Why We Suck at Saving Money, and Suck Even Worse at Saving Time

Two recent articles in the New York Times got me thinking about why most of us really suck at saving money and more importantly why we suck at utilizing our time well. These are two separate but very connected issues. They are connected because after all we all know that time is money and money is time.

Both money and time seem like nonrenewable resources. Time actually is a nonrenewable resource. Although we don’t know exactly how much time we have, it’s a pretty good bet that most of us have between 70 and 90 years on this planet. And we each have 16 to 18 hours of conscious time each day. Just like oceanfront property, we can’t manufacture more time, we can only better utilize the time we have.

Money also seems like a nonrenewable resource for most of us. But it’s not really. In fact, thinking that money is a nonrenewable resource is probably one of the main reasons why people don’t use time better.

The first New York Times article, How to Pinch Pennies in the Right Places, gave a theoretical thought experiment. If you could save $10 on a $50 set of headphones, would you drive 30 minutes across town to get a better price at a different store? (Answer this before reading on.)

Or, if you could save $15 on a $400 television would you drive 30 minutes across town?

Research done by Daniel Kahneman and Amos Tversky in 1981 suggests that most people were more willing to drive across town to save money on the headphones than on the television. You save 20% on the headphones and only 3.75% on the television. But we don’t spend percentages, we spend dollars, and actually you’d be saving more money ($15) on the television than on the headphones ($10).

The same article discussed other research that suggested that consumers were willing to spend 20 minutes extra to save $3.75 on a $10 pen, but needed a savings of at least $278 on a $30,000 car to be willing to invest the same 20 minutes extra.

This of course is crazy! In the example of the pen people value their time at $11.25 per hour. But in the example of the car people are unwilling to make an investment of time that would pay them $834 per hour!

But we all fall prey to different versions of this. How much time do we waste surfing Amazon in order to save a few bucks on a product? Or to find a product that has 4 stars instead of 3 ½ stars?

This article also pointed out that people on the lower income level are less likely to fall prey to the percentage saved fallacy, because they care about each and every dollar. But I think the article misses a more important point – which is the real way to have more money!

Saving $10 or $15 on a purchase really doesn’t matter compared to lowering recurrent expenses. For instance, how much money do you spend each month on the following items: cell phone service, Internet service, cable or satellite TV, coffee drinks at your local café, restaurant meals, rent or mortgage, car payments? How much money did you spend on your last car? Spending $120 per month on cable TV comes out to $14,400 over 10 years. Nice late-model used cars can be had for $10,000-$15,000, yet many people drop $50,000 on a new car. Even just saving $30 on a less expensive cell phone plan means that you will save $3600 over 10 years.

(A number of years ago I looked at my recurrent expenses and realized that I was spending a lot of money on two business landlines, and on cable TV. I spent some time doing research and ended up purchasing a couple of Ooma telephone systems that when connected to the Internet provided completely free telephone service. I also put an antenna on my roof and switched to free over-the-air HDTV. The time invested was probably about 4 hours for all of the research and installation. But I saved almost $300 per month, without giving up anything I really cared about other than perhaps Monday night football (which is on cable TV only). My one-time four hour investment has paid me more than $10,000 in savings, which is roughly $2500 per hour! And I continue to save money each month.)

But the article also misses a more profound point, how to earn more money. People focus too much on saving money and not enough on earning more money, through work, entrepreneurship, education and training, and investment. In this era of the Internet there are 1 million ways to earn more money. And improving your education and training can help you earn more money in your current employment as well as well. Improving income opportunities lasts for life, while getting a good “deal” only lasts for a day! Or, if you can afford to invest money, then focusing your time on investing more successfully can yield huge benefits in total dollars. I know people that have spent the time to learn about investing in residential real estate, and who will retire with very nice incomes from the time they invested in acquiring and managing these properties.

Which brings me to the 2nd New York Times article, What Should You Choose: Time or Money? This is a fascinating and profound article. It summarizes research performed by Hal Hirschfield, Cassie Mogilner, and Uri Barnea which asked the question what do people choose, time or money? About 65% of their participants chose money over time, showing a small preference for money versus time. This in itself is not surprising or even particularly interesting. What’s more interesting is that those who chose time rather than money reported higher levels of happiness, even when the researchers controlled for participants’ amount of leisure time and income and money.

Realistically speaking, we are all in the business of balancing time against money. How we do this has significant implications in terms of our well-being and happiness. Research suggests that we should tilt in the direction of saving and valuing time rather than money if we want to maximize our happiness. There is ample research suggesting that experiences create more happiness than material possessions. And experiences take time (and sometimes money), while material purchases take money (and sometimes time.)

What can we learn from this research?

  1. When possible, tilt your decisions in favor of time rather than money. Don’t buy a cheaper house which requires you to spend many hours a week commuting. Don’t spend very much time in order to gain small savings in money.
  2. If you are going to invest time in order to save money, calculate your hourly “pay”, and only invest the time if the hourly salary is high. For instance, if it will take me 30 minutes to save 20 bucks, I’m earning $40 per hour. But if it takes me 30 minutes to save $5, then I’m earning $10 per hour. Try to be rational about these decisions and don’t pay any attention to the percentages saved, only to the dollar values and the time values.
  3. Time invested in saving money on recurrent expenses such as cable or satellite TV, car insurance, cell phone service, Internet service, etc. will always pay you a higher salary rate per hour. A few hours invested in researching less expensive alternatives and switching can save hundreds of dollars a month indefinitely which adds up to a very good return on your time invested.
  4. When you get excited about “getting a deal”, always calculate the true cost of the deal in time and in hassle. This will prevent you from driving across town to get a small savings or from spending too much time spent on the Internet looking for deals. (I am as guilty of this as most people, although I’m much more likely to spend time online rather than time in my car, even though both waste time.) Ask yourself whether on your deathbed you will be telling your grandchildren about this deal that you got. Remember that in the grand scheme of life, time is worth more than money. (See this classic parable about the poor fisherman and the entrepreneur.)
  5. Finally, remember that life is not just about time and money, it’s really about meaning and values. Spending money doesn’t really benefit you unless it ties into your core values and improves meaning in your life. That’s why even getting a multiplicity of small “deals” doesn’t really matter in the grand scheme of things. What matters more is whether you spend money to support your core values. That’s why grandparents sometimes pay for their grandchildren’s college, even though it’s an expensive proposition. And that’s why taking your family on a really fun vacation is a good investment as it leads to experiences and memories that potentially last a lifetime. (My siblings and I will always remember magical experiences from our family trips – playing telephone tag in the elevators of the Caesar’s Palace in Las Vegas, riding donkeys along a precipitous cliff in Grand Canyon, screaming “beep beep” on a narrow, twisting road in Spain when our rental car horn failed.)
  6. And even time should be evaluated in terms of meaning and values. Here in Silicon Valley a lot of people retire early. This isn’t always a good thing however. What I’ve seen is that they often end up spending time doing things that don’t really add to their happiness. For instance, they will design and build a custom house, usually quite large, which eats up several years of their life playing at general contractor and quality control inspector.
  7. Just as spending money intelligently is challenging, it’s even more challenging to spend time well. I struggle with this all the time. But I try to continually improve how I spend my time, for instance trying to focus more on writing these blog articles rather than watching television or reading a novel.

This article ended up being a lot longer than I expected, but I think these are profound and important issues for all of us to think about and to improve. Now it’s time for me to have some fun!

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Dr. Andrew Gottlieb is a clinical psychologist in Palo Alto, California. His practice serves the greater Silicon Valley area, including the towns of San Jose, Cupertino, Santa Clara, Sunnyvale, Mountain View, Los Altos, Menlo Park, San Carlos, Redwood City, Belmont, and San Mateo. Dr. Gottlieb specializes in treating anxiety, depression, relationship problems, OCD, and other difficulties using evidence-based Cognitive Behavioral Therapy (CBT). CBT is a modern no-drug therapy approach that is targeted, skill-based, and proven effective by many research studies. Visit his website at CambridgeTherapy.com or watch Dr. Gottlieb on YouTube. He can be reached by phone at (650) 324-2666 and email at: Dr. Gottlieb Email.

Dealing with Conflict Over Typical Home Neatness/Cleanliness Issues: The Houzz Interview and Some Other Thoughts

I was recently interviewed for the site Houzz, which is a web site and online community about architecture, interior design and decorating, landscape design and home improvement. In an article, A Therapist’s Guide to Dealing With Conflict at HomeI was interviewed by Mitchell Parker, a writer for Houzz.

He asked me to comment on that age-old problem when people live together of neatness/sloppiness and cleanliness/messiness. How can people get along?

I suggest you read his article which really quite nicely captures my thinking about these issues. In a nutshell, it’s all about communication. It’s not the dirty dishes that create conflict, it’s the failure to communicate about the dirty dishes in ways that resolve the problem.

Most importantly, I discussed the fallacy of the moral high ground in neatness and cleanliness. I admit I might be a bit biased on this issue, living closer to the moral low ground, but the argument is that there is no moral high ground in terms of these issues. Because our culture often values neatness and cleanliness, in arguments the neat person always takes the moral high ground, “I am the one who’s right therefore you should change.” Needless to say this doesn’t usually result in any positive progress on the issue.

I prefer to think of these issues as aesthetic preferences. Just as one person might prefer abstract art on the wall, while another person might prefer realistic paintings, messiness versus neatness is really an aesthetic preference. Handling it this way usually leads to better outcomes in conflicts over these issues. If two people come at the neat/messy conflict from a position of having differing preferences as opposed to “shoulds”, it is more likely that they can come to some sort of negotiated compromise which will be workable.

And treating these differences as preferences has another advantage as well. It usually leads to much more respectful communication about these issues. If a neat person recognizes that their need for neatness is simply a preference, they will not demonize their partner who is messy, calling them a “slob” or a “pig”. In a similar way, if the messy person recognizes that their disorder is a preference, they won’t label their partner as obsessive or a “neat freak.” This makes it much easier to discuss the differences.

The key issue is to apply a sort of flowchart to these issues. The flowchart looks like this:

1.Identify what each of you wants in terms of your home environment. Recognize that these are aesthetic preferences, and not moral shoulds.

2.Identify the ideal state that you would prefer, and also identify a less than ideal but okay state. It’s the latter that you will most likely end up with.

3. Discuss the differences, and see if there is a workable compromise. Sometimes the compromise will not be a simple meeting in the middle, but will instead involve a trade-off. For instance, if one person prefers an impeccably clean house, but the other person is not willing to spend the time and effort to do this, the couple could agree that they will hire someone to come in weekly to clean the house. Or the neater person might clean the house, but the other person agrees to do other life maintenance tasks such as paying the bills, parenting tasks, gardening tasks, or house maintenance tasks. Things don’t have to be perfectly split down the middle, it’s just important that they feel fair.

4. In looking at these differences it’s also useful to see what people are able to do, and what they are willing to do. Willingness and being able to do something are completely different things. As hard as it is to believe, (for the neat person), many messy people actually do not have the ability to be ordered and neat. This seems hard to believe. After all, can’t anybody fold their clothing and put it away? Can’t anybody put a dish in the dishwasher? And of course the answer is yes, technically, but in practice, especially over time, many people lack the skills.

Think of it this way. Technically anybody should be able to exercise every single day of their life and also eat healthy. We all know how to eat healthy and how to exercise. But how many people actually succeed on a daily basis? Very few. We are willing but not very able.

5. Which brings me to my next issue that of willingness. Even if we are technically able to do something, we might not always be willing to spend the time and energy doing it. Time and energy are a zero-sum game. We only have 16 hours of conscious time each day, and actually most of us have far fewer free hours, with work, parenting, relaxation, and other priorities.

Cleaning and organizing takes time and energy, and while some people feel the time and energy is well rewarded others do not. In my interview, I suggested a market-based way of assessing willingness. Although I was speaking somewhat tongue-in-cheek, I suggested that if one partner wants the other to do something they offer to pay them. If I want my partner to wash the dishes instead of leaving them in the sink, what am I willing to pay on a daily basis? And what price would they require to be willing to do this?

This is more of a mental exercise than an actual exchange of dollars. But I know for myself if my partner asked me what it would be worth for me to keep every surface in my home perfectly cleared every single day, I would set the price very high, something like $500 a day. That is because it would take a lot of conscious work in order to keep every surface clear. And it would take perhaps an hour or two every day. My price represents my perceived value for the change.

And then my partner could decide if that was worth it. After all, we make these kinds of evaluations all the time. If our not so new car gets scratched in a parking lot, most of us choose not to spend a lot of money to have it fixed. We accept the scratches and live with them.

6. What it comes down to is very simple. If you want your partner to change some house related behavior, first try to assess their ability and willingness to do so. If they are able and willing then you can try to get them to change their behavior. This will require ongoing discussions and work, and will not be easy.

Or you can outsource the problem. If you don’t like cleaning toilets and you can’t get your partner to do that, pay someone to clean your toilets. Most of us do this in other realms without any issues. We pay car mechanics to fix our cars, we pay gardeners to cut down our trees, and we often pay tutors to help our kids learn.

Finally, you can accept the difference. Acceptance is probably the most powerful tool in dealing with these conflicts. Acceptance frees you to stop wasting energy being angry or trying to change your partner. I’m reminded of one of my favorite quotes, “Never try to teach a pig to sing, it frustrates you and annoys the pig.”

I started this post thinking I would just point to the interview that I did on house, but discovered that I wanted to elaborate on some of the concepts that I discussed during that interview.

Good luck to all of you, these can be difficult issues, and the key thing is to remember to be gentle, loving, and respectful in your communications about these differences. Nobody gets divorced over dishes in the sink, they get divorced because of the way they interact around dishes in the sink.

I’m off to straighten up, or maybe not?

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Dr. Andrew Gottlieb is a clinical psychologist in Palo Alto, California. His practice serves the greater Silicon Valley area, including the towns of San Jose, Cupertino, Santa Clara, Sunnyvale, Mountain View, Los Altos, Menlo Park, San Carlos, Redwood City, Belmont, and San Mateo. Dr. Gottlieb specializes in treating anxiety, depression, relationship problems, OCD, and other difficulties using evidence-based Cognitive Behavioral Therapy (CBT). CBT is a modern no-drug therapy approach that is targeted, skill-based, and proven effective by many research studies. Visit his website at CambridgeTherapy.com or watch Dr. Gottlieb on YouTube. He can be reached by phone at (650) 324-2666 and email at: Dr. Gottlieb Email.

Why You Should Never Read Online Illness or Medication Forums, and Why You Should be Skeptical of Google Search Results as Well

The first thing many people seem to do when they get a diagnosis of a physical or a mental illness is to go to the internet and search on that illness. Patients who are prescribed medications do the same. Often the search results lead to internet forums. These forums consist of user-generated content that usually is not moderated or edited by any professional. Anyone can post on these forums. This seems reasonable, right? But in this article I’m going to tell you why, for the most part ,you should avoid reading these forums. And I will also tell you why you should be skeptical of Google search results regarding any illness.

When people read on forums about their illness or medication, they get scared. Many of the forum posts will say that your illness leads to awful and dire outcomes, and that the medications prescribed to you will make you depressed, addicted, or crazy.

For instance, I often treat tinnitus patients. Samplings of the forums that cover tinnitus suggest that most of the people who post on these forums are completely miserable and suffering terribly from their tinnitus.

So what’s the problem here? Isn’t this useful information? Can’t patients learn something interesting and helpful from these forums?

Unfortunately, Internet illness forums often present a distorted, grim, and negative impression of most illnesses and most medications. Why is this? The main reason is because of selection and sampling bias. The groups of people who post on illness forums are not a representative sample of people with a particular illness. Let’s use tinnitus as an example. If you read the tinnitus forums you would assume that everybody with tinnitus is anxious and depressed about it.

But actually, we know from research studies that roughly 20% to 40% of the population experience tinnitus symptoms from time to time. We also know that roughly 2% of people who have tinnitus symptoms suffer psychologically. So the data from research suggests that a small subset (2%) of people who have tinnitus symptoms suffer anxiety and depression as a result of their tinnitus. Most people (98%) with tinnitus symptoms do not suffer significantly or they have adapted over time and gotten over their suffering.

But the forums are full of posts from the people who suffer the most. People who don’t suffer don’t spend their time posting. And people who have overcome their suffering also don’t post. So reading the forums gives a tinnitus patient a distorted and scary view of the experience of tinnitus.

The other problem in reading internet information about illnesses is the way that Google Search ranks and orders search results. When you search on tinnitus, what you might not realize is that Google presents pages in order of popularity, not in order based on how accurate or scientific they are. Sites that are clicked on more frequently will rise up in the Google search results and sites that are clicked on less frequently will fall down. When you do a Google search people typically click on the most shocking and scary links. “Tinnitus caused by alien abduction” will get a lot of clicks even though it may represent a site run by a single person who claims to have been abducted by aliens. Thus the alien abduction tinnitus site will move up in the Google rankings.

Boring scientific sites fall down in the search rankings. That’s because they have scientific names that don’t encourage people to click on the links.

So how can patients get accurate information about their illness or about medication treatments?

One way is to search within scientific and medical sites. For instance, Medscape is an excellent website that offers medical articles about almost every illness. WebMD is another site more designed for lay people, which also offers good information. If you want to search scientific articles you can use the PubMed search engine which searches published research articles.

Let’s do a Google search on tinnitus. Overall, the 1st page of Google results is pretty representative of medical and scientific sites. But the 3rd listing titled “In the news”, is an article “Martin McGuinness tells of misery living with tinnitus,” from the Belfast Telegraph. Pretty grim, you think, misery!

But if you actually clicked through to the article you would get a very different impression because Martin McGuinness actually says that “it had a limited impact on day-to-day life and work and that family, friends and work colleagues were very supportive.… It does not limit me in a professional or personal capacity.” This is a much more positive view than suggested by the title and the Google link.

This is a great example of why the Internet is dangerous. The headline is what’s called click bait, a link that falsely represents the actual page, which is designed to attract people’s clicks.

Forums about medication are also problematic. Many psychiatric medications can have side effects. For most people these side effects are minimal or tolerable and are overbalanced by the benefits of the medications. For a minority of patients, the side effects are not minimal and these are the patients who are over-represented in most Internet medication forums. Also, on an Internet forum you never really know all of the medications the person is taking, the accurate dosages, as well as their underlying illness.

There is one more problem with reading about illnesses on the Internet. It’s one that particularly disturbs me. Many websites, even websites that purport to be objective, actually are selling something. They may be selling a supplement or vitamin, or an e-book or some other kind of program to treat an illness. Obviously, to increase sales, these commercial websites will paint a distorted negative picture of any illness or condition. They may also disparage other more traditional and scientifically validated treatments or drugs. In general, you should be skeptical of any information that comes from a website that sells products or services.

To review:

  1. Take Google search results with many grains of salt. Remember that Google orders search results by popularity not by accuracy.
  2. Beware of Internet illness and medication forums. By and large, they are populated with an unrepresentative sample of illness sufferers, the ones who suffer the most and cope the least well. Reading them will depress you and make you anxious.
  3. If you want to get information about your illness or potential treatments, utilize established and reputable medical and psychological information sites. An exhaustive list of best medical sites can be found at: the Consumer and Patient Health Information Site. Some of the good medical sites include MedscapeWebMD, and MayoClinic. Some of the best sites for mental health information include PsychCentral, NIMH , American Psychiatry Association, American Psychology Association .
  1. Finally, remember that a very large percentage of websites are actually selling something, and be skeptical of information from these sites.

In conclusion, suffering any illness or condition is unpleasant and sometimes scary. Don’t make it worse by consuming information on the Internet in a random way. Be skeptical and selective and remember that Google is not always your friend. Often a good physician or good psychologist can give you clear and balanced information.

 

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Dr. Andrew Gottlieb is a clinical psychologist in Palo Alto, California. His practice serves the greater Silicon Valley area, including the towns of San Jose, Cupertino, Santa Clara, Sunnyvale, Mountain View, Los Altos, Menlo Park, San Carlos, Redwood City, Belmont, and San Mateo. Dr. Gottlieb specializes in treating anxiety, depression, relationship problems, OCD, and other difficulties using evidence-based Cognitive Behavioral Therapy (CBT). CBT is a modern no-drug therapy approach that is targeted, skill-based, and proven effective by many research studies. Visit his website at CambridgeTherapy.com or watch Dr. Gottlieb on YouTube. He can be reached by phone at (650) 324-2666 and email at: Dr. Gottlieb Email.

Jet Blue and Orchard Supply Hardware Customer Service: Epic Fail! (updated)

As a psychologist, I am always amazed at how foolish companies can be in terms of customer service. I recently had two experiences which demonstrate this.

The first one was with Orchard Supply Hardware (OSH). They had published a 20% off coupon for this past weekend. It was a two-day coupon, and I didn’t look at it terribly carefully, assuming that it was good for Saturday and Sunday as most weekend coupons are. On Sunday I went over to Orchard Supply Hardware with my significant other. We were shopping for a new backyard umbrella and stand. A very nice sales clerk,  Pilar, showed us the options. We then asked her if we could apply the 20% off coupon. That’s when we found out, according to her, that the coupon was actually only for Friday and Saturday. We asked her if it was possible to have the manager override it so that we could still get the discount. We told her that we would buy an umbrella and a stand if we could get the discount. She told me it was impossible, that the computer would not allow it.

As we checked out, buying a few small items that we needed, but not an umbrella and not the stand, we saw almost everybody presenting the same coupon and being told the same thing. In several cases the person shrugged and then said well I don’t want to buy this, walking out of the store in disgust.

So here’s an example of terrible customer service. You have a large group of people who bring in a coupon one day past its unusual expiration date, asking for the coupon to be honored. All of these customers want to give you money! Rather than give your managers the ability to do this, you have a rigid computer system, and you lose sales. Anyone who has come into use that coupon on a large item most likely walks out without buying that item. Epic fail!

Another example was my  interaction today by phone with JetBlue Airlines. I recently flew round-trip from San Francisco to Boston. JetBlue has a tie-in with American Airlines such that you can choose to receive American miles rather than JetBlue miles. At the airport I had specifically given my American frequent flyer number, and requested that I receive American miles rather than JetBlue miles. When I checked my statement I discovered that I had been incorrectly credited JetBlue miles and had received no American miles.

So I called JetBlue and spoke with Monica in their True Blue frequent flyer department. I should add that first I spoke to a regular customer service person who kept me on hold for 5 min. and then transferred me to Monica. When I explained to Monica that I would like her to switch the miles over to American, she curtly told me that once the miles were credited it was not possible. Even worse, she gave me a ridiculous explanation telling me that since I had bought my ticket after logging into my True Blue account, the ticket would automatically accrue True Blue miles even if I had my American frequent flyer number in the account. Since there’s no way to buy a ticket without logging in, that was pretty ridiculous.

I then asked to speak with her supervisor, which resulted in another long hold, at which point I decided to give up since it was clear that JetBlue had no interest in fixing this problem.

Once again, epic fail. I had been really impressed with the actual flight, the comfort of the seats, the friendliness of the staff. This had been my first JetBlue flight. But I have to admit that given my poor customer service experience regarding the frequent flyer miles, it leaves a sour taste in my mouth regarding JetBlue.

The key point in the JetBlue customer service failure and the Orchard Supply Hardware Customer service failure was the inability of the front line sales person to have the authority and the power to fix the problem instantly. So many companies seem to believe that empowering front-line people to fix problems is somehow a huge mistake. This is wrong!

In summary, there are a few key points.

1. Customer loyalty and satisfaction is difficult to gain, but incredibly easy to lose. Once you betray a customer’s trust, it’s almost impossible to regain it.

2. Customers repeat bad experiences much more than good experiences. From a marketing perspective, when a customer has a bad experience it potentially drives away many other customers as that customer tells their experience to other potential customers.

3. The goal of all customer service should be to leave the customer feeling good about the interaction. The best outcome is to give the customer what they want. In this case, for Orchard Supply Hardware, it would have meant honoring the 20% coupon. In the case of JetBlue, it would’ve meant transferring the miles over to American Airlines.

4. If you can’t give the customer exactly what they want, offer something else good. For instance, Orchard Supply Hardware could have offered another type of discount, or a coupon good for future use. JetBlue could have offered me some bonus miles under their own program.

5. If, for some inexplicable reason, you cannot offer the customer something good, at least be very apologetic. Neither the clerk at Orchard Supply Hardware nor the customer service rep Monica at JetBlue said the magic words. “I really wish that I could do something more for you, but I can’t. I really apologize.”

The failure to even apologize leaves me as a customer just amazed. Epic fail! Shame on both Orchard Supply Hardware and on JetBlue Airlines!

(See my update to this story here, where JetBlue compounds their failure, and Orchard Supply Hardware makes it right, with amazing customer service.)

 

 

 

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Dr. Andrew Gottlieb is a clinical psychologist in Palo Alto, California. His practice serves the greater Silicon Valley area, including the towns of San Jose, Cupertino, Santa Clara, Sunnyvale, Mountain View, Los Altos, Menlo Park, San Carlos, Redwood City, Belmont, and San Mateo. Dr. Gottlieb specializes in treating anxiety, depression, relationship problems, OCD, and other difficulties using evidence-based Cognitive Behavioral Therapy (CBT). CBT is a modern no-drug therapy approach that is targeted, skill-based, and proven effective by many research studies. Visit his website at CambridgeTherapy.com or watch Dr. Gottlieb on YouTube. He can be reached by phone at (650) 324-2666 and email at: Dr. Gottlieb Email.

Shopping for Happiness ™

I’ve been working on a book length project on how to apply the current happiness research to everyday life, and this is an excerpt from that book.

It is said that money can’t buy happiness. This is mostly true. Like most generalizations, though, there are exceptions. What I hope to do in this chapter is to use the happiness research to teach you how to be better at shopping for happiness.

The happiness research teaches us several things. One basic principle is that of habituation, or getting used to things. This unfortunately robs us of joy from new and shiny possessions.

Thus using your hard–earned money to buy that shiny sports car will most likely not result in as much happiness as you anticipated. This is disappointing. After all, what is the point of making money if spending it doesn’t bring happiness?

The happiness research also shows us what tends to make people happy are experiences. This gives us some clues how to spend money to maximize happiness. Instead of buying things, which fade remarkably rapidly in their ability to please us, it makes more sense to use your spending to purchase items that allow you to have experiences you will enjoy. Or to directly purchase experiences that you will enjoy such as exotic trips, unique experiences, or thrills and chills like a parachute jump or bungee cord drop.

Let me give you some do’s and don’ts of shopping for happiness.

In many financial magazines and journals you will see little articles about how much money you can save by skipping the latte at your local café. They run the numbers, calculating one latte per day investing for umpteen million years, invested at 10% interest, becomes some ridiculous number by the time you are 93, perhaps even several hundred thousand dollars. It certainly would be nice to have a spare $200,000 by the time you are 93, assuming you make it that far.

The problem with all these articles is that they ignore what science has discovered about happiness. It really depends how you spend the $3 on your latte. If you spend $3 on a latte just so you can rush in and out of your local Starsucks, jump in your car, and spend your morning commute more caffeinated, then the articles are right. You’d be better off making coffee at home, putting it in a go cup, and investing that money for the long term.

However, if the way you enjoy your latte is by sitting at your local café where you know people, chatting with your table neighbor, reading the New York Times or Wall Street Journal or the local paper, and in general, relaxing and socializing, then this is a $3 very well spent indeed! What you done is to purchase a pleasant and social experience. If you do this daily, you will form a community of sorts, which always increases happiness.

Spending money in order to have satisfying experiences leaves you with memories of those experiences, which linger, and raise your happiness level.

Let me give another example. Someone close to me was living with a woman and he was struggling to find athletic activities he could share with his partner. She didn’t like hiking,  and would complain bitterly when they climbed hills.

Biking was even worse. She was a slow and unconfident rider. He was resentful at how slowly she rode, as it prevented him from enjoying a workout. He also constantly worried about her in traffic, as she had little experience riding, and often would dart out into traffic. She would get mad at him when he rode ahead of her. It was no fun for either of them.

This was a problem. What was the solution? I suggested to them that they spend some money to solve this. What did I suggest? I told him to buy a tandem bicycle. I had seen one on EBay, a recumbent tandem, for about $1800 shipped.

He bought it, and they started to ride together. She would ride on the back of the bike where all she had to do was peddle, and he would steer the bike from the front position. He got a great workout, even if she didn’t peddle very hard, and she was guaranteed to keep up.

It became a very enjoyable activity for them, riding almost every weekend, talking while they rode, and enjoying a pleasant and athletic activity together.

What did my friend purchase? It seemed like he purchased an expensive tandem bike. But in actuality, he purchased a “ticket to ride” or a ticket to a recurring pleasant experience for him and his wife.

Similar examples would be buying backpacking equipment, golf equipment, scuba gear, running shoes, and so on. But it should be something you use regularly. Buying a pair of skis and boots that you only use 3 days a year will not have a significant impact on your happiness level, in fact, in many of these cases it’s better to rent.

For instance, I enjoy scuba. But other than a mask and fins, I own no scuba equipment. The main reason is that I only scuba dive a few days each year, and thus the hassle of buying and owning and maintaining the equipment is not worth the small increment in happiness that my own gear would bring. If I dove frequently I would own my own equipment.

This brings me to another useful principle in shopping for happiness. I didn’t invent this one, my friend Dan came up with this principle. Dan taught me one simple principle for purchasing things. He told me that one should buy the very best in things that you interact with every day.

Again, if I scuba dive daily, I should buy the best equipment I can afford. Or if I am a bicyclist, and I ride daily or almost daily, then it makes sense to spend three, four, or even five thousand dollars on a great bike if I can afford that.

As a result of Dan’s law, I am writing this on my very sleek three-pound Dell XPS laptop computer, which I use almost daily for writing and web-surfing in cafes. At home I write on a three monitor workstation, with a 32 inch monitor flanked by two 24 inch monitors. This is a delicious luxury which I use for many hours each day. As an avid computer user, I think one of the best investments one can make is to buy large flat screen monitors for all of your computers. Especially if you are over 40, and developing presbyopia.

How does this apply to buying cars? Cars are tricky because there are at least three different issues that are relevant: status, function, and add-ons.

The most obvious issue is status. Unfortunately, this is the one that has the smallest and most fleeting impact on happiness. If you buy your car to impress others, they will be less impressed than you expect, even if you buy an outrageous car like a Ferrari or Lamborghini. Secondly, their being impressed will actually give you less happiness than you expected, and you will get used to the oooh’s and aaaah’s all too quickly. Finally, the hassles and owning and insuring and driving a supercar will soon outweigh the relatively small happiness that status brings you. So rule # 1 is don’t buy things for status.

(The same applies for kitchens, bathrooms, televisions, or any other product where you might be torn between shopping for status versus function. If you are buying granite countertops because you like chopping food on granite, that makes sense. If you are buying them so your friends will say “Ooooooh and Aaaaaah” when they come into your kitchen, then your happiness dividends will be much less than you expect. After all, your friends will habituate to your new kitchen, and will stop marveling at its wonders after a few visits. And long before that, you too will have grown used to the “new normal” and lost your initial joy in it.)

Going back to the example of a car, you should be thinking about function. Therein lies the rub. Most expensive cars are not very different in function from less expensive cars. All cars have four wheels, a motor, brakes, and a radio. Heresy! You are thinking. Of course expensive cars are different. But not very much. Once you get into the $20,000 to $30,000 range for a car, you are getting a fast, quiet, and comfortable car that takes you where you wish to go. Above this amount, you are primarily paying for status or for features you can’t use much. Case in point, many expensive cars go very fast. A Ferrari can do a top speed of 155 mile per hour. Cool, right? There’s only one catch. It’s hard to get up to this speed on your morning or evening commute. In fact, you are lucky if you even get up to 45 mph.

So buying features you can’t use won’t increase happiness much, and may even frustrate you. Trying driving a six-speed manual transmission Ferrari in bumper to bumper traffic on the freeway sometime, if you don’t believe me.

Remember I said there were three factors. The first was status which I hope that I have demonstrated has relatively little lasting impact on happiness. The second is function. Function matters somewhat, but what really matters is the basic functions of a car, the ability to drive at reasonable speeds with reasonable comfort and quiet. That’s why convertibles rarely bring people as much happiness as they expect.

Convertibles are really fun about one or two weeks a year. But much of the time it is too hot, too cold, or too rainy to benefit. And convertibles are not very pleasant cars with the tops rolled up. So it makes more sense to rent a convertible for a week or two a year, and enjoy it. Most mid-range cars function very well, and expensive luxury cars have only a few additional functions, and sometimes these functions are more trouble than they are worth. As an example, the BMW 5 series, which has something called an I-drive ™ which is like a joystick that controls the car’s functions. Many reviewers have complained that this feature is confusing and difficult to use, and requires constant reading of the car’s manual.

The third principle of shopping for happiness with cars is the add-on principle. Instead of buying an expensive car, and having no money left over, buy a cheaper car and invest the money you save by customizing and improving the car in ways that will actually increase your happiness while driving.

An example is two items that can have a big impact on happiness. The first is a GPS unit. If you are like my friend’s girlfriend, who is directionally impaired, and who constantly is getting lost and arriving late to every destination, then buying a GPS unit will have a huge impact on your happiness level while driving. She has told me numerous times that buying a GPS was the best thing she ever bought for her car. It eliminated a constant annoyance in her life, for an investment of only about $300. (Or buy a good mount for your smartphone and use that as a GPS navigator.)

The other investment in a car that makes sense is a good sound system for your car. Now if you only drive 5 minutes a day, skip this paragraph. But if you are like most Americans, and you commute a significant distance each day, then it makes good sense to spend some money on adding a great sound system to your car, if it doesn’t have one already.

You will definitely want a way to play all of your favorite music. It doesn’t matter whether that is a way to plug in your Ipod, a CD changer, or some other device. You may also want to consider a satellite radio unit, especially if you like commercial free radio and you like talk radio without commercials. (No one has ever demonstrated that commercials add to happiness levels.) So for the mere $15 a month that it costs, satellite radio may be an excellent investment in happiness.

Once again, neither a GPS nor a satellite radio is very expensive, and they can be just as easily installed in a $15,000 car as a $100,000 car.

I practiced this with older cars for many years. When my Nissan Maxima passed its 15th year, I decided to give it a birthday party, and to improve the car. I replaced the sound system, put new shocks in the front, and added an anti-sway bar to improve its cornering ability. This greatly improved both the driving quality and the experience of being inside the car, and was much cheaper than buying a new car.

In a similar way, you could utilize the add-on principle for a house. Instead of buying a new house, you might focus on improving several areas of your current house, focusing on function rather than status.

I was speaking with a client recently, who loves cooking. She was contemplating a kitchen remodel. She was talking about granite countertops.

I asked her, “Can you cut food on granite?”

“No, of course not,” she said.

“Can you prepare food on granite?” I asked.

“You can,” she said, “but it’s not a good idea. The food can stain the granite.”

“How is a granite countertop going to make your cooking experience more enjoyable? “ I asked.

She thought about it for a moment, and then said quietly, “Well, it probably won’t make it more fun, but it will look nice.”

So I asked her how much the granite countertop would cost. She told me $12,000. I asked her if her budget was unlimited. She said no. Then I said, “Are there any functional items that would make your life easier as a cook? Are there any things you would rather spend your $12,000 on?”

She thought about it, and then she mentioned a special European dishwasher that had two drawers, so that you never had to unload it. And a special type of oven that was costly but worked better.

In the end, she decided to keep her tile countertops, and instead spent the money on high- end incredible appliances that she uses every day.

This was a great example of shopping for happiness. She spent her money on things that would bring her direct joy every day. In general, if you want to spend money on making your kitchen “look impressive”, you’d be better off spending the money on a beautiful painting, or on functional items that you can enjoy every day. Very few people spend time sitting in their kitchen, simply staring at and admiring the granite counters!

Let’s talk about more shopping decisions, and other ways to shop for happiness.

Travel is a great example where shopping for happiness principles are useful. First of all, travel in general enhances happiness. This is because even trips that aren’t that great tend to improve in memory, especially as we tell and retell the stories. Some of the biggest disasters on trips end up making the most memorable stories.

I’m reminded of an infamous bus trip I took while in graduate school, on a hippy bus line from Seattle to Baja Mexico. My then girlfriend and I decided it would be a lark to spend three weeks traveling around Baja on this hippie bus, and off we went. Many disasters ensued, including a middle of the night near head-on crash with another bus which took off the side mirrors on both buses, a trailered boat breaking an axle, falling off the bus, and taking a short and tragic trip across the chaparral, ending up in pieces, multiple encounters with Mexicans who were baffled by this group of Americans, getting off the bus when it became apparent that it was dangerous to stay on the bus, hiking to a deserted beach in the desert, and waking up in the morning to a beautiful experience of homemade fruit salad and skinny dipping, which resulted in every local bee attacking for hours, hiking out from the beach in a hurry as a result, and getting lost in the desert when I proudly said I knew exactly where we were, waking up in the middle of the night in a cheap hotel room only to discover 6 inch roaches trying to drag our food bags away, and then sleeping fully dressed, with blindfolds and the lights on for the rest of a very fearful night!

And these are just the highlights!

This is the stuff of legend, and I have to admit it was one of the best trips of my life. It also brought us closer because we had to cope with all of these disasters.

There are principles of shopping for happiness in travel which many people ignore. For instance, many people will pay more money to upgrade to business or first class when flying. This is generally not a good investment in happiness. (Unless work pays for it, then why not?)

(I should add at this point that these comments apply to people who do not have unlimited financial resources. If you are a Bill Gates or Steve Jobs, you have a completely different set of problems in terms of shopping for happiness, which I will talk about later in a section called Shopping for Happiness Tips for the Billionaire.)

This is not to say that business class and first class are not pleasant experiences. In comparison to coach, they are. The reason why they do not deliver a proportionately higher level of happiness, relative to their cost, is that most airline rides are short. If you are flying 2 to 5 hours, the difference is not very significant. It’s especially less significant if you tend to nap on cross country flights. If I close my eyes, and nap for half of my cross country flight, then I am looking at a 2.5 hour experience in First Class, for a cost of an extra thousand or more dollars. Spending $500 an hour to have a slightly wider seat, better food, and a few free drinks seems like a bad investment in happiness.

The same principle applies to hotels. Many people like to stay in four of five star class hotels, probably because they like the status of doing so. In general this is not a wise investment of travel money, especially if you tend not to spend a lot of time in your hotel room.

If you mainly use the hotel to sleep, then a five star hotel offers very little that a two star hotel does not. As long as the bed is comfortable, and the room is quiet at night, nothing else really matters. A big TV is not important, as you can watch TV at home. A gorgeous swimming pool is also not so important, as you can use the five star hotel’s swimming pool even if you are staying across the street in the two star hotel. Or you can go to the beach, which is free.

There is one exception, though, which is if you plan on never leaving your hotel during your stay. In that case it may make sense to pay more for a luxurious hotel room, as you will get to experience that luxury 24/7. This may have a small impact on increasing your happiness level.

The better way to spend money on travel is to use the happiness research which tells us that status items do not bring much happiness, and that experiences are what we remember fondly. An example of this would be to skip the five star hotel in Hawaii which costs $300 or $500 a night, and to instead stay at the $150 three star hotel. Then invest the difference in buying great experiences.

One day you might spend $200 on renting a pair of jet skis, and have a very exhilarating experience zooming around the coast. Another day you could spend that $200 taking surfing lessons, and renting surfboards. Whether you surf successfully or not, you will have a memorable experience. The next night you treat yourselves to a dinner in the best restaurant in Honolulu, where you run into Barack Obama, who is having dinner with his family at the next table. (True story from 2006.)

Think about travel stories you have told or listened to. Was it very memorable that the hotel room was large or luxurious? No. What was memorable is when you left the hotel and had exciting experiences.

To be continued…

Copyright 2006-2017 The Psychology Lounge/TPL Productions/Andrew Gottlieb, Ph.D.

 Shopping for Happiness ™ is a trademarked term. Trademark 2006, Andrew Gottlieb.

 

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Dr. Andrew Gottlieb is a clinical psychologist in Palo Alto, California. His practice serves the greater Silicon Valley area, including the towns of San Jose, Cupertino, Santa Clara, Sunnyvale, Mountain View, Los Altos, Menlo Park, San Carlos, Redwood City, Belmont, and San Mateo. Dr. Gottlieb specializes in treating anxiety, depression, relationship problems, OCD, and other difficulties using evidence-based Cognitive Behavioral Therapy (CBT). CBT is a modern no-drug therapy approach that is targeted, skill-based, and proven effective by many research studies. Visit his website at CambridgeTherapy.com or watch Dr. Gottlieb on YouTube. He can be reached by phone at (650) 324-2666 and email at: Dr. Gottlieb Email.