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8 Scientifically Proven Principles of Happiness

This article was written by in Consumer, Psychology. 13 comments.


There is a link between wealth and happiness, but it’s not that having more of the former results in more of the latter. The Journal of Consumer Research published a study involving a scientific analysis of the link between money and happiness designed and analyzed by researchers at the University of British Columbia, Harvard University, and the University of Virginia. The study indicated there is a direct link between wealth and self-reported satisfaction with one’s life, but no such correlation between wealth and a measurement of happiness.

The study looks at reasons this may be the case, and through a number of investigations, concludes the following:

This suggests that our money provides us with satisfaction when we think about it, but not when we use it. That shouldn’t happen. Money can buy many, if not most, if not all of the things that make people happy, and if it doesn’t, then the fault is ours.

I understand this. When I look at my life objectively, I see I should be happy. I’m financially independent, and I have access to anything I need and many things I want. I am in charge of my daily schedule, and I can spend my time doing whatever I like. Objectively, my life is very satisfying. So why am I not as happy on a day-to-day basis as I think I should be, given these circumstances?

According to the study, it’s because I — and, on average, everyone else — don’t spend wealth in a way that would lead to happiness. Maybe you can relate to this, too. Wealth provides access to many things that can contribute to a happy life, like better nutrition, healthcare, leisure time, and jobs, but these don’t necessarily contribute to self-reported happiness.

The analysis group of studies included in the published paper leads to eight approaches to spending money that will result in more happiness. Some of the suggestions are common-sense approaches to money management that I’ve written about on Consumerism Commentary, while others seem to oppose what financial advisers, planners, and authors present as good money advice. In the coming weeks, I’ll address each of these eight principles more in depth.

1. Buy experiences instead of things.

A few years ago, Laura Rowley, author of Money and Happiness: A Guide to Living the Good Life, was a guest on the Consumerism Commentary podcast. She pointed to an earlier study that showed that happiness plateaued at a household income of level of $75,000. There’s a lot of criticism of this study because, among other things, $75,000 in one location like New York City means something else to a family than $75,000 earned in rural Ohio. The study itself was recently debunked, but some of the conclusions still make sense with the new information.

One of these conclusions is that it’s better to to frame your financial choices in terms of experiences, as Laura Rowley mentioned in the podcast. Experiences create memories that contribute more to happiness than what you might achieve by buying products.

2. Help others instead of yourself.

Anything people due to nurture social connections with others increases happiness, and wealth can be used in such a manner. The study showed that those who spend more of their wealth on gifts for others and on charitable contributions than on bills and gifts for themselves are happier. Not only does prosocial spending affect self-reported happiness, but another experiment shows that the behavior created happiness that’s visible when observing the brain’s neurons.

3. Buy many small pleasures instead of few big ones.

The study uses this example to illustrate this point: “Eating a 12 oz cookie is not twice as pleasurable as eating a 6 oz cookie because the first X% of a cookie’s weight accounts for more than X% of its hedonic impact.” This is one of the reasons why it’s better to take your finite financial resources and spread them out over many things you find pleasurable rather than reaching for the experiences that are the most expensive. While the first principle might say it’s better to go on one $2,500 cruise than buying one $25,000 television, this principle says it’s better for your happiness to go on 50 dinners than one cruise.

4. Buy less insurance.

Most Americans are under-insured. An emergency fund is a type of self-insurance against the likelihood of a short-term financial setback, but this often needs to be supplemented with health insurance, life insurance, car insurance, and renter’s or home insurance. Many people need some form of general liability insurance, too.

These are all good uses of money, even though they might not correlate directly to happiness. But because consumers overestimate how much they’d be affected by a broken object, they’re led to extend the concept of insurance to the things they buy. Salespeople use this apprehension to sell extended warranties for products. Studies show that people are not generally affected negatively when products break without a warranty or generous return policy. If you are told that “all sales are final,” you appreciate the purchase much more.

5. Pay now and consume later.

The societal norm today is to consume now and pay later. That’s the premise of the credit card industry, and we’re lured into that spending behavior with generous cash back offers and other perks. We can delay the pain of parting with our money at the same time we advance the opportunity to consume. Shortsighted behavior results in financial problems in the future, and that’s one reason why the opposite approach increases happiness.

The other reason is that delayed gratification increases anticipation, and resolution of the feelings of anticipation inspire happiness.

6. Think about what you’re not thinking about.

When you daydream about the future, you’re more likely to think about it in abstract terms. As you get closer, whether in time or in physical space, details begin to emerge that cloud your happiness. This is apparent when you’re planning for a vacation. Six months in advance, your trip to Walt Disney World seems like a great idea, but as the time to depart gets closer and the details come into focus, you begin to think about all the frustrations you will experience. Those details, good and bad, will affect your level of happiness when the time comes, more than just the fact that you and your family are at Walt Disney World.

Thinking about those details in advance will prepare you for the future and will help you make better decisions about the future in terms of your happiness.

7. Beware of comparison shopping.

This gets interesting. Comparison shopping is a tool of the frugal consumer. It’s good to make a purchasing decision based on all data available, even if price is just one part of the comparison. Comparison shopping so so popular that there are even sections of Consumerism Commentary designed to help people make decisions about their money. Consumer Reports helps people, too, by rating products within appropriate categories to make informed decisions about spending money.

It turns out that shopping based on comparisons — which focus on how one version of a product differs from another — take focus away from attributes that are more likely to make someone happy. You can use online tools to compare a car’s specifications. Shoppers can determine what facts from among the categories will result in the best purchase, but the factors that contribute to happiness with a car purchase — perhaps the feeling of envy from friends, whether the driver’s seat fits you perfectly, or whether there’s enough room to make love in the backseat — are not listed or not really considered when shopping using a financially responsible, comparison-based approach.

8. Follow the herd instead of your head.

The best way to predict enjoyment of an experience is to see how much other people enjoyed the same experience. Going back to the Walt Disney World example, if more of my friends shared with me, more stories about their enjoyment of the vacation, the more I will enjoy my vacation there. Seeing that others are happy with their decisions increase our own happiness with the same decisions. In an experiment, women predicted how much they’d enjoy a date using two methods. The first was by photograph and biography of their date alone, the second was based solely on another woman’s previous analysis of the date. Those who received the photograph and biography made more inaccurate predictions of how they would enjoy their date.

Is your goal in life to be rich in financial terms only or do you want to be rich in happiness, as well? If you like the idea of living one happy experience after another, then it takes more than just wealth and financial independence. How you spend your money determines whether you’re happy. These principles should help you use your money in ways that are more likely to produce happy feelings.

There is much depth in these principles, so this article is just an overview. Each principle deserves its own analysis. For more information on the experiments conducted that led the researchers to these suggestions for happiness, read the study linked below.

Journal of Consumer Psychology

Updated May 30, 2014 and originally published May 7, 2013. If you enjoyed this article, subscribe to the RSS feed or receive daily emails. Follow @ConsumerismComm on Twitter and visit our Facebook page for more updates.

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About the author

Luke Landes is the founder of Consumerism Commentary. He has been blogging and writing for the internet since 1995 and has been building online communities since 1991. Find out more about Luke Landes and follow him on Twitter. View all articles by .

{ 13 comments… read them below or add one }

avatar krantcents

I think it depends on how you look at your situation. If you always want more no matter how much you have, you will be unhappy. If you change your mindset, you can be happy with a lot less. I meet the threshold of earnings in one of the highest cost of living areas (Los Angeles)! I have no debt except for a small mortgage and car loan. Both of which will be paid off in the next 4 years. I do not spend lavishly, but enjoy my life.

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avatar Jenny @ Frugal Guru Guide

Seriously, money can buy most thing that lead to happiness? Puh-leese. If that were true, then the more children you have, the less happy you’d be, but most people, in their old age, find family to be a major source of their happiness–or their regrets. And the fabulously wealthy would all have great marriages and personal lives. Yeah, you can totally see how HAPPY most celebrities are….

Having fun isn’t the same thing at all as being happy.

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avatar Luke Landes ♦127,505 (Platinum)

Yes, but… If you’re in debt up to your ears, and have immense stress because you and your spouse are both working several jobs to pay for just your family’s necessities, you’re not going to be happy no matter how nice your family is or how strong your spouse hugs you. And stress caused by financial problems could mean those hugs are few and far between.

It’s romantic to think that love is all you need, but when it comes to the reality of day to day happiness, financial independence gives you what you need to let your time with family provide you with what the study is addressing. That’s not to say money is more important than family. That goes against what I believe.

The study doesn’t say that money is the only thing that produces happiness, it’s just looking at why the expected correlation between wealth and happiness is elusive, and the conclusion is that certain spending habits eliminate the potential correlation.

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avatar Shan

I agree with Jenny. The reason the expected correlation between wealth and happiness is elusive is because it does not exist. A couple working extra jobs to pay off debt can absolutely be happy if they are making progress and working toward a common goal together.
Once you have the minimum of a roof over your head and food to eat and good medical care, it is all about relationships with people, having a grateful attitude, and achieving long-term goals that will lead to happiness.

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avatar qixx ♦1,895 (Half-Dollar)

If you chang the first one to “Invenst in experiences instead of things.” Than the family=happiness metric can be met. Provided you actually do that investment.

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avatar Anne

A 12-ounce cookie makes you unhappy because it gives you a tummyache. :)

Seriously though I’m not sure about #3. It’s counterintuitive to me, at least. I think I am happier taking a trip I’ve been looking forward to than having a small pleasure every day that I can easily discount. In fact the small pleasure becomes routine and stops feeling like an indulgence after a while, while the trip is something you can both look forward to and look back on fondly.

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avatar Luke Landes ♦127,505 (Platinum)

I think you make a great point, Anne. Small pleasures can indeed begin to lose their positive effect. Maybe there’s a case for balance between the two types… frequent smaller pleasures in addition to special occasion larger pleasures. Keeping variety with the smaller pleasures would help, too.

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avatar qixx ♦1,895 (Half-Dollar)

Business articles i read often say just the oposite. That the bigger vacation is required to hit that point of actually being able to let go (of work, stress, whatever you are trying to get away from). One year after taking that 2 week vacation you will be happier than the person that took one friday off every 4 weeks.

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avatar Luke Landes ♦127,505 (Platinum)

I think you’re saying the same thing Anne is.

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avatar Squirrelers

The older I get, the more I realize that it’s the experience with the people I care about most that have been better uses of funds than material purchases. Much better use of money. Plus, we can grow and develop from experiences, while a new pair of shoes can’t do much for us in that regard!

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avatar Kylie Ofiu

Interesting. The things that bring me most happiness are actually my kids, the funny things they say and dom plus the bond we share.

But in terms of money and happiness, I love these 8 points. Experiences mean so much more than just buying stuff. In fact, last year when I was robbed and got my insurance I first donated money to 2 of my fav charities, then did stuff I had been wanting to do then replaced my clothing etc. that was stolen. The helping others with my money, the experiences and thinking about the future and what I could do with the money was more interesting and fun than anything I actually bought.

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avatar John S @ Frugal Rules

Very interesting. I find that as I get older that #1 means much more to me. Creating those experiences with my family that will help develop lifelong memories for us and our children really can be special and means much more than anything we could just simply buy for themselves or for us.

I am not certain that I agree entirely with #3, though I guess it’s just like anything else and you need to have balance. There are times where I’d much rather scrimp some to take that really nice trip and create fun memories, but you also have to allow for the small things to make the day to day somewhat enjoyable.

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avatar Jacob @ Cash Cow Couple

Interesting article Luke. I’d agree for the most part, although some large purchases might deliver more happiness than the sum of little ones. I suppose it’s all context.

And following the herd mentality is usually a sure fire way to be miserable in financial matters. Most people spend incessantly. I prefer to spend very little and make the most of every situation.

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