Everyone has heard the claim, “Money doesn’t buy happiness.” Well, that might not necessarily be true.

I read a really interesting research article today on money’s effect on happiness called “If Money Doesn’t Make You Happy,” by Elizabeth W. Dunn, Daniel T. Gilbert, and Timothy D. Wilson. The study claims that money DOES buy happiness, but only in certain ways. The authors propose eight suggestions for getting more happiness from your buck:

Specifically, we suggest that consumers should (1) buy more experiences and fewer material goods; (2) use their money to benefit others rather than themselves; (3) buy many small pleasures rather than fewer large ones; (4) eschew extended warranties and other forms of overpriced insurance; (5) delay consumption; (6) consider how peripheral features of their purchases may affect their day-to-day lives; (7) beware of comparison shopping; and (8) pay close attention to the happiness of others.

Let me break each one down a bit.

1. Buy more experiences and fewer material goods: When you spend money on experiential things (a.k.a. things that provide an experience – a vacation, a dinner, a party), you get more happiness than if you spend money on material things. This stems from the idea that things lose value as you adapt to them whereas experiential spending can be remembered and cherished. The authors use the following example: “After devoting days to selecting the perfect hardwood floor to install in a new condo, homebuyers find their once beloved Brazilian cherry floors quickly become nothing more than the unnoticed ground beneath their feet. In contrast, their memory of seeing a baby cheetah at dawn on an African safari continues to provide delight.” They also state that living in the moment shows greater happiness – studies have shown that mind-wandering can actually be a sign of discontent in the present – thus, creating more memorable experiences helps people retain happiness.

2. Use money to benefit others rather than themselves: Many studies have been done to compare the happiness effects of giving to another (money, gifts, charitable donations, etc.) vs. spending money on yourself. These studies have all indicated that you receive greater happiness from giving the money away – regardless of whether or not you were forced to do so! Because humans are distinctly social beings, giving money or gifts to others positively affects our emotional self. This contradicts most traditional thinking that spending money on yourself makes you happier.

3. Buy many small pleasures rather than fewer large ones: I found this one to be particularly interesting. The authors state, “Happiness is more strongly associated with the frequency than the intensity of people’s positive affective experiences.” This is largely due to the fact that we adapt so quickly to our purchases. Therefore, buying a new car does not necessarily bring the same level of happiness as buying lattes or good-quality socks – over an extended amount of time, of course. There are a few reasons frequent buying helps: “Novelty (we’ve never experienced the event before), surprise (we didn’t expect it to happen), uncertainty (we’re not entirely sure what the event is), and variability (the event keeps changing)….Because frequent small pleasures are different each time they occur, they forestall adaptation.”

4. Eschew extended warranties and other forms of overpriced insurance: In case you’re like me and had to remind yourself what “eschew” means, it means “to avoid.” Now, the article isn’t saying don’t buy any insurance and live carefree; rather, they’re saying that many forms of insurance are overpriced and unnecessary. For example, when you a buy a plasma TV, chances are quite good that you will never need to use the warranty, so buying an extended warranty isn’t really necessary – it’s just emotional protection. But you know what? Our psychological minds are built to protect ourselves against that, so we don’t need emotional protection. We’re already insured against that. Related to that, things like return policies (i.e., return within 30 days for a full refund) may actually reduce emotional attachment, and therefore, happiness with a purchase.

5. Delay consumption: We’re used to credit card mentality – “Consume now, pay later!” – but studies show that paying up front actually may increase happiness in a product. You buy something and then anticipate its arrival, as opposed to “buying” something, adapting to it, and then having to pay for it after the fact. Would you rather look forward to something exciting or have to worry about paying for something that maybe isn’t so exciting anymore? Or as the authors say, “Anticipation is the Batman to the Robin of reminiscence.” Perhaps Walmart’s layaway plan isn’t such a bad idea (don’t worry, I still dislike Walmart). Interestingly, delaying consumption also seems to affect healthier buying. In a study where people were offered apples, bananas, paprika-flavored crisps, and Snickers bars, people chose the unhealthier options if they were to eat them quickly and the healthier options if they were to eat them later.

6. Consider how peripheral features of their purchases may affect their day-to-day lives: Think about what you’re not thinking about. Imagine your dream vacation: relaxing on the beach, dining at your favorite restaurants…but what is inevitable about every vacation? You get sunburned at the beach, you stand in long lines at your favorite restaurant, etc. Overlooking these little facts-of-life can actually decrease happiness in purchases, but being prepared for them cause increase happiness. Or as the authors express, “Happiness is in the details.” Knowing those details will also help you make more realistic purchases.

7. Beware of comparison shopping: By comparing one product’s features to similar products’ features, you may actually lose sight of the features of the product that make provide happiness. It may also persuade buyers to choose the best deal rather than the best option. Unfortunately, this one is difficult because our minds naturally compare items on a somewhat subconscious level. Basically, just be aware when you’re shopping that the features you’re comparing may not matter when you’re actually consuming.

8. Pay close attention to the happiness of others: This is pretty straightforward – what makes other people happy will often also make you happy.

I realize this is a long summary of the article, but I really valued the research presented here, especially considering my only long-term goal: to be happy. Those who know me know that money is a consistent frustration for me, so reading this was very enlightening. I hope you all found something of value as well!

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