Posted by The Situationist Staff on August 12, 2012
An excerpt from a recent, terrific New York Times piece by Elizabeth Dunn and Michael Norton:
The notion that money can’t buy happiness has been around a long time — even before yoga came into vogue. But it turns out there is a measurable connection between income and happiness; not surprisingly, people with a comfortable living standard are happier than people living in poverty.
The catch is that additional income doesn’t buy us any additional happiness on a typical day once we reach that comfortable standard. The magic number that defines this “comfortable standard” varies across individuals and countries, but in the United States, it seems to fall somewhere around $75,000. Using Gallup data collected from almost half a million Americans, researchers at Princeton found that higher household incomes were associated with better moods on a daily basis — but the beneficial effects of money tapered off entirely after the $75,000 mark.
Why, then, do so many of us bother to work so hard long after we have reached an income level sufficient to make most of us happy? One reason is that our ideas about the relationship between money and happiness are misguided. In research we conducted with a national sample of Americans, people thought that their life satisfaction would double if they made $55,000 instead of $25,000: more than twice as much money, twice as much happiness. But our data showed that people who earned $55,000 were just 9 percent more satisfied than those making $25,000. Nine percent beats zero percent, but it’s still kind of a letdown when you were expecting a 100 percent return.
Interestingly, and usefully, it turns out that what we do with our money plays a far more important role than how much money we make. Imagine three people each win $1 million in the lottery. Suppose one person attempts to buy every single thing he has ever wanted; one puts it all in the bank and uses the money only sparingly, for special occasions; and one gives it all to charity. At the end of the year, they all would report an additional $1 million of income. Many of us would follow the first person’s strategy, but the latter two winners are likely to get the bigger happiness bang for their buck.
We usually think of having more money as allowing us to buy more and more of the stuff we like for ourselves, from bigger houses to fancier cars to better wine to more finely pixilated televisions. But these typical spending tendencies — buying more, and buying for ourselves — are ineffective at turning money into happiness. A decade of research has demonstrated that if you insist on spending money on yourself, you should shift from buying stuff (TVs and cars) to experiences (trips and special evenings out). Our own recent research shows that in addition to buying more experiences, you’re better served in many cases by simply buying less — and buying for others.
Read the entire article, including their discussion of value of “underindulgence.”
Happy Money: The Science of Smarter Spending (Simon & Schuster), co-authored by Elizabeth Dunn and Michael Norton, is due out in the spring of 2013!
Pre-order it on Amazon here.
Related Situationist posts:
Posted in Altruism, Book, Deep Capture, Distribution, Emotions, Illusions, Life, Positive Psychology, Video | Tagged: Happiness, money | 1 Comment »
Posted by The Situationist Staff on September 21, 2011
From the BBC’s “Bang Goes the Theory Team.”
Related Situationist posts:
- Shared Human Experiences
- Body Image and Materialism
- Law, Competition, Self-Interest
- The Situation of Being Green
- The Situational Effects of Hand-Washing,”
- “Unclean Hands,”
- “Bargh and Baumeister and the Free Will Debate — Part I & Part II”
- “Social Psychology and the Unconscious: The Automaticity of Higher Processes,”
- “Situation of Consumption,”
- “The Color of Sex Appeal,”
- “The Primitive Appeal of The Color Red,” and
- “The (Unconscious) Situation of our Consciousness – Part I, Part II, Part III, & Part IV.”
Posted in Altruism, Choice Myth, Embodied Cognition, Video | Tagged: BBC, money, priming | Leave a Comment »
Posted by The Situationist Staff on April 30, 2011
This lively RSAnimate, adapted from Dan Pink’s talk at the RSA, examines some the ways that money doesn’t always buy motivation.
Related Situationist posts:
To review a collection of Situationist posts exploring the causes and consequences of happiness, click here.
Posted in Emotions, Ideology, Illusions, Life, Marketing, Positive Psychology, Video | Tagged: Dan Pink, incentives, money, motivation | Leave a Comment »
Posted by The Situationist Staff on October 15, 2009
At the Third Annual Law and Mind Sciences Conference at Harvard Law School, titled “The Free Market Mindset: History, Psychology, and Consequences,” (March 7, 2009) Christine Desan‘s presentation was titled “Legal Categories of Thought.” Desan is a Professor of Law at Harvard Law School, where she has taught since 1992. Her areas of interest include American constitutional history, legal and political thought, civil procedure, and statutory interpretation.
In her presentation, Professor Desan describess the rich variety of ways that the law categorizes different kinds of liquidity — including coin, banknotes, bonds, dollars, and securities, and explores some of the ways that legal doctrine has disciplined our thought, including our assumptions about money and the way it is made, about public and private, and about free choice in the marketplace. Below you can watch her talk in three videos (roughly 9 minutes each).
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To watch similar videos, visit the video libraries on The Project on Law and Mind Sciences Website (here) or visit PLMSTube.
Posted in Cultural Cognition, Deep Capture, Distribution, History, Ideology, Law, Video | Tagged: Christine Desan, Free Market Mindset, money | 3 Comments »
Posted by The Situationist Staff on June 13, 2009
Fiona Anderson of the Financial Post has an interesting take on a question that has been much discussed for many years: can money buy happiness? We excerpt the piece below.
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But if the best things in life are free, why is it that we always seem to be after more money? Because we think it can buy happiness.
And for those at the lower end of the income scale, it probably can, according to Michael Schmitt, a social psychologist at Simon Fraser University. “Because having some money is definitely better than having no money at all,” he says.
But Mr. Schmitt words the question differently: Are people with more money generally happier than those with less?
The answer is yes, when we are talking about having enough money to cover food and shelter. But the answer is a definite maybe when you get to middle-class earners and above. “It’s going to be more important if you need money to get access to those things that meet our basic needs,” Mr. Schmitt says. “Beyond that, the effect of having more money seems to be weaker.
“And it seems when people do increase their income and have access to more material wealth, you don’t see corresponding increases in happiness.”
Happiness surveys have been carried out for years. And while income has been going up steadily for the past three or four decades, our level of happiness hasn’t changed much, Mr. Schmitt says.
In the 1950s and 1960s, there were a lot of things that were problematic, he says. “So it’s not like things were perfect and idyllic then. But our increases in material well-being don’t seem to have translated into increases in happiness overall.”
One reason may be evolving aspirations. As people achieve goals they create new ones. While that seems common for financial targets, not all goals have moving goal posts.
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To read the rest of the piece, click here. For a related post, see Adam Benforado’s Somthing to Smile About. To review a collection of Situationist posts exploring the causes and consequences of happiness, click here.
Posted in Emotions, Life | Tagged: Happiness, money | 2 Comments »