Bloomsbury blog Spend to maximise your happiness

Bloomsbury newsletter, 30 June 2019

Recently we heard about someone with a family member in their late 80s moving to new but smaller accommodation. As the family converged to help, they found so much more than could possibly fit into the new place.

They found many loved treasures, well-worn and used items, but also kitchen equipment long forgotten, tools idle for years, hats never worn, jewellery never adorned.

They found stuff, lots and lots of stuff. Even after several rounds of giving away to charity and friends, there was still more stuff than was possibly needed.

That got us thinking about money, stuff and happiness. Most people seek happiness.

Some economists even think happiness is the best indicator of the health of a society. However, while money can make us happier, studies show that after our basic needs are met, it doesn't make us that much happier.

A 1978 study¹ compared lottery winners in the United States with a control group that didn't win money.

Not surprisingly, the lottery winners did report more happiness, initially, but over time there was very little difference between them and the control group. What's more, the lottery winners actually reported the least enjoyment in simple activities.

The New York Magazine ran an interesting article entitled "The Science of Us" where the author Melissa Dahl said,

"The thrill of winning the lottery will itself wear off. If all things are judged by the extent to which they depart from a baseline of past experience, gradually even the most positive events will cease to have impact as they themselves are absorbed into the new baseline against which further events are judged".

Basically, we adjust to our new reality very quickly. Once we do, positive feelings come from unexpected improvements from the new reality, and negative feelings come from unexpected losses from the new reality. But just being at the new reality eventually ceases to feel special. It just feels… normal.

Dr. Thomas Gilovich, a psychology professor at Cornell University has been studying the question of money and happiness for over two decades. Gilovich says, "One of the enemies of happiness is adaptation. We buy things to make us happy, and we succeed. But only for a while. New things are exciting to us at first, but then we adapt to them."

This is why some people buy things they don't need, or even use. The purchasing of material possessions makes us happy, but the feeling wears off, sometimes with astonishing speed. The need to recapture this feeling can be strong and the cycle continues, whether or not there is a need or even space to put the new things.

There are a number of reasons why material possessions don't permanently improve our happiness. Our tastes change, fashions change, possessions often require maintenance and someone else always has more.

So, what can we do?

Well, we are not making a case against spending. The old adage is true; you can't take money with you when you go. But the truth is you can't take your material possessions either. The answer might be to try to target your spending on ways to maximise your happiness, rather than on just accumulating more stuff. With that in mind, the following ideas might be worth more than a second thought.

1. Spend on experiences not things: Research has shown² that after the fact, we enjoy our memories of good experiences rather than the things we have bought but don't really need. Experiences come in every shape and size, but our favourites are often the ones that remind us of being young. For those with a love of animals and photography, then a trip to Africa may be in order. Dreamed of being an astronaut? Perhaps a trip to Kennedy Space Center. If cricket is your passion, then the World Cup every four years is a must.
2. Spend money to be social and learn skills: Good relationships make human beings happy and fulfilled³, so consider spending money enhancing relationships in social settings. This could be related to learning a new skill such as a painting or pottery class where there is an opportunity to meet people and form new friendships. Joining a golf club or taking up a gym membership is a way to meet people with similar interests and stay fit. Spend money doing activities around and with other people.
3. Spend money to volunteer and share with others: There are many wonderful causes in the world so find one that aligns with your own views and ideals. Spending time and money supporting those causes can give incredible joy⁴ and lead to strong and lasting relationships.

Striving for happiness is a pursuit that everyone shares but perhaps not many of us think too deeply about. And while the list of the ways to maximise your happiness is surely longer than these three suggestions, what they have in common is that each requires a level of contemplation or planning.

The first step is to realise that the true measurement of happiness is not in the volume of stuff cluttering up your garage, it's much more commonly found in the quality and vitality of the relationships you develop with others, and the mutual shared experiences you enjoy along the way.

References

1. Lottery Winners and Accident Victims: Is Happiness Relative? (PDF, 888KB)
2. A good summary of this research is found at - Why You Should Spend Your Money On Experiences, Not Things
3. One major study on this theme is found here - Interpersonal relationships and irrationality as predictors of life satisfaction
4. A good summary of this science is found here - Key to Happiness: Give Away Money