The Situationist

Posts Tagged ‘money’

The Situation of Money-Based Happiness

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: , | 1 Comment »

Money Priming

Posted by The Situationist Staff on September 21, 2011

From the BBC’s “Bang Goes the Theory Team.”

Related Situationist posts:

Posted in Altruism, Choice Myth, Embodied Cognition, Video | Tagged: , , | Leave a Comment »

On Money and Motivation

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: , , , | Leave a Comment »

Money and the Situation of Happiness

Posted by The Situationist Staff on June 23, 2010

The exceptional mind science writer and blogger Wray Herbert has a post on Huffington Post summarizing recent research studying the effects of money on happiness.  Here is an excerpt.

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Psychologist Jordi Quoidbach of the University of Liege, Belgium, and his colleagues wondered if wealth, because it promises abundant pleasure, might actually weaken the internal sense of scarcity that makes small pleasures possible. They decided to test this idea in the lab.

They recruited a large group of university employees, ranging from deans to janitors. The idea was to get a range of incomes and financial comfort, which they did: Some of the volunteers had socked away 75,000 euros or more, while others had a mere 1,000 euros in savings. They gave all of these volunteers a test that uses vignettes to gauge positive emotions like pride and awe and contentment. For example, the volunteers might be asked to imagine going on a hike and discovering an amazing waterfall. Would they be visibly emotional? Reminisce about the waterfall later? Tell others about the experience? And so on.

The scientists also measured the volunteers’ overall happiness, using a standardized scale, and also their desire for wealth. They measured desire for wealth with this kind of question: “How much money would you have to win in a lottery to live the life of your dreams?”

Then they crunched all the data together to sort out the links between money and happiness and savoring the little things in life. Here’s what they found: The more money people have, the less likely they are to appreciate things like waterfalls or blooming azaleas or quiet weekends. What’s more, cause-and-effect was clear from the data. That is, the ability to savor life’s small pleasures was not diminishing the need or desire for money; it was clearly the other way around.

And overall happiness? That’s the really interesting part. There is a modest relationship between wealth and happiness; that’s not all that surprising. But the inability to appreciate waterfalls undercuts money’s blessings. That is, any positive effects of wealth on happiness were offset by wealth’s deleterious effects on ability to savor life’s pleasures.

These findings reported in the journal Psychological Science, were provocative enough that the researchers wanted to double-check them in a different way. So in a second experiment, . . .

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You can read the entire post, including a description of the second experiment, here.  For a sample of related Situationist posts, see “The Situation of Money and Happiness,” “Receiving by Giving,” and “Something to Smile About.”  To review a collection of Situationist posts exploring the causes and consequences of happiness, click here.

Posted in Choice Myth, Distribution, Emotions, Positive Psychology, Social Psychology | Tagged: , | 3 Comments »

The Categorical Situation of “Money”

Posted by The Situationist Staff on October 15, 2009

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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: , , | 3 Comments »

The Situation of Money and Happiness

Posted by The Situationist Staff on June 13, 2009

Money HappinessFiona 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: , | 2 Comments »

 
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