Moving Forwards: Money can buy happiness...

...but experiences, not stuff, are the key.

In a study conducted in the 1970s psychologists interviewed some lucky individuals who had won between $50,000 and $1 million in the Illinois State Lottery. Strikingly, less than a year after receiving the potentially life changing news of winning the lottery, they reported being no more happy than regular folks who had not experienced the sudden windfall. They returned to the same level of happiness or unhappiness they had before. This led to a belief that happiness came from within. It was the belief that you have a naturally happy disposition or not, and changing your financial status would not affect your happiness.
Yet through substantive research, positive psychology has proven that there are things you can do to live a happier life. For individuals with severely limited financial resources, happiness is not a relevant factor. They worry more about satisfying basic needs such as food, shelter and clothing with little concern for life happiness. But it has been proven that once you have attained a level of income above poverty level, it is what you do and not increases in money that will contribute to your greater happiness.
Therefore, for many of us deciding how to invest our resources to maximize happiness becomes our challenge. In his book Luxury Fever, Robert Frank wrote about this challenge. He wondered why, as nations rise in wealth, their citizens become no happier. He examined why we are devoted to spending money on luxuries and other goods which we quickly take for granted, rather than on things that would make us happier for the long term.
For Frank it is a question of how you spend your money. Whether you spend it on “conspicuous or inconspicuous” consumption. Conspicuous consumption refers to things that are visible to others and that can be used as markers of a person’s relative success. Their value sometimes comes as much from the statement they make about their owner as it does from their objective value. It is the difference between driving a Chevy Aveo, Ford Focus, Honda Accord, Lexus 350, BMW 740 or a Porsche Targa 911. The differences are tangible, measurable and conspicuous to all.
Inconspicuous consumption refers to activities that are valued for themselves. They are usually consumed more privately and are not bought for the purpose of achieving status, because it is much more difficult to compare their value to those of others.
Two examples of conspicuous versus inconspicuous consumption relate to our salary and vacation at work. Frank asked, would you prefer a job in which you earned $90,000 a year and your coworkers earned an average of $75,000 or one in which you earned $100,000 and your coworkers earned on average $120,000? Many people chose the first job, thereby revealing that the relative social position and conspicuous value has a financial cost.
Another question is whether you would rather work for a company that gave you a two-week vacation each year, but other employees were given only one, or one that gave you a four-week vacation but other employees were given on average six? The great majority of people choose the longer absolute time. Time off is primarily an inconspicuous consumption.
Frank’s conclusions are bolstered by recent research by psychologists Leaf Van Boven and Thomas Gilovich who identified the benefits of “doing versus having.”  Their primary conclusion suggests that we derive more enjoyment when we use our discretionary income on experiential purchases than from discretionary material purchases.
They gave some interesting reasons why experiential purchase make people happier.
Experiences are happier because they have great social value and aremore pleasurable to talk about than material purchases. Furthermore,people like listening to and telling stories. Experiences are morelikely to have a typical story narrative structure, with a beginning,middle and end. Both listeners and storytellers enjoy conversationsabout experiences more than about possessions.
Experiences aremore open to positive reinterpretations when we reflect back and thinkof them. We are not limited by reality in our evaluations of pastexperiences as we are with material possessions. We tend to forgetincidental annoyances and distractions that detract from theexperience. Friends or family members we know who are greatstorytellers intuitively take the opportunity to embellish andreconfigure the past experiences to create a much rosier andentertaining memory of the event. All of us tend to do it when thinkingof a past memory, even if we are not trying to impress someone. Theword memory itself has a positive connotation.
Experiences arealso more central to our identity. A person’s life is quite literallythe sum of his or her experiences. The accumulation of rich experiencesthus creates a richer and happier life. When I am counseling parentsand there is a choice between buying something for a child or planninga fun entertaining experience together, the experience wins out all thetime. It is a positive investment in the relationship.
When youinvest your money, remember that “doing” beats “having” all the time.Make sure to choose the family vacation over the bigger car, ski tripover the bigger TV or the outdoor adventure over the extra suit onsale. The choice is yours.
The writer is a positiveclinical psychologist who helps clients in his Jerusalem office andgives workshops on positive psychology to businesses and