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Does money buy greater happiness?

October 3, 2010 12:35 am

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THE PAST FEW years, a difficult economic recession has required many Americans to cut back on unnecessary purchases and leisure activities. The term "stay-cation" has cropped up in many Facebook communications. People are staying at home instead of traveling, to get the relaxation benefits without the expense. Despite the feeling of sacrifice, Americans may be learning important lessons about living in a way that brings greater happiness.

The expression "Money can't buy happiness" is an extremely hard maxim for many to accept. Americans seem to think that if we could just make more money, then we would be happier. The problem is that we tend to overestimate both the happiness associated with good things and the negative feelings associated with life's bad things.

The truth is that people are adaptable and resilient. If there is an annoying light fixture flickering overhead, at first we think it will drive us crazy, but soon we barely notice it. Or we are able to tune out annoying noise (traffic outside our window or our children playing nearby) and focus on the task at hand.

People habituate easily to distracting stimuli in the environment and are able to focus on important things like school, work, or a conversation with a friend. Indeed, we habituate to most circumstances of our lives, whether good or bad, in a relatively short period and maintain a somewhat consistent level of happiness over time.

While it's true that people get a surge of happiness when they make a big purchase or experience a change in life circumstances--like starting a new job--they soon generally return to their original state of happiness. There are two primary factors that researchers use to explain this phenomenon.

First, there is a strong genetic basis to happiness that determines a person's happiness "set point." We must think of this genetic set point as being like the thermostat in our homes. After the temperature in the house rises (or happiness increases), the heat turns off until the house cools down to the temperature set on the thermostat (the happiness set point).

In happiness terms, this "cooling off" process is referred to as "hedonic adaptation," the second factor in adapting to life circumstances.

People adapt to hedonic pleasures in their lives and return to their baseline level of happiness. This relationship also holds true for society at large, as demonstrated by what's called the "progress paradox": Despite significant progress and economic growth over the past 50 years, happiness levels have remained relatively constant or declined.

The good news is that the genetic basis of happiness accounts for about only 50 percent of people's happiness levels. However, the things that we think would make us happy-- such as more money, a bigger house, a newer car, or the latest electronic gadget--really don't contribute that much to happiness. Taken together, the circumstances of life, including wealth, marriage, health, attractiveness, and education level, account for only 10 percent of our happiness because we habituate to our circumstances. Big changes quickly become a normal part of life, and we return to our happiness set point.

MORE ISN'T BETTER

There are a few qualifications to the general rule that money doesn't buy happiness. Money is related to happiness when people do not have enough money to meet basic needs for food, shelter, and clothing and still have a little left over for non-essentials. But a new study by Nobel Prize winner Daniel Kahneman at Princeton University identified $75,000 (depending upon where you live) as the income above which the relationship between happiness and income basically disappears. More income does not translate to being happier.

Another qualification to the money-doesn't-buy-happiness idea is that there are multiple ways of viewing happiness. Having a higher income is not related to the moment-by-moment positive feelings we associate with happiness; however, it does increase people's overall satisfaction with their lives or view of themselves as successful.

So, if about 50 percent of happiness is explained by our genes and 10 percent by our life circumstances, what accounts for the remaining 40 percent? Researchers are starting to view happiness as similar to weight loss. There is a genetic basis for the weight that each person's body will tend to maintain (again, a set point), which is often higher than we'd like. In order to lose weight, we must make lifestyle changes to diet and activity levels.

Analogously, this same type of intentional activity can increase happiness above the natural set point. The activities that promote happiness are those we have resorted to during the recession because we haven't had as much disposable income as usual, such as staying at home for game or movie nights with family and friends.

The No. 1 predictor of happiness across studies and cultures is good relationships.

PERSONAL INVESTMENT

Spending time with the people we care about increases positive feelings as well as building social support that we can call on in times of need (a friend to bring us chicken soup when we're sick). This investment in close relationships may have happened out of the necessity of the recession, but could result in unanticipated long-term benefits.

If buying material goods doesn't increase happiness, how can we maximize the benefits of the expendable income we do have? We now know that we will quickly habituate to a large purchase. To offset the tendency to adjust to the positive feelings generated by getting something new, we can make frequent small purchases, such as flowers or a new shirt, instead.

There is evidence that spending money on experiences can increase happiness. Having a picnic or taking a vacation allows us to increase happiness through several mechanisms. First, a shared experience with family or friends can increase the social bonds that are robustly associated with happiness.

Second, savoring the experience in the moment and reminiscing about it afterward are both associated with increased happiness.

We often look back at our experiences with "rose-colored glasses," remembering the positive about the time and the people who shared it with us. Having positive illusions (within reason), rather than dwelling on the negative, is also associated with being happier.

And finally, being grateful for what we have (good friends, our health, etc.), even during difficult economic times, increases happiness. Taking the time to count our blessings and to realize that, while we may not have it as good as we used to, we have it a lot better than most people in the world--that can put things into perspective.

The bottom line: The things we think will make us happy do not make us as happy as we would think. So the question is, will we go back to our old spending habits after economic recovery? Or will we take to heart the lessons we've learned during this recession, making permanent changes in how we spend our time and money that may ultimately increase happiness?




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Holly H. Schiffrin is an assistant professor of psychology at the University of Mary Washington and PCI Certified Parent Coach who conducts research in the area of positive psychology and child development.




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