It is that time of year when many people's thoughts turn towards buying gifts for loved ones. More generally it is a time when thoughts related to money and happiness occupy our attention. When thinking of ways to spend money either on oneself, for loved ones or even for complete strangers wouldn't it be nice if there was some actual research to provide data-based guidance on the topic? As it happens, there is. Researchers Elizabeth Dunn of the University of British Columbia, Daniel Gilbert of Harvard and Timothy Wilson of the University of Virginia have identified, through their research, eight principles designed to help consumers get more happiness for their money. Follow them as you will to enhance your life.
Principle 1: Buy Experiences instead of things
There are a couple of reasons for this. One is that we adapt to things quickly so products lose their sheen pretty soon while experiences are savored undiminished for a long time. Another reason is that we tend to anticipate and remember experiences better than products. Experiences bring happiness both when using and when remembering.
Principle 2: Help others instead of yourself
Since human beings are social animals almost anything we do to improve our connections with others tends to improve our happiness as well. So go ahead, buy a lot of gifts for others and donate liberally to charities and make yourself really happy!
Principle 3: Buy many small pleasures instead of a few big ones
Since we always adapt, we also do so to new things that bring us delight. So it stands to reason that if we indulge in a variety of frequent, small pleasures rather than spending on infrequent big ticket items, we will be happier overall. As the authors poetically put it "we may be better off buying frequent doses of lovely things rather than infrequent doses of lovelier things".
Principle 4: Buy less insurance
Since we are very good at adapting to things, it is also true then that we adapt pretty well to bad turns of events. Hence the tendency to buy excessive insurance may be unnecessary emotional protection. Okay so, this Principle is a bit harder to relate to.
Principle 5: Pay now and consume later
The national debate on the country's debt probably makes this one a no-brainer as far as sound economic living goes. But this has another effect in that anticipation is increased when you pay now and consume later, therefore improving happiness. A further benefit is that when people follow this principle, experiments have shown, they consume less "vices" and more "virtues", ultimately making them happier.
Principle 6: Think about what you are not thinking about
Happiness is often in the details. A vacation at a cottage by a lake sounds enticing but when it is a year away it is easy to delude oneself by not thinking about the annoying mosquitos. So when thinking about spending money it helps to think about how purchases will affect the ways in which we spend our time.
Principle 7: Beware of comparison shopping
Comparison shopping has benefits, but also downsides for happiness. It can exaggerate the importance of features that are different between options while downplaying similarities. Further it can get us to focus on features that are important while shopping but not when consuming, therefore leading to lower levels of happiness.
Principle 8: Follow the herd instead of your head
Research suggests that the best way to predict our enjoyment about something is to check how much someone else enjoyed the same thing. Other people can also directly supply us with useful information. Research shows that an attentive dinner companion could accurately predict your enjoyment just by looking at your facial expression when the menu choices are presented.
So there you go, eight simple principles on how to spend your money in ways that can improve your happiness.