Hey there, time traveller! This article was published 16/4/2012 (3397 days ago), so information in it may no longer be current.
We've heard it ad infinitum: "Money can't buy happiness."
Now two new studies are knocking the teeth out of that old saw by suggesting that cash can make you happy -- if you spend it right.
Let's say your 2011 tax return brought an unexpected $1,000 windfall. Would you buy a new wardrobe or maybe something for the house? Or would you splurge on a fancy dinner with friends, or a weekend getaway?
How you answer speaks volumes about you. According to recent psychological research, people who spend money on travel, food and cultural events tend to be more extroverted and adventurous, less anxious in social situations, and even better liked than those who spend it on material possessions.
In other words, you are what you buy. And if you want to be happier in the long run, buy more experiences and less stuff.
That's the gist of a study out of San Francisco University, where nearly 10,000 people filled out online questionnaires about their personality and their purchasing habits. (Take the survey at www.beyondthepurchase.org.)
The results, published last January in the Journal of Positive Psychology, showed that six out of 10 "experiential spenders" had overall life satisfaction compared with about four in 10 "materialistic buyers."
"Investing discretionary resources into life experiences rather than buying material possessions, makes people happier," the researchers wrote. "Therefore, it seems purchasing decisions have a significant effect on happiness and may explain why materialistic pursuits lead to lower well-being."
One reason the experiential spenders are happier, the researchers posited, is because they're bigger risk-takers. You can't return a trip, a meal or a night at the theatre the way you can something purchased at a store.
People also reported feeling a greater sense of vitality or aliveness during an experience. The initial buzz of acquiring a possession, say a new car or computer, fades over time as you get used to having it around, the experts said. (Some studies say the thrill is usually gone after about eight weeks.)
Experiences, on the other hand, continue to reward us long after the fact in the form of memories.
"There's that savouring capacity that experiences offer us, in advance as we're planning them, as we're having them and then, the triple delight, through remembering them afterwards," says Winnipeg financial psychologist Moira Somers.
"And you don't have to store it or clean it, so in some ways it's a much less complicated use of money."
Also, since experiential spenders usually take other individuals along for the ride, they were also fulfilling their need for social bonding -- a well-established happiness booster, the San Francisco researchers said.
That study mirrors similar findings by researchers at the University of Colorado who found that the less-happy materialistic buyers were less well-liked by their peers than the experiential buyers.
Participants in the Colorado study apparently expressed negative stereotypes of materialistic people, judging them to be self-centred, selfish and shallow. Experiential shoppers, by contrast, were deemed more charismatic and worthy of spending time with.
Part of the stigma of materialism, Somers says, is basic human nature. "Other people having things we don't have can generate some of the darker emotions in us, such as envy, greed and prejudice."
But she points out that often people high in materialism are not pursuing happiness through stuff so much as they're trying to avoid negative experiences -- namely internal, emotional ones.
"So if you're an experiential avoider, you're more focused on getting away from what you don't want, as opposed to moving towards what you do want," such as intimacy, closeness and connection, says Somers.
People can use shopping and consumerism, she says, to avoid conflict, confrontation and painful emotions and to fill an inner void. And they can also end up on the "hedonic treadmill" -- where there's a need to acquire more and more stuff to reproduce the dopamine blast in the brain that comes from acquiring. According to this theory, also know as "hedonic adaptation," as we make more money, our expectations and desires rise in tandem, so there's never a permanent gain in happiness.
The hedonic treadmill is even more painful for people who are continually comparing themselves to others and trying to "keep up with the Joneses," says Mark Burch, a Winnipeg educator and author who has spent the last two decades trying to spread the less-is-more gospel of voluntary simplicity.
"Since most people who are prone to this now have television celebrities as their social comparison models rather than their neighbours or other family members, the comparison usually reveals an extreme gap which can be intensely stressful," he says.
Burch, who has written several books and taught a university course on voluntary simplicity, hasn't worked full-time for money for nearly two decades. Neither has his wife.
While the result is a much smaller retirement income than they otherwise might have had, the "abundant leisure time" and freedom more than compensate, he says.
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"The difference is that I have been enjoying my semi-retirement for the last 20 years, a little at a time, whereas the mainstream way of doing things is to wait, save lots of money, and then retire at a time in your life when your health is shot and you can't remember what you were saving the money for anyway," says Burch, who is currently spearheading Transition Winnipeg (www.transitionwinnipeg.ca), a community-led initiative to transition to a less carbon-intensive way of life and make the local economy more resilient.
Former Winnipegger Tobi McCrae Kreider and her family, who live in Goshen, Ind., became instant minimalists when they were forced to move into their rental property after it got trashed by the tenants.
They went from a spacious, two-storey home to an 880-square-foot bungalow, which required getting rid of half of their home furnishings. But McCrae Kreider, who moved to the United States in 2005, says getting off the material treadmill has reaped unexpected benefits.
"Living small inspires creativity, organization and re-teaches you what to value," says the communications consultant and mother of two little boys.
"It's just so much easier to keep things clean. It's fun and easy to have people over for a dinner party at a moment's notice. I don't feel mentally bombarded or overwhelmed by the visual distraction of too much random stuff piling up."
Does money have an effect on happiness and overall life satisfaction? Here's what some Facebook users had to say during a recent social media discussion:
"I don't like the framing of money actually buying happiness, but I totally agree with the general premise. My life has gotten so much better and happier since I got rid of almost all my material possessions. The only point of ongoing stress in my life right now is making sure I'm able to take care of basic needs -- pay my incredibly minimal bills, pay for food, etc. If I didn't have to worry about that even, I'd have pretty much nothing left to worry about.
-- Anlina Sheng, web designer
"At some point, money must lose its effect, since $40,000 would mean more to someone who makes $25,000 a year than someone who makes $300,000 a year. Really, what's the difference between $300,000 and $340,000? A BMW instead of a Toyota?"
-- Ward Holland, environmental scientist
"I think money can only facilitate happiness, in the sense that its possession eradicates anxiety about how to pay for basic needs, such as food and shelter, and also affords us the enjoyment of vacations, material goods and other fancies.
But I don't think one can buy happiness, only passing pleasures. The more you have, the more you want."
-- Susan Rich, PhD candidate in English literature
"Aristotle got it right all those thousands of years ago. You cannot fulfil your human inclinations and hence, achieve happiness, if you have to concern yourself primarily with survival. So yes, insofar as money helps you survive and, more importantly, buys you time and opportunity, it's conducive to happiness, but it's only a means to an end."
-- Kenton Smith, freelance writer
"Maslow's Hierarchy of Needs points to this idea. You don't hit levels of love/belonging, esteem, and self-actualization until you have food, water, and security covered. If you can't afford to eat and put a roof over your head, you aren't going to be happy.
"That doesn't mean that more is always more, though. Beyond those basic needs, money is less important. You don't get self-actualization at Walmart."
-- Blair Mahaffy, IT specialist
More bang for your buck
In a paper published in The Journal of Consumer Psychology titled If Money Doesn't Make You Happy, Then You Probably Aren't Spending It Right, Elizabeth W. Dunn, a University of British Columbia psychology professor, proposes eight principles to help consumers get more happiness for their money:
1. Buy experiences instead of things
2. Help others instead of yourself
3. Buy many small pleasures instead of a few big ones
4. Buy less insurance
5. Pay now and consume later
6. Think about what you're not thinking about (consider how purchases will affect how you spend your time)
7. Beware of comparison shopping (it may distract you from attributes of a product that will be important for your happiness)
8. Follow the herd instead of your head (research suggests the best way to predict how much you'll enjoy an experience is to see how much others enjoyed it)