Amazing Psychology: 5 Ways In Which Money Really Can Buy Happiness

Published on the Newsline Magazine blog in December 2011:

Happiness doesn’t buy happiness. It’s a ridiculously overused saying. You hear it all the time. From your parents – probably followed by its even more clichéd sister, “Money doesn’t grow on trees”. It’s the message those movies give you, in which the poor main protagonist, who is constantly complaining about having no money, suddenly gets rich, only to discover that all the money in the world can’t fill the sad, sad hole in his heart. It’s not like the message is incorrect. After all, clichés become clichés for a reason – because there is a grain of truth in them. And if I had to bet, I’d probably say that a person with healthy, fulfilling relationships would be happier than a person with an obscene amount of money in his bank account and no friends. But recent studies show that there are ways in which money can increase your happiness. In fact, these researchers say that if money isn’t buying you happiness, then you’re probably not spending it right! Here are some ways in which you can use your money to give you greater pleasure:

  1. Spend money on others

Research suggests that we think that spending money on ourselves will make us happier than spending money on other people. As is often the case, we are wrong. There is evidence from several studies which suggests otherwise. For example, in one study, participants were given $5 and $20, and it turned out that those who spent that money on others were happier than those who spent it on themselves. Also, people who spend a greater proportion of their income on donations and charity are happier than those who spend more on themselves (Dunn at al, 2011).

But why? Why is it that spending money on other people gives us such pleasure? Well, one reason that pro-social spending is good for our happiness is that it makes us feel good about ourselves. It helps us form a self-image in which we are generous and large-hearted, which makes us happy. Also, spending money on others helps cement our social relationships, and people with stronger social ties are generally happier.

  1. Buy more experiences instead of material things 

In an experiment conducted by Leaf Van Boven from the University of Colorado and Thomas Gilovich from Cornell University, participants were divided into two groups. One group was asked to write a description about a material purchase (a gadget, clothing, etc) that made them happy. The other group was asked to write about an experiential purchase (a meal out, tickets to a concert, etc) that made them happy. Their happiness was measured before and after they wrote these descriptions. A week later, the same participants were called and asked to read and reflect on their description, and their happiness was measured then, as well.

Results showed that thinking about experiences gave the participants more pleasure than thinking about material purchases. Van Boven and Gilovich also discovered that people spend more time thinking about the experiences they purchased rather than the materials.

The reason why buying experiences is better than buying material things is that experiences improve with time. You can think about past experiences in the abstract and so those experiences can take on a symbolic meaning in your memory. On the other hand, purchases are harder to think about in the abstract. A car you bought will just be a car. Another reason why experiences give greater pleasure is that experiences have more social value than purchases. Experiences tend to improve our social relationships, which in turn makes us happy. Also, it is more socially acceptable to talk about experiences. For example, you are a lot more likely to want to punch a guy who goes on and on about the latest iPhone he bought, than a guy who keeps talking about his trip to Paris.

  1. Pay now and consume later 

Having something to look forward to greatly increases our happiness. It’s not just common sense, it has been found to be true in research (Bryant 2003). The power of anticipation in boosting our general well-being is incredible. That is why our modern consumer philosophy of “buy now and pay later” robs us of pleasure. Part of the pleasure of purchasing something is the anticipation of actually getting it.

There is a part in our brain which thinks that we would be happier if we got it right away. But that part is like a greedy, starving 6-year-old in a room full of candy. So basically, someone not to be trusted. One might think that what you lose in anticipation, you’ll gain in reminiscing. But this doesn’t seem to be true. The pleasure people get from anticipation is greater than the pleasure they get from their reminiscences (Van Bowen and Ashworth, 2007). This is partly due to the Zeigarnik effect, which says that something is going to stick in your mind as long as it’s unfinished, or not obtained. Once it is completed or achieved, you tend to forget about it. But while it is still in the future, your mind keeps mulling it over.

In this way, internet shopping is actually beneficial (its other major benefit is that it allows you to shop in your pajamas), because it makes you pay right then, but you actually get your hands on your purchase later. Waiting for good things is fun. It is, as Dunn calls it, ‘free pleasure’.

  1. Beware of comparison shopping 

Buying shampoo these days is like a nightmare. You walk into a store and there will be about a thousand different shampoos for a thousand different hair types. There are herbal shampoos, two-in-one shampoos, shampoos for dry hair, silky hair, silky-but-sometimes-frizzy hair. In short, the quantity of choices you are faced with when you want to buy something is mind-blowing.

Making comparisons between different products is supposed to help us get a better deal. But it doesn’t always work that way because our mind has a nasty habit of making a big deal out of irrelevant differences.

In a study conducted in by Morewedge et al (2010), participants were asked to predict how much they would enjoy a potato chip. Half the participants were in a room which had superior snacks such as expensive chocolate bars and the other half were in a room with inferior snacks, like crackers. The people in the superior snack room predicted that they would enjoy the potato chip less than those in the inferior snack room. Later, it was found they liked the potato chip exactly the same, no matter the surrounding snack. The lesson to be had here is that comparisons mess with your mind.

When we go shopping for a car or a chocolate bar, we tend to make a big deal out of the differences between similar products. In reality, the difference in our enjoyment is much smaller than we imagine. Psychologists suggest that comparison shopping is more trouble than it’s worth. Going crazy choosing between features or models won’t make much of a difference. In fact, these small differences can actually make you spend more money than you want, when you can buy a cheaper product which would give you the same amount of pleasure.

  1. Buy many small pleasures instead of a few big ones 

In 2008, Nelson and Meyvis conducted an experiment in which they had participants massaged for three minutes. Half the participants were given one continuous massage while the other half had a 20-second break in between. Surprisingly, the latter group enjoyed the massage more. This was because the break prevented them from getting acclimatized to the massage.

Acclimatising or adaptation is the enemy of happiness. Once we get used to things, they give us less pleasure, and after awhile we start taking them for granted. But if you keep doing small, different enjoyable things, you’ll get more pleasure and you will be overall happier.

People who are able to savour the small things in life are happier. People who are richer tend not to savour the small things so much, which is why they aren’t as happy as you would think, despite the mansion and the Ferrari (I know, your heart bleeds!).

So the next time you want to splurge on that designer dress? Spend the money going out to that cheap café around the block, with your friends a bunch of times instead. It will make you happier. The research says so.

Read this at the Newsline website:

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