Exploring the Connections Between Happiness, Stuff, and Money

The Daily Beast has an article Consumption Makes Us Sad? Science Says We Can Be Happy With Less by Barry Schwartz (author of The Paradox of Choice) that serves as a nice compilation of various psychological and behavioral economics findings about money and happiness.

The first main topic is hedonic adaption. When things are awesome, we eventually get used to it (celebrities, lottery winners). When things are really awful, we tend to get used to that as well (disabled persons). This is why it’s hard for people to achieve a constantly higher level of happiness. We get a nicer car/house/toy, we get used it, and then soon we want an even nicer car/house/toy, never getting anywhere as if we are walking on a treadmill.

Simply knowing that the good feeling from that purchase is only temporary may help you cut back on your spending. In addition, author Dan Ariely suggests you deal with the hedonic treadmill by pacing yourself when it comes to experiencing pleasure, and (when needed) making painful cuts all at once. For example, you might not buy a entire home theater setup all at once, but perhaps upgrade one component and wait until the shine completely wears off before buying a new couch. If you need to cut costs, it may be better to make a big spending cut by downsizing your house rather than cutting things you’ll miss repeatedly like your daily coffee or selling your stuff on eBay piece-by-piece.

The second main topic is how most of us get more pleasure out of doing stuff than out of having stuff. This especially applies to activities with other people and/or activities that we find important and worthwhile. A nice result form this is that those activities often cost very little or nothing. I think this concept is related to the research by Daniel Kahneman that found that happiness did not increase past earning $60,000 a year.

Below 60,000 dollars a year, people are unhappy, and they get progressively unhappier the poorer they get. Above that, we get an absolutely flat line. I mean I’ve rarely seen lines so flat. […] Clearly money does not buy you experiential happiness, but lack of money certainly buys you misery,” he said. But the real trick, Kahneman said, is to spend time with people you like.

We all need a certain amount of “stuff” (and thus money) to make us feel physically healthy and safe from harm. Past that, adding more stuff doesn’t seem to help. Schwartz suggests that at some point, one might even stop looking for a job that pays more, but instead go for a job that makes us feel valued and doing something important. Of course, more money can get you to early retirement faster if you’re into that sort of thing, so there is a balance to be made.


  1. jack foley says:

    Yea spending time with people you like is good medicine..

    That will fill you up..

  2. It is amazing what humans can get used to. Habits are just a tool in our arsenal – we can use this to our own advantage, by associating with the people that are already doing what we want to, or to our disadvantage – by just letting habits control us. By default they’re not very constructive 🙂

    I like the concept of experiencing rather than owning. However, there’s a limit to the things you can experience when you don’t have the money, and Kahneman’s talk makes it clearer to me where the limit is on average of the money that we need to feel comfortable. Thanks for the post!

  3. Thanks for reminding me that my wife and I are overdue to go see some stand-up comedy together. One of our favorite things to do together.

  4. I agree completely. I’ve never been much for materialistic things, but more about building experiences. The happiness you get from buying things can be fleeting, however with experiences such as vacations your memories usually get better over time.

  5. Sometimes the line between things and experiences is pretty thin. So merely getting “better” things is not going to make you happy, but getting “different” things may make you happier by enabling new experiences. For example buying a new book, movie, video/board game will enable an experience you couldn’t otherwise have (perhaps with other people). But upgrading your TV from 37″ to 70″ isn’t going to have the same effect.

  6. I think people also lose sight that the same thing happens to experiences. If you get used to going on exotic vacations several times per year, that just becomes your new normal. I personally like treasuring the small things. I think the big exotic stuff should frankly be more rare – it is more exciting that way! Whether we are talking bigger/better things OR experiences.

    But, overall, I totally agree with this blog post – good points.

  7. Learn a new term “Hedonic adaptation” for a old thing. My wife asks me now and then, why are you not crazy about buying gadgets or new things like other guys. I kept saying to her, I don’t know. May be I am frugal or something who only buys things when needed. Or may be because I am grown up like that. But I surely like to spend time together like walk in the community park, taking my son for a run and similar other stuff. As the original blog post explains, doing things really gives a different kind of pleasure or new memorable moments to thing back compared to having things. It does make sense but sometimes as humans we are driven by others around you as well. That’s little bit tough to avoid in certain things.


  8. jack foley you are totally right.

  9. The real rub is that we often “save money” buy buying more all at once. I’m not talking 30 rolls of toilet paper at costco more, I’m talking about free online shipping thresholds, spend $100 get x free, and stay 6 days and the 7th is on us type of deals. These encourage you to group your expenditures together so that you don’t spread out your euphoric buying experiences.

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