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 IBM Laptop computer, which I use almost daily for writing and web-surfing in cafes. At home I write on a dual monitor workstation, with two 20 inch monitors side-by-side. 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.

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 15^th 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 2006-2007 The Psychology Lounge/TPL Productions/Andrew Gottlieb, Ph.D.

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