“MONEY IS AN opportunity for happiness, but it is an opportunity that people routinely squander because the things they think will make them happy often don’t,” write Elizabeth Dunn, Daniel Gilbert and Timothy Wilson in an article in the Journal of Consumer Psychology that appeared April 2011—and which, needless to say, I only just got around to reading. It’s arguably the best academic article on money and happiness for the general public, because it’s chock full of practical lessons, plus it has the added virtue of being written with a wry sense of humor.
So how can we buy happiness? The authors mention a number of counter-intuitive notions. We get greater happiness if we spend our money on others rather than on ourselves. We’ll likely get more pleasure from frequent small purchases than occasional big expenditures. We also get more pleasure if we delay purchases rather than buying items right away, because the delay brings with it an enjoyable stretch of anticipation.
The authors suggest that, when assessing the impact of a purchase or event on our lives, we focus less on the big picture—wouldn’t it be great to own a vacation home?—and more on the mundane details, like dealing with maintenance and repairs, because those are a big part of day-to-day happiness.
In addition, the authors note that comparison shopping can lead us to focus on features that aren’t that important. For instance, when house-hunting, we might be drawn to bigger, more expensive homes. But there’s a good chance our home’s size won’t prove all that important to our long-run happiness—and yet we could find ourselves spending far more than we should.