If You Think Money Can’t Buy Happiness Then You Don’t Know Where to Shop

Research psychologists have long documented a causal relationship between individual wealth and personal contentment. In other words, the consensus among scientists is that money does indeed buy happiness.

Intuitively, this makes sense. Having a certain degree of wealth makes it easier to overcome the stress of many of life’s challenges – stresses which presumably lead to unhappiness.

Elizabeth Dunn of the University of British Columbia, Daniel Gilbert of Harvard University, and Timothy Wilson of the University of Virginia recently published a paper in the Journal of Consumer Psychology (Volume 21, Issue 2, April 2011) taking a fresh look at this relationship between money and happiness.

“Wealthy people don’t just have better toys; they have better nutrition and better medical care, more free time and more meaningful labor – more of just about every ingredient in the recipe for a happy life,” write Dunn, Gilbert & Wilson.

Yet when you delve deeply into the data, you find that the link between money and happiness isn’t nearly as robust as the theories contend it should be. The scholars note that “[the wealthy] aren’t all that much happier than those who have less. If money can buy happiness, then why doesn’t it?”

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

Dunn, Gilbert & Wilson have come up with a surprisingly simple answer to this conundrum, “Because people don’t spend it right.” After our basic human needs are met, the amount of money we have has far less to do with our happiness than how we choose to spend it.

Given that we are now in the midst of the Christmas Season and this time of virtually unrestrained holiday shopping, let’s ponder some of the conclusions of these scholars on how to spend our money in ways which bring us higher levels of happiness.

“Buy Experiences Instead of Things”

People can get used to pretty much anything. And that’s the problem when you seek happiness through the accumulation of things. “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,” write the scholars.

Experiences, on the other hand, remain alive and vibrant in our memories long after the event has passed. Don’t we all smile when we think back to the first time we saw American Folklore Theatre’s Guys on Ice? Can’t we all recall fondly the memory of watching a sunset at Peninsula State Park while holding the hand of the one we love?

“Things bring us happiness when we use them, but not so much when we merely think about them,” write Dunn, Gilbert & Wilson. Our experiences, however, are relived in our minds and can continue to generate warm feelings long after the event itself.

“Pay Now and Consume Later”

In the last few decades, immediate gratification has become the modern way. Once upon a time, we would set aside money each week until we accumulated enough to make a purchase. Today, with no money down, no payments for six months (and a little assistance of the multi-billion dollar credit card industry) we can buy most anything we want. The merits of this credit-driven consumption can be debated, but what is absolutely clear is that it is counter-productive to our happiness.

Anticipation is an exceptionally powerful driver of personal contentment. As much as the memories of meaningful experiences are a demonstrated source of happiness, research has shown that thinking about a future experience triggers an even stronger emotional response than reminiscing after the fact.

In other words, a lot of happiness comes from simply having something to look forward to. And the great thing about anticipation is that it’s free! Dunn, Gilbert & Wilson sum it up this way: “The person who buys a cookie and eats it right away may get X units of pleasure from it, but the person who saves the cookie until later gets X units of pleasure when it is eventually eaten plus all the additional pleasure of looking forward to the event.”

“Help Others Instead of Yourself”

We are social creatures by nature, so it should come as no surprise that perhaps our greatest happiness comes from doing for others rather than for ourselves. In fact it appears we are hard-wired to be generous.

In one study, subjects were hooked up to a Magnetic Resonance Imaging (MRI) machine to look at brainwaves when making choices.

“Participants in an MRI were given the opportunity to donate money to a local food bank,” write Dunn, Gilbert & Wilson. “Choosing to give money away – or even being forced to do so – led to activation in brain areas typically associated with receiving rewards.”

Our culture of consumption has conditioned us to believe that happiness comes from fulfilling that desire to buy something for ourselves. The scientific truth is that being generous with others is the source of perhaps the greatest joy of all.