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  • How Money Can Buy You Happiness

    Despite assertions to the contrary, science tells us that money can buy
    happiness. To a point. From a recent study (my emphasis):

    We report an analysis of more than 450,000 responses to the Gallup-
    Healthways Well-Being Index, a daily survey of 1,000 US residents
    conducted by the Gallup Organization. […] When plotted against income,
    life evaluation rises steadily. Emotional well-being also rises with log
    income, but there is no further progress beyond an annual income of
    ~$75,000. For reference, the federal poverty level for a family of four
    is currently $25,100. Once you reach a little over 3 times
    the poverty level in income, you've achieved peak
    happiness, as least far as money alone can reasonably
    get you.

    This is something I've seen echoed in a number of studies.
    Once you have "enough" money to satisfy the basic items at
    the foot of the Maslow's Hierarchy of Needs pyramid – that is,
    you no longer have to worry about food, shelter, security, and
    perhaps having a bit of extra discretionary money for the
    unknown – stacking even more money up doesn't do much, if
    anything, to help you scale the top of the pyramid.

    But even if you're fortunate enough to have a good income,
    how you spend your money has a strong influence
    on how happy – or unhappy – it will make you. And, again,
    there's science behind this. The relevant research is
    summarized in a recent study in Journal of Consumer
    Psychology by a quartet of Harvard researchers: If money doesn't
    make you happy, then you probably aren't spending it right:

    Most people don't know the basic scientific facts about happiness — about
    what brings it and what sustains it — and so they don't know how to use
    their money to get it. It is not surprising when wealthy people who know
    nothing about wine end up with cellars that aren't much better stocked than
    their neighbors', and it shouldn’t be surprising when wealthy people who
    know nothing about happiness end up with lives that aren't that much
    happier than anyone else's. Money is a chance for happiness, but it is an
    opportunity that people routinely squander because the things they think will
    make them happy often don't.

    What is, then, the science of happiness? I'll summarize the basic six
    points as best I can…

    1. Buy experiences instead of things
    Things get old. Things become ordinary. But experiences are totally
    unique; they shine like diamonds in your memory, often more
    brightly every year, and they can be shared forever. Whenever
    possible, spend money on experiences such as taking your family
    to Disney World, rather than things like a new television.

    2. Help others instead of yourself
    Anything we can do with money to create deeper connections with
    others tends to tighten our social connections and reinforce positive
    feelings about ourselves and others. Imagine ways you can
    spend some part of your money to help others – even in a very
    small way – and integrate that into your regular spending habits.

    3. Buy many small pleasures instead of few big ones
    Because we adapt so readily to change, the most effective use of
    your money is to bring frequent change. Break up large purchases,
    when possible, into smaller ones over time so that you can savor
    the entire experience. When it comes to happiness, frequency is
    more important than intensity. Discover how many small,
    pleasurable purchases are more effective than a single giant one.

    4. Pay now and consume later
    Immediate gratification can lead you to make purchases you can't
    afford, or may not even truly want. Impulse buying also deprives
    you of the distance necessary to make reasoned decisions. It
    eliminates any sense of anticipation, which is a strong source of
    happiness. For maximum happiness, savor (maybe even prolong!)
    the uncertainty of deciding whether to buy, what to buy, and the
    time waiting for the object of your desire to arrive.

    5. Think about what you're not thinking about
    We tend to gloss over details when considering future purchases,
    but research shows that our happiness (or unhappiness) largely lies
    in exactly those tiny details we aren't thinking about. Before making
    a major purchase, consider the mechanics and logistics of owning
    this thing, and where your actual time will be spent once you own
    it. Try to imagine a typical day in your life, in some detail, hour by
    hour: how will it be affected by this purchase?

    6. Beware of comparison shopping
    Comparison shopping focuses us on attributes of products that
    arbitrarily distinguish one product from another, but have nothing
    to do with how much we'll enjoy the purchase. They emphasize
    things we care about while shopping, but not necessarily what we'll
    care about when actually using what we just bought. In other
    words, getting a great deal on cheap chocolate for $2 may not
    matter if it's not fun to eat.

    Happiness is a lot harder to come by than money. So when you do
    spend money, keep these lessons in mind to maximize what
    happiness it can buy for you. And remember: it's science!

    Dennis Bridges | 06/08/2018