Can Money Buy Happiness?

Simon and Garfunkel tell us about happiness and money in the song “Richard Cory” from their Sounds of Silence album, .

They say that Richard Cory owns one half of this whole town,
With political connections to spread his wealth around.
Born into society, a banker’s only child,
He had everything a man could want: power, grace, and style.

But I work in his factory
And I curse the life I’m living
And I curse my poverty
And I wish that I could be,
Oh, I wish that I could be,
Oh, I wish that I could be
Richard Cory.

He freely gave to charity, he had the common touch,
And they were grateful for his patronage and thanked him very much,
So my mind was filled with wonder when the evening headlines read:
“Richard Cory went home last night and put a bullet through his head.”

But I work in his factory
And I curse the life I’m living
And I curse my poverty
And I wish that I could be,
Oh, I wish that I could be,
Oh, I wish that I could be
Richard Cory.

Richard Cory didn’t have enough to be happy, but that doesn’t stop us from desiring the power, prestige, and money he enjoyed.

Happiness is one of those aspirational things where we all want more. Last year Stanford University held a roundtable on happiness. Can money buy happiness?

Researchers at Harvard and other universities write that “the relationship between money and happiness is surprisingly weak, which may stem in part from the way people spend it.” Can we can spend our money more wisely to increase our happiness? Their paper provides eight principles on how to spend your money and get more happiness, while citing studies to back up the principles. I’ll summarize the findings; see the paper for details and the studies.

  1. Buy more experiences and fewer material goods. “Asked which of the two
    purchases made them happier, fully 57% of respondents reported that they had derived greater happiness from their experiential purchase, while only 34% reported greater
    happiness from their material purchase.” A reason for this behavior is that we adapt to new purchases quickly, so the satisfaction of a material good fades faster than the feeling of seeing baby cheetahs at sunset on a safari.
  2. Use your money to benefit others rather than yourself. Man is the most social animal on the planet, with complex social networks including unrelated individuals. “The quality of our social relationships is a strong determinant of our happiness”. “Because of this, almost anything we do to improve our connections with others tends to improve our happiness as well— and that includes spending money.”
  3. Buy many small pleasures rather than fewer large ones. “One reason why small frequent pleasures beat infrequent large ones is that we are less likely to adapt to the former.”
  4. Eschew extended warranties and other forms of overpriced insurance. “With price tags reaching as high as 50% of a product’s original cost, extended warranties sold by retailers and manufacturers provide huge benefits to the seller and are widely acknowledged to be “bad bets” for the buyer.” “The prospect of loss is highly aversive to people, who expect the pain of losing $5 to exceed the pleasure of gaining $5 (Kahneman & Tversky, 1979). But research shows that this expectation is wrong.”
  5. Delay consumption. “The first and most obvious is that the “consume now and pay later” heuristic leads people to engage in shortsighted behavior—to rack up debts, to save little for retirement, etc. In the end, the piper must be paid, and when that happens, lives are often ruined. Vast literatures on delay of gratification, intertemporal choice, and delay discounting show that when people are impatient, they end up less well off.” “But there is a second reason why “consume now, pay later” is a bad idea: it eliminates anticipation, and anticipation is a source of “free” happiness.”
  6. Consider how peripheral features of your purchases may affect your day-to-day life. “In thinking about how to spend our money, it is worthwhile to consider how purchases will affect the ways in which we spend our time. For example, consider the choice between a small, well-kept cottage and a larger “fixer upper” that have similar prices. The bigger home may seem like a better deal, but if the fixer upper requires trading Saturday afternoons with friends for Saturday afternoons with plumbers, it may not be such a good deal after all.”
  7. Beware of comparison shopping. “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 options.” For example, Harvard student are assigned to one of twelve houses after their first year. “When these students stood on the brink of entering the housing lottery and were asked to predict how happy they would be living in each of the 12 houses, their attention gravitated to the features that differed most between the houses; their predictions were driven largely by the physical characteristics of each house, which varied greatly between the 12 houses.” “When these students later settled into their houses as sophomores and juniors, their happiness was predicted by the quality of social features but not by the quality of physical features in the houses.”
  8. Pay close attention to the happiness of others.  “Research suggests that the best way to predict how much we will enjoy an experience is to see how much someone else enjoyed it.” “Other people can supply us with a valuable source of data not only by telling us what has made them happy, but also by providing information about what they think will make us happy.”

“When asked to take stock of their lives, people with more money report being a good deal more satisfied. But when asked how happy they are at the moment, people with more money are barely different than those with less (Diener, Ng, Harter, & Arora, 2010). This suggests that our money provides us with satisfaction when we think about it, but not when we use it.”

 

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charley280

I enjoy travel, art, food, photography, nature, California native plants, history, and yoga. I am a retired software engineer. The gravatar is a Nuttall's woodpecker that visited our backyard.

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