Which experiences will give you the most value for your happiness dollar? The specifics will vary according to your interests and abilities. In general, look for unique experiences that connect you with others, that reinforce your self-image and that will make a “memorable story.”
Businesses can satisfy customers and employees by emphasizing experiences. The world-renowned (now closed) restaurant elBulli in Spain turned its reservation process into an experience. The restaurant served only 8,000 customers a year, though more than a million clamored to get in each year. Gourmets devoted years to a quest to dine there.
“By consistently asking yourself how a purchase will affect your time, your dominant mind-set should shift, pushing you toward happier choices.”
- “Make It a Treat”
“Habituation” is the enemy of pleasure. If you eat chocolate daily, it soon will seem less enticing. But if you limit your access, you’ll enjoy chocolate more when you do indulge. The same goes for your fancy sports car. If you use it for every trip to the grocery store, its glamor will fade. But if you drive it only when you can enjoy it for its own sake, using the car will remain a treat.
Credit cards “provide anesthesia against the immediate pain of paying.”
Businesses can turn their services or products into coveted treats by rationing them, perhaps through a limited-time offer. McDonald’s cultivates a passionate following for its McRib sandwich by offering it only intermittently at various locations. Fans created a website that tracks reports of the McRib’s reappearances across the US. Disney heightens the allure of the video versions of its classic movies by keeping them off the market and unavailable for years at a time.
The way to find renewed pleasure in your activities is to introduce novelty. For instance, avoid habituation in your relationships and friendships by sharing novel activities, like going to hear a new band.
“When people think about recent expenditures, they become more susceptible to actual, physical pain.”
- “Buy Time”
The amount of money you have has little influence on your happiness, but “time affluence” contributes significantly to your sense of well-being. When you feel as if you have plenty of time, you are more likely to take part in happiness-inducing activities, like exercising. When you aren’t obsessing over all the tasks you have to do, you can focus on the present. You’re happier when you can give your full attention to what you’re doing, even if the task is unpleasant.
“If you carry a credit-card balance that fills you with dread, the happiness boon of paying it off may be greater than just about anything else you could do with your money.”
Can money help? Well, you can buy a bunch of labor-saving devices and free up your time, but unfortunately, that doesn’t always create any additional happiness. Such toys often increase feelings of impatience, and all you gain is a desire for more labor-saving devices. Other purchases produce minimal happiness because you end up paying for them with time as well as money. Many people view a big house in the suburbs as almost the definition of happiness. But when you buy a suburban home, you also acquire a longer commute – one of the most stressful activities of modern life. You’ll lose even more time if you have to work longer hours to pay your mortgage.
To avoid these problems, turn “decisions about money into decisions about time.” People often sacrifice time in order to save small amounts of money. A connecting flight may be cheaper than a direct one, but think of the hours you’ll waste during the layover. Assessing the time-draining potential of a purchase is not always easy. When you’re considering a pool, for instance, you’ll probably envision days of family swimming fun, not the hours you’ll spend cleaning it. To avoid this, “think about Tuesday.” Instead of picturing the pool’s impact during a relaxing Sunday, imagine a typical Tuesday when you’ll be scooping leaves or working extra hours to pay for it.
“From chocolate bars to luxury cars, habituation represents a fundamental barrier to deriving lasting pleasure from our purchases.”
One trick for increasing your time affluence is counterintuitive: You’ll feel like you have more time if you give it away. Part of the reason that you feel time constraints is that you view your time as valuable and people assume that anything valuable is also scarce. If you can afford to give away some time doing volunteer work, you’ll subconsciously conclude that you must have plenty of it. Helping others will make you feel more competent to attack your daily tasks.
“We mistakenly believe that we’re already spending money in ways that will make us happier; the flat-screen TV and enormous house in the suburbs just feel like they’ll provide lasting happiness.”
Businesses can use time to increase their employees’ satisfaction. For instance, Google lets employees spend 20% of their time working on whatever projects they want to pursue. This enhances employee satisfaction, and these independent projects have led to such well-known products as Gmail. Intel and Patagonia find that offering their employees sabbaticals keeps staffers more content. Some firms harness the time-multiplying power of volunteering. Home Depot employees give time and expertise to Habitat for Humanity, helping build homes for disadvantaged families. Such activities increase feelings of time affluence and job satisfaction.
- “Pay Now, Consume Later”
Paying for things can be painful. Researchers have found that high prices actually activate the physical-pain centers of the brain. You’ll enjoy your purchase more if it’s untainted by the pain of paying for it. Most people try to avoid this pain by delaying payment with credit cards or other payment plans. That replaces payment pain with a new problem – worry about debt. Debt anxiety is such a foe of happiness that paying off debts is one of the best investments you can make to add to your well-being. Credit cards have other drawbacks. When you eliminate the pain of paying by deferring your bills, you are likely to spend more. And because you’re not using cash, it’s easier to lose track of how much you spend.
“There is almost no evidence that buying a home – or a newer, nicer home – increases happiness.”
A better tactic to avoid new debt and to spend more wisely is to pay in advance, using cash or a debit card. When people pay for groceries with cash, they are more likely to buy healthier food and resist the temptations of the snack aisle. Paying first provides the pleasure of anticipation. Waiting for a purchase can often be as enjoyable as the purchase itself and sometimes even more so. You might suspect that anticipation could set you up for disappointment, but unless the reality diverges sharply from your expectations, your pleasant picture of the future can help you enjoy your purchase even more. Your brain “smooths over the cracks” and your experience tends to conform to your vision of it.
“Insights into how to make yourself happier are also relevant for any organization in the business of trying to make others happy.”
Businesses can use anticipation to increase customer satisfaction. After you book a vacation with TripAdvisor, the web service builds excitement by sending you weekly up-to-date information about your destination. The Birchbox company built its business around the pleasures of anticipation. For $10 a month, usually billed in advance, Birchbox sends its customers a monthly box filled with samples of beauty products. Customers don’t know what will be in the box – and that’s the fun. The day Birchbox announces a new box shipment, fans take to social media to trade guesses and rumors about what will be in it.
- “Invest in Others”
One of the most powerful ways to extract happiness from your money is to spend it on other people. A researcher gave small amounts of money to random people in Vancouver, British Columbia. She told them to spend the money on themselves or on someone else. Those who spent the money on others were “measurably happier” than those who bought something for themselves. Researchers studying more than 600 Americans found no relation between subjects’ happiness levels and how much they spent on themselves. However, their happiness positively correlated with how much they spent on others or gave to charity. By this logic, Warren Buffett should be one of the happiest people in the country: The billionaire has pledged to give away 99% of his wealth. Buffett says he “couldn’t be happier” with his promise.
“People who report donating money to charity feel wealthier than those who do not, even controlling for how much money they make.”
Such “prosocial” spending offers other benefits: For instance, it can improve your physical health and make you feel wealthier. Scientists gave subjects $10 and told them they could keep it or share it. Those who gave the money away reported feeling happier and had measurably lower levels of cortisol, a hormone associated with stress. Just as donating your time makes you feel more time-affluent, donating money can make you feel wealthier. The joy of investing in others may be intrinsic to human nature. Even children, who aren’t generally known as enthusiastic about sharing, reap happiness from altruism. When researchers gave toddlers crackers, the kids – judging by their facial expressions – were happy with the treats. But they displayed even greater joy when they gave their crackers to an appreciative puppet.
“Taking the time to help others makes people feel effective…and these feelings of competence lead volunteers to feel less overwhelmed by the multitude of tasks in their everyday lives.”
Companies can harness the philanthropic impulse to build engagement with their employees and customers. In 2009 Pepsi pulled its Super Bowl advertising and used the budget to fund the Pepsi Refresh Project. It invited consumers to submit and vote on ideas for community-renewal projects and awarded grants to the most popular ideas. The Pepsi project captivated consumers; its vote count exceeded that of the 2008 presidential election. Employees enjoyed being from the company that won 300,000 new Facebook fans. The campaign energized Pepsi employees, who felt a new pride in their company.
Enabling employee giving may be an effective alternative to traditional cash bonuses. Researchers gave a group of sales teams €15 bonuses. They instructed some team members to spend the bonuses on themselves and told the others to spend the money on their teammates. The teams that spent the bonuses prosocially brought in upward of 17 times more sales than the other teams. In another example, Google established a fund from which employees can award each other $150 grants. Google says that this modest acknowledgment from peers has been more effective than bonuses from management.
“Just because money often fails to buy happiness, does that mean that it can’t?”
Beyond the Personal
Government can use the smarter-money principles to promote general well-being by ensuring that citizens have money to spend. It should decrease income inequality: The wealthiest top 20% of Americans control nearly all the country’s wealth. A survey of 54 countries found that respondents in nations with the most equitable distribution of wealth had the highest levels of well-being. Governments should encourage their citizens to buy experiences. The US government now encourages home ownership through tax breaks and other incentives. But owning a home does not contribute significantly to happiness and it adds the stress of debt. Governments can cultivate happiness more effectively by funding institutions that offer memorable experiences, such as parks and museums.