Institute For The Future

Can Money Buy Happiness?

The Boston Globe ran a fascinating article earlier in the week pulling together some of the newest research into a very old question: Can money buy happiness? And the answer seems to be that, well, it depends. Or as social psychology professor Elizabeth Dunn puts it, "Just because money doesn’t buy happiness doesn’t mean money cannot buy happiness.”

 

What she means by that is that the ways that most people currently spend money--plowing discretionary income into consumer goods-doesn't buy happiness. But that other types of spending can. As Drake Bennett writes in the Globe:

 

 

Beyond the point at which people have enough to comfortably feed, clothe, and house themselves, having more money - even a lot more money - makes them only a little bit happier...

 

But starting to emerge now is a different answer to that age-old question. A few researchers are looking again at whether happiness can be bought, and they are discovering that quite possibly it can - it’s just that some strategies are a lot better than others. Taking a friend to lunch, it turns out, makes us happier than buying a new outfit. Splurging on a vacation makes us happy in a way that splurging on a car may not.

 

 

At first glance, this seems a bit counterintuitive. After all, putting money into experiencing a vacation for a week would seem to buy fewer positive experiences than a 60-inch flat screen television, for example, which could provide years of viewing pleasure. Commenting on the phenomenon, Jonah Lehrer suggests that "a fundamental feature of neurons: habituation" may explain why this is the case. "When sensory cells are exposed to the same stimulus over and over again, they quickly get bored and stop firing," he writes. "If we paid attention to everything, we'd quickly be overwhelmed by the intensity of reality."

 

In other words, after we've had that new television or car for a few weeks, it stops feeling new, interesting or exciting--and the amount of pleasure we gain from it declines. Over time, not only do we become bored with our own possessions, but if we look around and see that our friends and colleagues have nicer stuff, we gain even less pleasure from our own possessions and get jealous of theirs.

 

On the other hand, as the Globe notes, "experiences instead tend to get burnished in our memory - a year after a vacation, we look back not on the stress of dealing with lost luggage or the fights over which way the hotel was, but the beauty of the scenery or the exotic flavors of the food." When these experiences are shared, people can look back on them together, and continue bonding long after the vacation has ended. And the value of a trip to Yosemite doesn't decline because a neighbor took a trip to Aspen; for whatever reason, our brains aren't wired to compare experiences the way we compare possessions.

 

It's tough to know if consumer habits will change, given enough research into links between consumption and mental health, though I don't think I'd bet on it. But if I were a retailer, I'd spend some time thinking about how to make shopping feel more like an experience between friends rather than a straight transactional experience.