Monday, January 11, 2016

MAKING SEN$E - You Can Buy Happiness

"Money can buy happiness, especially when you invest it in others" by Paul Solman, PBS NewsHour 1/7/2016

Editor’s Note:  Money can buy happiness, say psychology professor Elizabeth Dunn and marketing professor Michael Norton.  That is, as long as you follow five core principals on how to spend it.

Economics correspondent Paul Solman sat down with Dunn and Norton to discuss their co-authored book, “Happy Money: The Science of Happier Spending” for Making Sen$e's latest segment on altruism.  Below Dunn and Norton discuss two things they say can buy you happiness: time and investing in others.

For more on the topic, tune in to tonight’s Making Sen$e, which airs every Thursday on the PBS NewsHour.

MONEY CAN BUY BETTER TIME

Elizabeth Dunn, co-author:  If you want to use money to buy happiness, we suggest you do the following; buy experiences, buy time, make it a treat, pay now and consume later, and invest in others.

Paul Solman:  Buy time?  But time is money, so how can you buy time if you’re just buying money?

Elizabeth Dunn:  Well, actually, thinking about “time is money” turns out to be bad for happiness.  So when people see their time as money, they’re less willing to do prosocial things, like volunteer or even recycle paper.  So it’s better, in fact, to see money as a way to get better time.

Paul Solman:  But Ben Franklin was right, wasn’t he?  Time is money.  That’s the economic concept of opportunity cost.

Elizabeth Dunn:  So Ben Franklin was technically correct.  He was thinking like a good economist.  But I like to think that if he was around today to see modern happiness research, he might rephrase that idea to suggest that money can buy better time.

Paul Solman:  So what do you mean “money can buy better time?”

Elizabeth Dunn:  Well, you could, for example, buy a home that’s closer to work so that you’re not spending big chunks of your day commuting, which we know to be one of the least happy activities in most people’s day.

Paul Solman:  Or you could buy a home closer to your kids and grandkids.

Elizabeth Dunn:  Right.  So spending time with others is also very important for happiness.  And if you buy a home in an area where you can be with your family, that’s also going to be a good choice in terms of using money to buy better time.

Paul Solman:  Because you don’t have to commute to get to the kids or grandkids.

Elizabeth Dunn:  Exactly.  So if we’re using all our time to get to the things that make us happy, we may not have much time left to do those things that we really care about.

INVEST IN OTHERS

Michael Norton, co-author:  This fifth principle that we’ve identified — invest in others — is a very different mindset, which is, “What should you do with your money to help other people in order to make yourself the happiest?”  So we’ve done lots of research to try to figure out when you have that one moment a week where you’re feeling charitable, what should you do with that money to really get the happiness bang for your buck?

Paul Solman:  And what do you do?  What should you do?

Michael Norton:  I keep it.  [laughs]  But Liz will often spend money on others.

Paul Solman:  What do you do?

Elizabeth Dunn:  Well, one thing that I’m doing right now is I’m working with a group of friends who are organizing to bring over a family of refugees.  We live in Canada where it’s possible for any five Canadians to get together to bring over a refugee family.  And it’s been really cool because everybody’s working together; everyone's chipping in money and offering time.  And it’s amazing how much people are willing to give when you actually ask them.  So far, it’s been really rewarding.

Paul Solman:  How do you live this principle to the extent that you do, and how should any of us?

Michael Norton:  I think Liz sponsoring a refugee family is a great example, because one of the things that is so critical to being happy when you give is knowing where the money is going and seeing the impact.  We’ve seen that all forms of giving are kind of associated with happiness.  When you can really have a tangible impact on others — that’s when we see happiness at its highest.

WHY GIVING MAKES YOU HAPPY

Michael Norton:  There’s a wonderful paper by an economist named Joel Waldfogel called “The deadweight loss of Christmas,” where he shows that people get Christmas wrong in a sense.  So we think we know what our loved ones want, and then we buy them the thing that we think they want.  They open it up, look at it and say, “Oh, a sweater,” like it’s the worst thing in the world.  And he calculated the loss in value when we get it wrong in the sense that, “I should've just given you 50 bucks, and you could've gone out and gotten the sweater you wanted.”  Instead, I buy the wrong sweater and you can’t return it, and so we’re losing all this money in the economy as result.

And I don’t disagree, actually, with that premise at all.  But from our perspective, there’s another currency that’s missing, which is the happiness that you get from giving.  So it’s true that I could just give you $50 in cash on your birthday and on every holiday, and you could go buy what you want with it.  But you wouldn’t be as happy probably, because it suggests that I didn’t give much thought to your gift.  And we’ve shown I wouldn’t be as happy, because I’m not giving a specific thing that’s making you very happy.  So in a sense, we’re weighing these two things against each other, or we’re trying to be economically efficient, or we’re working in another currency, which is our relationship and our happiness.  And it’s a tough equation to figure out.  Sometimes you’re still going to get it wrong either way, but it’s an important consideration.  It’s not just the economic value or self-interest, but also the complicated nature of social relationships and social support.

But from a different perspective of thinking about having a happy life, it’s not clear that people who constantly maximize their own self-interest end up really happy, or they end up like Scrooge McDuck on a pile of coins, and they have no one who cares about them.  So we really try to think carefully about balancing economic self-interest versus these warmer, fuzzier, more nebulous things.  But it turns out, at the end of people’s lives, they care much more that they have friends and family who they had an impact on than they care about how much money they had in the bank.

Paul Solman:  I have to say that Scrooge McDuck always seemed quite happy swimming in his silo of coins.

Michael Norton:  I recently saw a New Yorker cartoon of a guy on his deathbed, and the quote from him was, “I wish I’d spent more time at work.”  Now, why is that funny?  Because no one, of course, would ever say, “I wish I’d spent more time at work.”  And yet, most of us spend a ton of our time at work trying to make money that we’ll then enjoy or help other people.  But then, we keep accumulating it for so long that we end up not having time to do that.  And in the process of accumulation, what we’ve done is we’ve spent time on getting money, instead of time on building social relationships.  Maybe Scrooge McDuck was happy swimming around in his coins, but my guess is he probably would’ve been happier with a family who cared a lot about him; because we know from data-set, after data-set, after data-set that social support and having people who love you is a critical predictor of well-being much, much more so than how much money you have lying around.


"Want to be happy?  Giving is more gratifying than receiving" PBS NewsHour 1/7/2016

Excerpt

SUMMARY:  'Tis better to give than to receive, goes the old saying.  But better for whom?  Economics correspondent Paul Solman talks with psychology scholars about the ways altruism can benefit those who give.

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