Stuff Doesn’t Make You Happy . . .

While everyone is busy unwrapping all of their holiday gifts, here’s something to mull over: Stuff doesn’t make you happy.

There has been an ongong thread about this amongst some of the econoblogs, and I think some of the commenters may be missing the main point: The value of wealth isn’t necessarily the THINGS you can acquire, it is the things you can do with it — the experiences and memories that you can "acquire."

Think of it this way: Its the not the TOYS, its the PLAYING.

Now, let’s be honest — I am in no position to lecture anyone about the evils of materialism; Does anyone really need a 500 HP car? How many watches can one person wear? The silk neckties in my closest cost more than the GDP of a small country — please do not take this as a holier than thou finger wagging. I am as guilty as anyone else

No, this is merely a moment of reflection during the holidays of what truly matters, and what actually makes people happy.

In my experience, most of us would get more out of taking an advanced driving course at Skip Barber, where you learn HOW TO DRIVE high performance cars, and wring the most performance out of them — than merely having one. If you still want the F-car, then go get — but drive the shit out of it, join a car club, go on roadtrips — but don’t just leave it in the garage.

Basic psychology suggests we do not have an innate need to accumulate "stuff;" indeed, we were nomadic throughout all but the last 10,000 years or so. How you spend your time — your relationships are a big key to this — will determine how "happy" your life is.

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These are just one man’s opinion and experiences . . . However you spend them, do have a Happy Holiday!

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20051005_nythappycharts

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UPDATE December 31, 2005  9:56am

Today’s NYT has an article ont hat exact same theme:

"As some of you may have heard, money does not have a very strong relationship to happiness. Indeed, it is unclear whether the two parties are even well acquainted. Yet, according to the renowned British economist Richard Layard, author of "Happiness: Lessons From a New Science" (Penguin, 2005), humans cling to the notion that the two are linked – with a result, Mr. Layard said in an interview, that "people tend to expect more from money than it can give."

That’s not to say being broke is better. One of my favorite quotations in Mr. Layard’s book is credited to Woody Allen: "Money is better than poverty, if only for financial reasons." Amen to that. At the same time, Mr. Layard points out that the research on this topic suggests that we would all be a lot happier if we understood the true effect of money on our psyches.

You or I may wish for a more prosperous new year, a big raise, a fat bonus, the wherewithal to buy a bigger home, a nicer car and so forth, but Mr. Layard says that "many studies show that people have an exaggerated forecast of the benefits of having that higher income or bigger house."

As soon as your material position improves, researchers have found, there is a remarkable tendency to adapt. The thrill is gone, as they say. "When we monitor how people are affected by the house or car, it’s not anything like they expected," Mr. Layard said. "Your happiness does go up for a while, then it returns to the base level.

If you think that sounds like a recipe for that chronic not-quite-satisfied feeling, you would be right. People tend to crave more money and more things to restore that peak of good feeling – only to adapt to those pleasures and seek the next high – an addictive phenomenon that economists have called the hedonic treadmill."

Fascinating stuff . . .

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Sources:

Latest from the happiness industry                     
http://neweconomist.blogs.com/new_economist/2005/10/latest_from_the.html

Keeping Up With the Experiential Joneses
http://economistsview.typepad.com/economistsview/2005/11/keeping_up_with.html

A New Measure of Well-Being From a Happy Little Kingdom
By ANDREW C. REVKIN (NYT) 2936 words
Published: October 4, 2005
http://tinyurl.com/7oe4z

Recalculating What Money Can’t Buy
M.P. DUNLEAVEY, Basic Instincts
NYT, December 31, 2005
http://www.nytimes.com/2005/12/31/business/31instincts.html

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What's been said:

Discussions found on the web:
  1. B commented on Dec 25

    Money may not buy happiness but it is a hell of alot more pleasant living in a castle than living in a dirt hut. Those studies are BS. The human condition never changes regardless of our social standing. We still have mental illness, we still get sick, we still lust after what we don’t have, we still complain about what isn’t right, we still compartmentalize so that we can feed our face at Xmas while tens of millions in the world don’t have anything to eat, etc. (But we feel better giving to our local charity.)

    But, all things equal, I’d prefer to do it with alot of money than wondering if I am going to die in the middle of the night from hunger.

    Btw, I know that poll is flawed because The Nederlands isn’t at the very top. Anyone who gets to legally smoke Ganja and eat shrooms has to be happier than that.

  2. Zmetro.com commented on Dec 25

    The Lives We Live

    Changing planes at O’hare recently, I stood next to an early 20’s woman trying to fly standby to Dayton, Ohio. I discovered that she structured work to support her travel wants. My fellow traveller said that she joined the Air…

  3. D. commented on Dec 25

    I think money is only good for anything that brings quality of life such as creature comforts, education, health, life experiences. I also believe many North Americans have it all wrong. Many focus on the destination instead of the road to get there. They focus on stuff instead of experiences.

    A big house can seem like a desirable asset, if you like everything that revolves around its maintenance. Outsourcing can be even worse because then you must find your crew and keep it dedicated to doing the job the way you like it done. With a big house, you might be forced to stay at a job you hate or even swallow your ethics to keep up with the mortgage payments.

    Spend too much and you end up with more headaches than pleasure. As our assets grow, my husband and I are finding ourselves more and more annoyed… We seem to spend all of our precious time managing assets (fixing a roof, fixing a car, fixing a pool, fixing the air conditioner, etc) and managing people (lawyer, accountant, contractors and all those trying to make you part with your money). I’m still thinking of my boss who spent his entire fall trying to keep his boat (in Florida) safe. It took him two years to sell it… as soon as he got it, he was disappointed. What a pain in the %$%#!!!

    I think my dad is dead on when he says:

    L’argent ne fait pas le bonheur mais rend la mis√®re plus confortable. (Money does not bring you happiness but makes misery more comfortable).

  4. Fred commented on Dec 25

    When I saw the first public storage units going up twenty five years ago I realized Americans have too much stuff.

  5. Barry Ritholtz commented on Dec 25

    Money eliminates the “lack of money blues.” But its not everything.

    You know the cliche: — I’ve been rich, and I’ve been poor –rich is better.

    Like most things, its more complex than the bumper sticker philosophers would have you believe . . .

  6. cm commented on Dec 25

    Others have already pointed it out, but I’d say money and the things you buy with it *may* give you comfort, which is a large ingredient to happiness. I certainly don’t get the max performance out of my car, but I get the comfort of not having to plan my daily activities around the vagaries of transit networks and bus schedules, and all the restrictions that come with it. Which would be, rendering adult life in a suburban area very ungratifying.

  7. cm commented on Dec 25

    Fred: Don’t forget that basements are not that common in the US (not sure why, perhaps mostly the large expense of building them, versus vast space available of external storage). There are items you would not want to keep in your living area or even the garage, like once-a-year needed equipment, construction/repair materials, and indeed old junk that you are not quite sure you want to throw out yet (hunter & gatherer instincts?).

  8. Ian Welsh commented on Dec 25

    All other things being equal being rich is better. And truly being poor – as in not being able to buy the things you need, sucks. Been there, done that, don’t want to do it again.

    But being rich isn’t a guarantee you’ll be happy. Money is a means to happiness, not an end in itself.

    Don’t comment often Barry, but you’ve been doing beautiful work.

  9. angela commented on Dec 25

    “The best things in life aren’t things.”

    Yep that’s one of the Bay Area bumper stickers along with ahw who dies with the most toys wins.

    Funny about driving. My firend had a little one wheel Nova and on going down the hills in the Santa Cruz mountains would constantly have to slow down because the porsche drivers and other precision car drivers were afraid. She also went on a number of dirt backgrounds and one time a guy behind her in a 4 wheel drive got freaked and turned back, these people literally thought you had to have 4 wheel drive to do dirt as though farmers were not driving model Ts all over the place 80 years ago.

  10. Fred commented on Dec 25

    cm,

    I don’t know why you would say that basements are not common in the U.S. I have a basement. Nearly everyone in Wisconsin has a basement. I had a basement even when I lived in an apartment. There I had an assigned section of the apartment building basement about two thirds the size of the apartment.

    I don’t know where you are coming from since you are coming from “nowhere.”

  11. cm commented on Dec 25

    Fred: I’m coming from Germany. I said basements are not “that common” in the US, which was meant to mean that one cannot assume that everybody has a basement as a matter of course. Apparently there are differences by region (climate?) or the period in which buildings were constructed. Yes, even in California many apartment complexes give you a (usually small) storage, often a cupboard-style thing mounted at the assigned parking space. Many SFH’s here don’t have a basement though.

    I did not mean to make a very strong point of this, but I’m sure it contributes at the margin. But fundamentally you are right of course. Many people have their cars parked in the driveway and/or on the street (depending how many they have), and when I look into their open garages, it is outright scary.

  12. hans Suter commented on Dec 26

    why not use this holiday to read Amartya Sen’s Development as Freedom ? Sen will give you insight in this kind of problems, e.g. “the dissonance between income per head … and the freedom of individuals to live long and live well” (from the introduction). Happy New Year, all.

  13. grumpY! commented on Dec 27

    wealth, insofar as it removes worry, is of use. in the US you need a fair amount of money to avoid worries – particularly if you have children. the cost to remove the worry of how your kids will attend college is significantly higher than the cost of the very best flat screen television. also the worry of paying the mortgage, health care costs, etc. these are big expenses.

    but once you reach a level where you are no longer plagued by worry, any pursuit of wealth or stuff on top of that in my opinion distracts you from the more sublime experiences. yesterday i went on an 18 mile trail run, it cost me nothing, but the experience temporarily purged me of all cynicism and angst. how cool is that? i told my wife that i considered this to be a very rareified type of experience, how many people experience a full psyche wash and rinse? very few from what i can see. there are definitely higher levels of experience that go beyond consumption.

  14. Troy commented on Dec 27

    One thing that is missing here is analyzing what % of our income is going towards ground-rent (into the pockets of our landlord or mortgage holder) as opposed to actually paying for stuff or services.

    Since the supply of quality housing does not exceed demand, we, collectively, have pushed all of our “excess” money into housing costs, which replaces the goods and services we could have bought with that money with just a higher mortgage. Economic insanity.

    Georgists and geolibertarians say the money we pay for ground rent should be recaptured by the community and replace taxes, leaving more money for the better things in life.

  15. BusinessPundit commented on Dec 27

    Stuff – It Won’t Make You Happy

    Barry Ritholtz has a great post about why all that stuff you got for Christmas might be nice, but it won’t make you happy. It’s interesting because it ties back in to the first post I ever made….

  16. BusinessPundit commented on Dec 27

    Stuff – It Won’t Make You Happy

    Barry Ritholtz has a nice post about why all that stuff you got for Christmas might be nice, but it won’t make you happy. It’s interesting because it ties back in to the first post I ever made….

  17. mike commented on Dec 27

    I seem to spend just a little more than i make…regardless of how much i make.

    rich is just relative

  18. vivek commented on Dec 28

    Doesnt the GNP per capita v/s Happiness graph need to be altered to take PPP (purchasing power parity) into account to make it more representative?

  19. dryfly commented on Dec 28

    Money may not buy happiness but it is a hell of alot more pleasant living in a castle than living in a dirt hut.

    Depends on if you are ‘free’ to leave the castle or not.

    Seriously – one can become a slave to wealth. You think Bill Gates is really ‘free’… he can buy an island and pay guards to keep him and his family safe… but he can’t just take of and walk down mainstreet anymore. He and all his family and immediate associates are all kidnap fodder everywhere they go all the time.

    Nope you definitely want to have enough to cover the basics & some play time but having a lot more than that is deminishing return and maybe even worse.

  20. david commented on Dec 30

    I think having money improves your happiness. Having things does not. I made a ton of money while I was young and bought the usual things – fancy car, fancy house, fancy… Last year I completely eliminated most of these things. I downgraded to a small condo that fits my needs. I got rid of all my cars. I eliminated 80% of my wardrobe. I sold all my gadgets except for 1 computer and 1 cell phone (no tvs, pdas, etc.). I then quit my job that made me rich. I spend my days reading books, doing community activities, and going to school (cooking classes last year, programming classes this year) and spending time with my wife. I don’t miss any of those things. Being rich is good. Spending that money on things didn’t make me unhappy but it introduced a ‘jail’ on my time and my freedom and my relationships.

  21. gochess commented on Jan 3

    Once a person is above the poverty line, consumer “stuff” only produces a short-term dopamine thrill. So what produces meaningful Happiness? We asked this question from the perspective of Lifehacks at:

    http://wiki.43folders.com/index.php/Happiness

    It’s a wiki page, so it’s a collaborative project in progress. Join in with your experience.

    Happy New Year!

  22. john samuel commented on Feb 2

    having too many stuff corrupts and confuses your mind, and drags your soul into an abyss of the workings and maintenance of such gadgets or stuff. it completely debases your human aura to be tinkling and fondling and obsessing over stuff. it is good to have a lot of money, but keep it in the bank, and only sorround yourself with the minimum things you need to survive. get an average car( toyota camry), get a small but richly decored house, and thats it. ok maybe a laptop and mobile phone. you will realise that not being sorrounded by too many stuff declutters your head. the more stuff you have, the more cluttered your mind gets. the money in the bank, you use for life experiences like travelling, helping less fortunate people etc but not for accumulating stuff that will clutter your mind and make you pseudo psychotic. why do you think alot of americans are relatively mentally unstable compared with citizens from the rest of the world. they own too much stuff which clutters their minds, and makes them very neurotic. email me for a response at buzugee@yahoo.com and let me introduce you to minimalist living.

  23. Sage commented on May 2

    In true reality material things mean nothing, you only have them for a borrowed amout of time-You can’t take them when you go!!!

  24. J. Evans commented on Jun 14

    We know money can’t buy happiness, but it has
    a great way of relieving misery!!!

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