Can money buy happiness?

How you spend your money can have a long-term effect on your happiness, according to this study.

Can money buy happiness?

A psychology study looking into consumer purchases has found that those who buy experiences are happier than those who buy things. Can money buy happiness?

The study was performed at Cornell University by Dr Thomas Gilovich, who has been studying the relationship between money and happiness over the last two decades.

The study was exploring the ‘Easterlin Paradox’, a key concept in Happiness Economics (yes, that’s a real thing, and Australia ranks quite highly), which explains that money can buy you happiness, but only so much of it.

Participants in the study were asked to report their happiness with major purchases, both material (such as new smartphones, TVs and cars) and experiential (such as learning new skills, travel and concerts). Initially, most ranked their happiness with both types of purchase at the same level. However over time the rankings for material purchases went down, while the rankings for happiness with experiential-based purchases went up.

It might seem counterintuitive that the happiness related to physical purchases went down, despite them still existing and being used daily, but it turns out that this is actually why the feeling of happiness diminishes. These material objects quickly become part of daily routine, transitioning from new and exciting to plain and everyday, while the memories of experiences you have, live on untarnished in your memory.

Participants were also more likely to negatively compare their material purchases with those of others, diminishing satisfaction with a purchase even further. As experiences are more difficult to compare than material objects, participants were less likely to do so.

Another study revealed that even when people had a bad experience that negatively affected their happiness, their happiness with the experience still increased over time. Anyone who does a lot of travelling probably has a few nightmarish tales that have now become funny anecdotes.

How do you spend your savings? Will this change your habits or perhaps reinforce them?

Read more at Co.Exist.





    COMMENTS

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    Eliza
    19th Oct 2015
    11:19am
    Things are just things ... Life is to short not to enjoy the experience ...
    Splash out and take yourself to musical theatre - if not the major productions, go to the local theatrical group productions. Music is a wonderful thing to lift the happiness bar????
    Adrianus
    19th Oct 2015
    12:26pm
    When we buy an item, quite often we can have an emotion called buyers remorse. During this time we are constantly justifying the purchase to match our perception of value. The item is always there to seemingly prompt the question, "did I get value with this purchase?" Newer models are produced, often parts are required etc. all designed to give longevity to our buyers remorse.
    It is much easier for us to confirm the value for money concept with the purchase of an experience because buyers remorse does not last as long if it exists at all and experiences are fondly remembered, although accuracy diminishes with time.
    Personally, I don't reflect so much on what I spend money on. Throughout my life money has never been important to me. I spent a lot of money sending my 2 children to a private school. Money was harder to come by in those days. But not once did I question the value.
    jackie
    19th Oct 2015
    1:00pm
    You only live once so enjoy every precious moment of it.
    KSS
    19th Oct 2015
    1:03pm
    Can money buy happiness? Maybe. Maybe not.

    BUT you can be miserable in comfort!
    MICK
    19th Oct 2015
    1:46pm
    Howard Hughes would have agreed with you. Perhaps a balance is important. Having worked 60 hour+ weeks for decades I now sit back and ask if it was really worth it. Don't know the answer to that....but it is nice being able to go overseas and ski for a couple of months every year. There is always a cost though, and I am not talking about money here.
    Adrianus
    19th Oct 2015
    2:25pm
    When you are young you have plenty of time and no money. As you age the situation gradually reverses to plenty of money and no time. It's how we manage money that can foster happiness.
    If you were down to your last $10, had not eaten for days. Would you go to the Chinese all you can eat $10 smorgasbord or buy 2 big mac happy meals and take a friend?
    Young Simmo
    19th Oct 2015
    2:53pm
    KSS, money doesn't buy happiness, but it does give a better quality of misery.
    Sundays
    19th Oct 2015
    3:49pm
    Grew up poor, worked really hard, but now wish there had been more balance in our lives. However, we are not struggling in retirement. Money doesn't buy happiness, but it does ease stress, so that you can enjoy life more. Experiences are great, but comfort is good too.
    Cranky
    19th Oct 2015
    3:59pm
    I will say a definite YES to that question.
    I am Happy when I buy the things I want, Happy when I have no worries about paying the bills, Happy I have a nice car to travel around and see the country, and Happy I can afford to be a little generous helping others who need a hand...
    Does Money buy Happiness....My word it does.
    Denzel
    19th Oct 2015
    4:42pm
    Yes - of course

    Only people with no money ask a silly question like this

    19th Oct 2015
    9:50pm
    Maybe not, but it IS easier to be sad when driving a Lexus rather than a Ford.
    Believer
    20th Oct 2015
    2:59pm
    I agree that money and buying experiences does buy you happiness. We have always had holidays that only the wealthy enjoy. When you work hard and think you can only do a little it makes you feel second class but if you try a nice 5 star hotel and go on holidays that only the well off can have you feel up there and best of all you realise the wealthy are pretty thick at times. They don't know how to enjoy life but for us it has been an eye opener and now we have cut back having done the so called good stuff and settled to what we enjoy! Theatres and shows and life experiences will always be in our memories because we can say: been there done that and it was no big deal but better to have tried than not!
    btony
    21st Oct 2015
    9:09am
    The only thing money cant but is poverty :-)


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