Happy Money: The Science of Happier Spending

Immediately after settling in to their new abodes, these movers reported being much more satisfied with their new homes than they’d been with their old ones. Humans are adaptable creatures, however, and research shows that people often get used to whatever they’ve got. So we might expect that this initial spike in housing satisfaction would wear off, leaving people no happier with their home than they were before moving. But that’s not what happened. Satisfaction with the new home only wore off a little bit, and in the subsequent five years, movers remained significantly more satisfied with their new home than they’d been with their old one. Sounds promising, but there’s just one problem: while movers’ satisfaction with their houses increased substantially, their satisfaction with their lives—their overall happiness—didn’t improve at all
she found that first-year students expected to be much happier living in the beautiful, centrally located houses, but students who ended up in desirable houses weren’t any happier as sophomores than students who had landed in undesirable houses.2 Just like the movers in the German study, students who had moved into the desirable houses did report higher housing satisfaction. But their enhanced housing situation failed to impact their overall happiness.
In a carefully controlled study of more than six hundred women in Ohio, homeowners weren’t any happier than renters, though they were about twelve pounds heavier
some 57 percent of Americans reported that the experiential purchase made them happier than the material purchase, while only 34 percent reported the opposite
Researchers at Cornell gave students a Pilot G2 Super Fine pen as a prize and asked them to try it out.29 When it was surrounded by inferior prizes, including an unsharpened pencil and a bag of rubber bands, the students gave the pen rave reviews. Other students saw the same pen alongside a USB drive and a leather-bound notebook. The presence of more desirable goods significantly diminished the pen’s appeal. This simple study illustrates one of the major barriers to increasing human well-being. We are happy with things, until we find out there are better things available
vacationers rated their happiness on each day of their trip via text message.36 One to two weeks after they got back, they reported their overall feelings about the holiday. Although the vacations ranged in length from four to fourteen days, the duration of the trip had no bearing on their overall feelings about the trip. The text messages revealed that vacationers felt happier during their trip than they did in their daily lives. But after the trip, they remembered feeling even better than they actually had
the Michigan researchers asked car owners to think back on the last time they had driven their car, rating how much they enjoyed that drive. Although their cars ranged widely in value, from around $400 (a Yugo, perhaps?) to $40,000, there was no relationship at all between the Blue Book value of the car and the amount of enjoyment the owners got from driving it that day. But here’s the twist in the road: The researchers asked other drivers to list their car ’s make, model, and year, and then consider how they typically felt while driving it. When car owners thought about their vehicles in this light, those who owned more expensive cars reported deriving more enjoyment from driving. Suddenly there was a relationship between a car ’s value and its emotional payoff. Why? When people are asked how something generally makes them feel, they tend to draw on equally general theories to form an answer. Rather than reconstructing how they felt each of the last fifty times they drove the Bimmer and then averaging these experiences, a BMW owner is likely to think something like, “I own a midnight blue Z4 with three hundred horsepower and a retractable hardtop. Of course I enjoy driving it. Next question.” These undeniably fabulous features are likely to make a big difference for enjoyment during an initial test drive, which is why smart salespeople focus our attention on these features at the time of purchase. Novelty attracts the spotlight of attention, focusing our minds and exciting our emotions. But once we get used to something—even something as nice as a midnight blue Z4—the spotlight moves on
wealthier individuals reported a lower proclivity to savor life’s little pleasures. They were less likely to say that they would pause to appreciate a beautiful waterfall on a hike, or stay present in the moment during a romantic weekend getaway.6 This phenomenon helps explain why the relationship between income and happiness is weaker than many people expect. At the same time that money increases our happiness by giving us access to all kinds of wonderful things, knowing we have access to wonderful things undermines our happiness by reducing our tendency to appreciate life’s small joys… Canadian students saw a photograph of money and then ate a piece of chocolate, as researchers surreptitiously observed them.10 Compared to others who hadn’t seen the money, students who saw this photograph spent substantially less time eating their chocolate, chowing it down like Augustus Gloop. The observers also noted less enjoyment on their faces
After an initial chocolate tasting, students promised to abstain from chocolate for one week.15 Another group of students pledged to eat as much chocolate as they comfortably could, and they received a two-pound bag of chocolate to help them fulfill their pledge. The students who left with this reservoir of chocolatey goodness may seem like the lucky ones. But their sweet windfall came at a price. When they returned the following week to sample additional chocolate, they enjoyed it much less than they had the week before. People only enjoyed chocolate as much the second week as they had the first if they had given it up in bet
residents typically report that they’ve visited fewer landmarks—from Big Ben to Kensington Palace—than visitors who have only been there for two week… Faced with this choice, most people were happier with the two-month option, and 68 percent reported that they would use it before this expiration date.25 But when they received a gift certificate for a tasty pastry at a local shop, only 6 percent of people redeemed it when they were given a two-month expiration date, compared to 31 percent of people who were given the shorter three-week window.
In a study conducted at the Old North Church, one of the most-visited historical landmarks in Boston, American tourists completed a travel checklist just before entering the church, marking off the other cities they had visited.44 Some tourists saw a checklist that included evocative as the presentuln destinations such as New York, Orlando, and Las Vegas, places many Americans have visited. Others saw a checklist that included more exotic international destinations, such as Tokyo, Paris, and Sydney. As you’d expect, tourists checked off a lot more places when they were presented with the list of U.S. destinations, leading them to feel more well-traveled than people presented with the broader list of international destinations. The tourists went on their way, heading inside to check out the church. But the checklist changed how they behaved when they got there. Those who saw the list of exotic international destinations entered the church feeling like they were not well-traveled, and ended up savoring their visit more. They spent significantly more time enjoying the church compared to those who saw the domestic checklist
When the lottery prize was a $200 dinner to a gourmet restaurant, 84 percent of people bought a ticket. When the prize was $200 cash, only 65 percent of people bought the ticket. This difference is remarkable. After all, you could use the $200 in cash to buy a $200 dinner, or anything else you desired. But the opportunity for a treat in the form of a gourmet dinner provided a more compelling incentive than cash, which most people thought they’d use for boring necessities, such as groceries
Professionals who felt they had too little time in a day and were constantly rushed were much less satisfied with their jobs as well as their lives overall… They even reported more headaches and sleep problems… increased time affluence is linked to greater happiness even in those who say they prefer to be busy
Wealthier individuals are more likely to say they felt stress on the previous day
People with longer commutes have less life satisfcation, are less satisfied with their homes, and are less satisifed with their jobs… People report lower happniess when their spouse has a longer commute
People felt less stressed and disgruntled after taking the train compared to driving
People experience less pleasure watching television than more active forms of leisure…
People who watched more than 30 minutes of television per day were less satisfied with their lives than those who watched less
We view our choices about how to spend time as being connected to our sense of self… choice sbaou tmoney lead us to think in a cold rational manner… Focusing on time freses people to prioritize happeinss and relationships… Participans primed with money spent more time working, while those primed with time spent more time socializing and were more happ afterwards
People enjoyed music less if they had calculated their hourly wage… People paid by the hour are more liekly to see time as money… Hourly workers are more liekly to give up additional time in exchange for additional money… 32 percent of hourly workers reported they would trade time for money, whereas only 17 percent of nonhourly workers found this appealing
Some students were told which one of their favorite gifts they would receive, while others got the good news that they would receive both gifts. A third group learned something more uncertain. They would receive one of their two favorite gifts in a few minutes, but they weren’t told which one. Given the chance to look at pictures of the gifts while they waited, those students who didn’t yet know which gift they would receive gazed at the pictures the longest. And by the end of the experiment, they felt even happier with their single gift than students who received both gifts
People are driven to reduce their uncertainty by finding out what’s in the box. Yet successfully accomplishing this goal—taking away the uncertainty—can also take away the fun. The same region of the brain that responds when we anticipate something good (the nucleus accumbens) loses interest once we’ve gotten it
people led to believe that a set of cartoons would be funny ended up laughing more
people led to believe a politician would perform well in a political debate viewed his performance more positively than those who had been told he was under the weather
students got the most pleasure from playing a video game if they first spent a minute imagining how much fun it would be
waiting can increase satisfaction if customers get the impression that work is being done on their behalf during the delay
When people think about recent expenditures, they become more susceptible to actual, physical pain.34 Neuroeconomists have found some evidence that facing high prices can activate regions of the brain associated with anticipating real, stub-your-toe style pain
Desirable products like Godiva chocolates popped up on the computer screen followed by the price of the product, and people decided whether to purchase each product. Viewing enticing products promoted activation in the nucleus accumbens (the brain region linked to positive anticipation). But when a price appeared that participants evocative as the present6Lh considered excessive, their brains exhibited activation in the insula, a neural region that responds to diverse forms of impending pain. Activation in both the nucleus accumbens and the insula predicted individuals’ decisions about whether to purchase each product. Contemplating the purchase of something as simple as a box of chocolates can trigger a blend of both pleasure and pain, shaping our decisions about whether to reach for our wallets
When students had the opportunity to bid on a pair of tickets to a sold out sporting event, those told they would have to pay with cash by the next day bid an average of $28 for the tickets. Their peers who used credit cards bid an average of $60.38
Although the relationship between income and happiness is fairly weak among Americans, there is a much stronger relationship between individuals’ happiness and whether they have difficulty paying their bills.
what we owe is a bigger predictor of our happiness than what we make. In Britain, households with more debt exhibit lower happiness
Debt is particularly detrimental for marriage. Married couples with higher levels of debt show increases in marital conflict about everything from sex to in-laws
The average ratio of personal to prosocial spending was more than 10 to 1. But the amount of money individuals devoted to themselves was unrelated to their overall happiness. What did predict happiness? The amount of money they gave away. The more they invested in others, the happier they were. This relationship between prosocial spending and happiness held up even after taking into account individuals’ income. Amazingly, the effect of this single spending category was as large as the effect of income in predicting happiness. If you’ve been focusing on trying to make more money, remember that giving some of it away can be just as rewarding as getting more of it.
people who donated to charity in the past month reported greater satisfaction with life. This relationship emerged in poor and rich countries alike, and held up even after controlling for individuals’ income. Across the 136 countries studied in the Gallup World Poll, donating to charity had a similar relationship to happiness as doubling household income
Sometimes people could choose whether to give money, but sometimes the donations were mandatory, more like taxation. Even when donations were mandatory, giving to this worthwhile charity provoked activation in reward areas of the brain. But activation in these reward areas (along with self-reported satisfaction) was considerably greater when people chose to donate than when their prosocial spending was obligatory.
giving treats away to Monkey made toddlers happier than when they received treats for evocative as the present sh themselves. Perhaps most surprisingly, toddlers were happiest of all when they gave their very own treat to Monkey. Faced with the toddler equivalent of gold (Goldfish crackers), children derived more happiness from giving this precious resource away than from getting more of it themselves.
Both UNICEF and Spread the Net are worthy organizations devoted to children’s wellbeing, and the two are partners. But it’s a lot easier to see how your donation to Spread the Net will make an impact. And when donors give money to Spread the Net, they get a bigger happiness bang for each buck than when they give money to UNICEF
The benefits of having an impact can filter into your professional life, as well. In a study of eightytwo fund-raisers responsible for soliciting multimillion-dollar donations for the University of North Carolina, individuals who agreed with statements such as “I feel that my work makes a positive difference in other people’s lives” were less likely to experience emotional exhaustion at work
the consequences for happiness were similar across Canada and Uganda. People in both countries felt happier after thinking about a time when they’d spent their own money on others rather than themselves. Investing in others promotes happiness, even in relatively impoverished countries where money is tight and where prosocial spending commonly entails helping someone in dire need rather than enjoying a pleasant trip to the mall.
the more shame people felt upon deciding how much money to keep for themselves, the higher the levels of cortisol in their saliva afterward, suggesting that generous or stingy economic decisions can get under the skin
People who report donating money to charity feel wealthier than those who do not, even controlling for how much money they make. And giving as little as $1 away can cause you to feel wealthier
Teams who had been given personal bonuses went from winning 50 percent of their games before they received the bonus to 43 percent after. But those teams who received prosocial bonuses went from winning 50 percent of their games to dominating the league, winning fully 80 percent of their games post-bonus… Sales performance remained flat on the teams where members spent the money on themselves, but sales shot up on teams that received prosocial bonuses. For every 15 euros given to team members to spend on themselves, the company got just 4.5 euros back a few minutes leL—a net loss. Because sales failed to increase, personal bonuses were wasted money. In sharp contrast, for every 15 euros given to a team member to spend prosocially, the company reaped 78 euros
On days when they simply asked passersby to donate their spare change to the cause, they collected a total of $52.27. On days when they asked for donations and invited people to buy a can of Red Bull for $2.50 with 50 cents going to charity, they sold 15 cans (yielding $7.50 for charity) and collected $10.55 in donations. The donation drive yielded three times as much money when people were asked simply to donate
a more equal distribution of money across people is associated with higher average well-being in the world’s countries
By asking people where they would like to see their taxes spent, people’s satisfaction with paying their taxes and their beliefs that their mtax money proivded value to the country increased

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