Yes, money can buy happiness. But it buys less than most people think. That is the starting point for a revealing study of research into what makes people happy. Carried out by serious thinkers including Daniel Gilbert (pictured) and published in the Journal Consumer Psychology, the full article If money doesn’t make you happy, then you probably aren’t spending it right is also available online as a pdf.
The article helpfully summarises key principles to be followed by anyone who wants to think about what money is for, and how to use it to maximise their happiness. Here are the first four principles, with brief explanations from me based on much fuller and better ones in the article.
Watch out for the remaining principles in a future post. When you’ve read these you’ll appreciate the thinking behind splitting them in this way. It gives you more happiness than reading them all in one go would have done. Either way, they are invaluable source material for discussion and argument with young people.
Principle 1: Buy experiences instead of things
There are various theories about why people get more happiness from things they do than things they own. You get used to things you buy, but experiences are different each time. And you get more pleasure from anticipating and remembering experiences than you do reflecting on things. Also, experiences tend to be shared, and other people are a great source of happiness.
Principle 2: Help others instead of yourself
Easy to mock, but there’s sound evidence that spending money on other people leads to activation in brain areas that associated with receiving awards. Give individuals a £20 note and randomly ask some to spend it on themselves and some to spend it on others. Those who spent on others were happier. Just because people don’t think this is true, doesn’t mean it isn’t.
Principle 3: Buy many small pleasures instead of few big ones
The trouble with big ticket items is that you get used to them. The novelty and excitement wears off. Smaller but more frequent pleasures tend to score more highly on novelty, surprise, uncertainty and variability. We pay more attention and don’t get used to them so quickly.
Principle 4: Buy less insurance
The theory here is linked to the previous principle. You get used to pleasures, so they don’t wow you anymore like they first did. Likewise, you get used to bad things that happen to you. Put another way, we tend to overestimate our vulnerability to negative happenings. So businesses naturally trade on that by offering insurance against various forms of potential future unhappiness. Generally, it’s not worth it.
