Can't Buy Happiness?

Because one student wanted to conduct a happiness intervention, gratitude started spreading through my lab—everyone has been thanking everyone else. And, as you would expect, the entire lab seems authentically happier after we started our own gratitude intervention. This is a story about how developing a thesis project transformed my entire lab.

Happy people have a particular pattern they use to spend windfall money when their essentials are paid for. They take about 25% and save it or invest it. They take about 12% and give it to charities or religious organizations or gifts for other people – basically, pro-social spending. And they spend about 40% on life experiences.

Everyday businesses are realizing that in order to prosper in today’s consumer-centric economy satisfying the psychological needs of their customers is vital to their financial success. For example, my friends at Zenzi are constantly touting the benefits of value-based marketing. But why, you may ask, are values so important?

Wealthy neighborhoods fuel materialistic desires. Individuals who live in affluent areas are more likely to spend compulsively and less likely to save.

Data collected from BeyondThePurchase.org shows that those who are willing to sacrifice for pleasure value thrill-seeking and physical pleasure. The more people enjoy eating tasty food, the more maladaptively they pursue pleasure. Interestingly, there is relationship between hedonistic tendencies and happiness; however, hedonists reported feeling anxious.

While researchers can determine, quite easily, consumer behaviors from self-report data, it is almost impossible to get reliable data on why they buy what they do. How then can we predict why consumers make the decisions they make?

There is a wide array of decisions associated with seeing a movie. These decisions affect our own personal experience as well as the profitability of movie production and promotion companies. Unfortunately predicting the success/failure of films has been a largely unsuccessful venture—making movie productions a risky investment.

Marketers are always seeking to understand how consumers perceive and connect with their product. In doing this, they are trying to find ways to improve the product, packaging, messaging, and promotion. Improvements in these areas lead to better sales. The question is, what is the best way to get this information?

We are constantly finding ways to layer plausible explanations onto decisions we make throughout the course of our everyday lives. While these explanations allow us to weave a coherent story, often times the true reason for why we make a decision is obscured from our conscious awareness.

Advertisements with the intent of eliciting emotional responses from the consumer have become embedded in our culture – from ‘Nothin’ Says Lovin’ Like Somethin’ in the Oven’ (Pillsbury) and ‘There are some things money can’t buy, for everything else there’s MasterCard’. But using emotional responses is not as straightforward as just presenting happy and cheery images.

Every day more and more people are trying to understand the relationship between money and happiness. Lately I have beening thinking about, what seems like, a simple question: do our values predict what we buy? Allen and Ng proposed that the influence of values on product evaluation will be different for utilitarian and symbolic products

A few years ago I read a story in CNN Money (Most Americans can't afford a $1,000 emergency expense) that reported over 60% of Americans did not have enough money in their savings or checking accounts to pay for a $1,000 emergency. I was shocked. Is it possible that only 36% of US adults have $1,000 in a savings account saved up for a rainy day? Well, maybe not.

A few weeks I wrote about how a lack of money management predicts individuals' compulsive spending, regardless of their personality, gender, age, and income. These results were based on a study published in the Journal of Economic Psychology. In this blog entry I answer a few follow-up questions.

We asked about their materialistic values, addictive shopping behavior, and motivations behind their purchases with widely-used questionnaires in order to explore the relationship between these three things. We learned that individuals who value material possessions are more likely to shop compulsively because they don't manage their credit well.

I’m convinced that one secret of Warren Buffett’s enduring popularity is his “everyman-ness.” While “The Oracle” is insanely wealthy, he is also grounded and approachable which makes replicating what he has done seem almost doable for regular schlubs like you or I. Buffett famously said of intelligence and investment success, "You don't need to be a rocket scientist."

So, why do shopping addicts, or compulsive buyers, keep spending their money even in the face of harmful financial, emotional, and social consequences? Compulsive shoppers tend to be people who bury their head in the sand and ignore credit card bills, as we we found that these individuals keep on buying because they are looking for that "buy high."

Certainly, people value certain aspects of happiness more than others. So, we asked users of BeyondThePurchase.org to defined the "good life."

People who spent most of their disposable income on experiences scored highly on the “extravert” and “openness to new experience” scales.

When women perceive there to be competition for mating opportunities, they sexy up their wardrobe. Something as seemingly unrelated as the state of the economy may lead women to perceive that the pool of available, attractive men is smaller, and thus, the competition for those mates stronger.

Buying the right car for your teenager can prove to be a challenge. A lot of parents out there think it’s just about picking one and going with it. However, your teenager obviously doesn’t think like you.