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Can money buy happiness?

Tuesday, December 23rd, 2008

Researchers find that it can – if you spend it on other people.

In the last few decades real incomes and real wealth have increased much more than people think, but people are no happier, according to research. Gregg Easterbrook wrote a book about this, The Progress Paradox: How Life Gets Better While People Feel Worse, which prompted Martin Seligman to invite him as a guest lecturer in an online course I was part of.

Elizabeth Dunn, a psychologist at the University of British Columbia, thought this might be because of the way people spend their money. “People often pour their increased wealth into pursuits that provide little in the way of lasting happiness.” They do things like buying flat screen TVs. Research has found over and over that you get a little jolt of pleasure from this, but it goes away pretty quickly. It turns out giving has more benefits. Also, just thinking about having more money makes people less likely to use it in ways that would make them happy (Vohs et al, 2006). And when a group similar to those in the third study below were asked to select the conditions in that study that would make them happier, they got it exactly backwards.

We’re actually not very good in general at predicting what will make us happy. One Harvard psychologist has devoted a lot of his research career to this. His engaging and witty best-seller is called Stumbling on Happiness, which I’ll definitely be talking about in a future post.

giftGetting back to Dunn and colleagues, who published their findings in March this year in Science, their research looked at this question in different ways by doing three separate studies. They concluded that buying stuff for yourself doesn’t make you happier, but spending money on other people does.

They surveyed 632 Americans, gave them standardized, validated measures of general happiness, and asked questions about income, spending on (1) bills and expenses, (2) gifts for themselves, (3) gifts for others, and (4) donations to charity. Spending on the first two categories was not related to happiness; spending on the second two categories was.

Next they looked at people who received a windfall profit-sharing bonus (mostly in the $3000-$7000 range), and how they spent it. General happiness measures were taken a month before and 6-8 weeks after. They reported what percentage of their bonus they spent on 6 different categories including “buying something for someone else” and “donating to charity.” High or low income didn’t affect the happiness measure, and the amount of the bonus didn’t either. But spending in the two “pro-social” categories I just mentioned predicted higher levels of happiness. How much people got wasn’t related to their happiness two months later. Spending it on others was.

A third study was an experiment which could demonstrate causality. Participants were given either $5 or $20 to spend by 5:00 p.m. and were randomly assigned to two groups. In one group they spent the money on a bill, an expense, or a gift for themselves, and in the other group they spent the money on a gift for someone else or to make a charitable donation. Those in the latter (pro-social spending) group had increased general happiness scores.

The researchers go on to say that it might be better to focus on “intentional activities” (“practices in which people actively and effortfully choose to engage”) in finding ways to increase happiness, rather than looking at life circumstances like income, gender, and religious affiliation. They also point out that a small change in spending habits can have a significant effect. Remember that in the third study, only $5 made a difference.

5 dollar bill

References:

Elizabeth W. Dunn, Lara B. Aknin, Michael I. Norton (March 2008), “Spending Money on Others Promotes Happiness,” Science 21: Vol. 319. no. 5870, pp. 1687-1688. DOI: 10.1126/science.1150952.

Kathleen D. Vohs, Nicole L. Mead, and Miranda R. Goode (November 2006), “The Psychological Consequences of Money,” Science 314: Vol. 314. no. 5802, pp. 1154-1156. DOI: 10.1126/science.1132491.

First step: What do you really want?

Tuesday, September 2nd, 2008

…then goals and commitment.

Since this is my first post, I thought I would talk about the topic of taking a first step. Some ideas that came to mind were about goals and commitment.

Concrete goals help you focus. They take a vague idea and make it more specific. They clarify what you need to do, and they actually help you get it done. People who make clear goals, with a time frame for getting them done and a way to gauge performance, are more successful.

According to psychological research,* goals help you in at least four ways:

1. Goals help you pay attention to, and learn, what you need to know to accomplish them.

2. People with goals make more effort, both physically and mentally.

3. Goals help you stick with a task, giving you more persistence in pursuing the accomplishment.

4. Goals help you use relevant knowledge and strategies.

Goals also help you commit. If you say you’re going to do something, you’re more likely to do it. If you make a decision to accomplish your goal (or each specific step needed for a more complex goal) by a certain date, there will be psychological forces helping you to do it.

Obviously, the reverse is true: commitment helps accomplish goals, especially challenging ones.

Sometimes you have to take a risk and make the commitment even if there’s no guarantee you’ll be able to accomplish exactly what you’re setting out to do. Olympic divers need to put themselves in the right frame of mind the moment they jump, but if they wait too long on the board over-thinking it, they’re more likely to have a poor dive. The preparation they needed happened before they even climbed up the diving board, during the many hours of training leading up to the execution of the dive. When it’s time to dive, take the leap.

But before goals and commitment you have to decide something: What do you really want?

This may not be as easy as you think. Harvard psychologist Daniel Gilbert points out that we’re actually pretty bad predictors of what’s going to make us happy. He wrote a best-selling book about it called Stumbling on Happiness. More on that later.

Sometimes you know exactly what you want and you can just pursue it, with whatever goals and commitment are appropriate. Other times, especially when it comes to big things, it’s not always completely clear. When the question “What do you really want?” is expanded in scope to mean “What do you really want in your work or career?” or “What do you really want in life?” – then a lot of people aren’t completely sure. Often they haven’t really thought it through very carefully. Sometimes they were just going after things they thought they wanted. In many cases they’re not very happy with some aspect of their work or life.

When it comes to their work, some people say “Just give me a paycheck.” Those people are not as happy in their work life as people who find some inherent value or meaning in what they do. Even people who have what many would consider a mundane and boring job, like an assembly line worker, can be satisfied with their work if they feel it has intrinsic value. In one study I ran across, some assembly line workers reported that they took pride in their role as creators of a quality product, they said they liked their jobs, and their scores on standard measures agreed.

One thing that contributes a lot to life satisfaction is engaging in activities that make use of your personal strengths. One prominent psychologist spent three years studying this, and working with a colleague (an even more well-known researcher and past president of the APA), wrote an important book which features a list of personal strengths. Take a look at that list and ask yourself how much you’re using your strengths in your life, in your work, and in your leisure activities. Are there changes you could make to spend more time doing the things you find rewarding and valuable?

I’ll be writing a lot more on these and related topics. Please subscribe and check back with me.

I asked myself the question: “What do I really want…out of this web site?” My answer was that I wanted to create as much value as possible for my readers. I want to share what I think and what other psychologists think about how to increase your happiness, life satisfaction, and meaning in life. Some of it will be straight out of research studies, and other ideas will be informed and influenced by them. Either way there will be some science behind the advice. Think of it as “Dear Abby 2.0.”

*If you want to take a look at a review of the academic literature on goals, there is a good one entitled “Building a Practically Useful Theory of Goal Setting and Task Motivation” (pdf format) that was published in American Psychologist in 2002. It’s not light reading, but a lot of scientific findings are presented on this topic. A side benefit is that even in the first couple pages you can see how far psychology theory has come in the last 50 years since the dark days of psychologists’ thinking being almost universally conditioned by the ubiquitous conceptual assumptions of behaviorism, even on questions where it didn’t make much sense.

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