Happiness & money

Question 1

Richard Easterlin

Answer 1

Does more money buy happiness? Richard Easterlin Says NO!

Question 2

But how is “happy” measured?

Answer 2

differently from “happiness”

Question 3

Kahneman and Diener

Answer 3

Kahneman and Diener asked ‘how happy were you yesterday’?
•Weak correlation across nations
•Richer people w/in country are happier,
but only to a certain extent
•SO…money doesn’t always = happiness

Question 4

How to Spend Money Better

Answer 4

1. Buy experiences not things
2. Use money to buy for others
3. Buy many small purchases rather than
   fewer large ones
4. Delay consumption
5. Buy time

Question 5

1. Why Are Experiences Better than Things?

Answer 5

1. We adapt quicker to things than to experiences;
   experiences are always changing
2. We anticipate and remember experiences more
3. Experiences are difficult to compare
4. Experiences are shared with others

Question 6

2. Spending on Others

Answer 6

Social relationships are critically important for
happiness…and prosocial spending has a powerful
impact on social relationships

ie. Gift from a romantic partner in college Marriage!

Question 7

3. Many Small Purchases vs. Few Large Ones

Answer 7

Happiness is more strongly associated with frequency than intensity of positive experiences

Small pleasures less susceptible to diminishing marginal utility— So segregate experiences

Ex. massage chair- 180 sec vs 3*60 sec increments.

Question 8

4. Delay consumption

Answer 8

Pay Now, Consume Later

The anticipation adds excitements

Ex. Vacation- anticipation is happier than actual vacation

Question 9

5. Buy time

Answer 9

With rising incomes, comes more feelings

of “time pressure”