TODAY, I SING the praises of spending—on the little things in life.
We fiercely resist the suggestion that money doesn’t buy happiness. Commentators will often trot out the quote—which has been attributed to all kinds of folks—that, “I’ve been poor and I’ve been rich. Rich is better!”
I think that’s true. But it isn’t proportionally true. If you went from earning $100,000 a year to earning $200,000, or your portfolio grew from $500,000 to $1 million, would you be twice as happy?
Similarly, on a recent Friday, I found myself alone, with no desire to cook, so I simply heated up a $5.99 pizza from the supermarket. Yes, I admit it, it was a little sad, especially for a Friday night.
The following evening, I went out with three friends to one of my favorite restaurants and we spent more than $100 a head, or some 20 times more. The food was undoubtedly better and there were other perks, including the anticipation of a fun evening, the company and the brief reprieve from dishwashing. Still, I’d be hard pressed to claim that the entire experience was 20 times better than the prior night’s supermarket pizza.
What’s my point? There’s huge variation in the cost of goods and services—but the resulting boost to happiness varies far less. Buying a new Kindle eight-inch tablet computer might cost you $110, while purchasing a new car would set you back an average $38,000. To be sure, most folks need a car.
Still, if the goal is greater happiness, wouldn’t it make sense to spend, say, $11,000 less on the vehicle, which would give you savings equal to the cost of 100 Kindles? That way, you could buy perhaps one new Kindle, plus 99 other treats costing $110 or so.
That would almost certainly be a prescription for greater happiness. Why? Whatever you do with your money, the happiness you receive from the spending will wane, as the initial thrill quickly turns to ho-hum, thanks to so-called hedonic adaptation. The $38,000 car might generate greater excitement than the $110 Kindle, but you’ll get to indifference—and perhaps even disdain—soon enough.
One of the upsides of less expensive but more frequent purchases: You might be able to afford, say, a small thrill every week or two, rather than a somewhat larger thrill every three years. Moreover, by favoring smaller purchases, you limit the magnitude of your financial mistake if—as often happens—you misjudge what will make you happy.
I’m hardly the first person to suggest this strategy. For instance, it’s one of many mentioned in the brilliant paper by academics Elizabeth Dunn, Daniel Gilbert and Timothy Wilson. Like the idea of small pleasures? Here are eight additional thoughts on that strategy:
Obviously, there’s pleasure to be had from signaling. But I presume there’s greater pleasure to be had if we can each figure out what we truly enjoy. So what do you enjoy? Make a list—the longer, the better—and then focus on those items with more modest price tags.