“Money can’t buy happiness, but it can make your misery a little more comfortable,” or so my father once said. I have also come to believe that while money can’t buy happiness, it can buy you options. For example, with enough in savings, you may be able to make a different career decision, or you may have peace of mind that allows you to feel free from an employer’s whim or an industry’s downsizing and of course, money may allow you to retire early. But what about that jolt of glee that you feel, when you sit in a brand new car or slip on that sparkling piece of jewelry? Psychologists and behavioral economists have conducted studies, which have shown that despite a shot in the arm that a purchase or even a gift can provide, the happiness boost does not last that long. There is actually a name for this: The Hedonic Treadmill.
The root of the word “hedonic” is the same as the root of hedonism (defined as “the pursuit of pleasure; sensual self-indulgence”) – both words are derived from the Greek “hedone,” which means pleasure. Social scientists often use the term hedonic treadmill (also known as hedonic adaptation) to illustrate that no matter what happens to you, good or bad, or what you buy, everyone returns to a so-called ‘set point’ of happiness.
While a set point can change, it takes some effort and mindfulness. This is where fresh research comes in. “Money can buy happiness if you spend it right,” according to University of British Columbia psychology professor Elizabeth Dunn, the co-author of a recent study from the National Academy of Sciences. Here’s how it worked: Researchers surveyed more than 6,000 people in the United States, Canada, Denmark and the Netherlands and gave them $40 for two weeks. One week, they had to buy something material, like a shirt. The next week, they paid to save themselves time.
People said they felt happier after spending money on something like housekeeping, delivery or car services, than those who bought a physical object. Perhaps this helps explain why the gig/service/sharing economy has taken off so quickly: people are experiencing more happiness paying for timesaving conveniences, rather than obtaining an elusive object.
Before you send me an email to complain that this is a “one percent issue”, please stand down. While all four nations in which the research was conducted are in fact wealthy ones, the study found that income levels of respondents did not change the results: participants from upper, middle and lower classes found that spending money to save time made them happier. In fact, those at the lower end of the income spectrum derived even more happiness out of timesaving purchases than those from the upper end. Maybe that’s because they don’t do it that much. Just 28 percent of the people surveyed spent money to save time, probably because to someone who may be struggling to meet her various monthly bills, it could seem frivolous to spend money on a food delivery service than to go to the grocery store and prepare your own meal.
None of this is to say that you should be spending recklessly at the expense of being financially responsible. Nor is it reasonable to use the research to justify not saving to fund your emergency reserve fund, pay down your debt or to save for retirement. The research simply compares paying someone else to do a time-consuming task that you don’t like, versus buying a material object. When that’s the choice, you may be better off erring on the side of paying for service, then stuff.