Scholars at the University of Virginia, University of British Columbia and Harvard University sought to make sense of a seeming contradiction in the way some people relate to money: “When asked to take stock of their lives, people with more money report being a good deal more satisfied. But when asked how happy they are at the moment, people with more money are barely different than those with less.”
In a 2011 study published in the Journal of Consumer Psychology, “If Money Doesn’t Make You Happy, Then You Probably Aren’t Spending It Right,” the scholars collected findings from multiple academic papers to distill the chief lessons of the research community on how best to spend to maximize happiness. The study then formulated eight general recommendations and lessons:
- Spend money on “experiences” such as travel, concerts and sporting events rather than goods; in one study examined, 57% of survey participants reported gaining greatest happiness from experiential purchases compared to 34% from material goods.
- Give money to others via charities, personal relations, or political donations, rather than using it solely on oneself; not only do people self-report being happier but “the emotional rewards of prosocial spending are also detectable at the neural level.”
- Spend small amounts of money on many small, temporary pleasures rather than less often on larger ones. The authors find that “not only are the small pleasures of daily life an important source of happiness, but unfettered access to peak experiences may actually be counterproductive.”
- Don’t spend the money on “extended warranties and other forms of overpriced insurance”; indeed, “research suggests that the warranties may be unnecessary for happiness and the return policies may actually undermine it.” Hedging against future regret or disappointment can deprive one of the “emotional benefit of commitment.”
- Switch from the mentality of “consume now, pay later” to “pay now, consume later,” because “research shows that thinking about future events triggers stronger emotions than thinking about the same events in the past.”
- Think carefully about the day-to-day consequences, particularly the negative ones, of a purchase before you commit to it: “Over time, psychological distress is predicted better by the hassles and ‘uplifts’ of daily life than by more major life events.”
- Avoid buying things because they are comparatively better from a monetary perspective: “Comparison shopping may lead people to seek out products that provide the ‘best deal’” rather than the greatest happiness.
- Ask previous consumers their opinions before purchasing: “Research suggests that the best way to predict how much we will enjoy an experience is to see how much someone else enjoyed it.”
Tags: consumer affairs, metastudy, tourism