“Can money buy happiness” is an age-old question. Plenty of recent research has explored the relationship between what we earn and how we feel. In general, the results border on the painfully obvious: Yes, people with higher incomes, broadly speaking, tend to be happier than those who struggle to make ends meet.
But, as Andrew Blackman points out in an article for the Wall Street Journal, if we “dig a little deeper into the findings, and they get a lot more surprising—and a lot more useful.” For example, he points to a study that found that giving money away makes people happier than spending it on themselves. And spending money on experiences—a birthday dinner for a child or vacation with family makes people a lot happier than buying material items. And, yet, so many of us continue to shop ‘til we drop and insist we can’t afford a vacation! Why is that?
Blackman notes that Professor Howell, associate professor of psychology at San Francisco State University, studied that question and found that people think material purchases offer better value than experiences because material goods last longer. But, in fact, Prof. Howell found that when people looked back at their purchases, they rated experiences as providing a better value.
Prof. Howell theorized that the process of “hedonic adaptation” makes difficult to buy happiness through material purchases because we soon take our new items for granted. The new car smell fades. Or our neighbor buys a newer model. On the other hand, the experiences we fund tend to create a bigger longer lasting part of our identity. These are issues to consider as we budget and plan.
Notably, Blackman concludes his article with this observation, “Although much of the research in this field is on spending money rather than saving it, the researchers agree that spending more than you can afford is a route to misery. Taking care of your basic needs and achieving a level of financial security is important.”
I was happy to read that wise summation and could not agree more!