Money and Happiness

I came across If money doesn’t make you happy, then you probably aren’t spending it right, a paper by Dunn, Gilbert, and Wilson and I found it very interesting. You can download it from Science Direct, if you want.

The main message is that people are not happy because they do not know what makes them happy.

Some of the ways in which money or, better, decisions can make us happier include:

  • Focus on experiences instead of things, because we remember experiences and relive them over and over again. By contrast, we tend to adapt fast to things, which lose their perceived value fast. (One countermeasure is transforming “things” into “experiences”).
  • Help others instead of yourself, because we are social animals. Helping others helps us being more social and increases our connections.
  • Buy small pleasures instead of big ones, because we adapt fast to our environment and we forget the value coming from what we have. For this reason putting some temporal discontinuity between positive experiences increases the payoff we get: eat a cookie, wait a while, eat another.
  • Worry less about the future, since we adapt to bad situations better than we believe.
  • Delay pleasurable experiences, so that we have more time to think about the positive experiences we will have.
  • Happiness is often in the details. A small treat now is better than a big treat in the future.
  • Think about what you are not thinking, when evaluating possible choices. When we evaluate our future, we tend to focus on the positive aspects and forget little details and negative consequences. This bias can lead us to take the wrong decision or remain disappointed when we the future ends up being less rewarding than anticipated.
  • Beware of comparison shopping, since in this case we tend to focus on measurable features, rather than on the aspects which make the stuff we buy rewarding. As a reinforcement: as soon as we start experiencing what we have, we forget thinking about what we could have gotten.
  • Follow the herd instead of your head. Our experiences are similar to those of other people. If other people liked it, we are also most likely to enjoy the same stuff.

Some things we do not always know about ourselves:

  • We are extremely adaptable to good and bad situations.
  • We are very good are interpreting the past so that we don’t feel regret (“I did not win the medal, but it wasn’t my fault and I have no regrets”).
  • When we think about the future, we have a cognitive bias which makes us overoptimistic.

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