticipated.
The authors share a number of studies that show how our thinking is biased toward things in the present, and biased against future events. We think that we will happier if we get something now, when the actual experience is the same regardless of when we receive it, and we thus can append all the pleasurable anticipation that we would not otherwise have experienced. Where possible we can improve our satisfaction by paying first and delaying consumption.
Invest in Others
Lastly, we are happier when we give to others. In a study two groups of people were asked to participate in an experiment. If willing they were given an envelope which contained a $5 bill and instructions on how to proceed, they were also asked their current level of happiness on a sliding scale. Some received $20 instead of $5. Half the people were instructed to spend the money on themselves and half were to spend it on someone else or give it to charity. Later in the day they were contacted and asked how they felt in general, and what they had done with their money. The results showed that the amount of money did not significantly change their happiness. However those that used the money to benefit others were much more happy than those that spent it on themselves.
Dunn and Norton go further and specify that the biggest happiness bang for our prosocial buck is achieved when we have take advantage of three strategies:
- Make it a Choice – we contribute of our own accord, not when pressured by others
- Make a Connection – we make a personal connection with the recipient (think serving in a soup kitchen)
- Make an Impact – we choose a cause where we can see the clear benefit that the donation provides.
Beyond the benefits in satisfaction, people who spend time to benefit others feel that they have more time. We are also healthier when we give to others.
I encourage you to buy or borrow Happy Money: The Science of Smarter Spending
Please leave a comment and share how you get the most happiness benefit from your dollars spent!
