Money and Happiness in The Land of More

(Part 1 in a 3-part series)

After my Money, Money, Money post, a friend wrote to tell me how glad he was that I’d brought up the topic, especially in these crazy economic times, when most of us have been affected by the recession in one way or another.  Like most of us, he knows a lot of folks struggling to find enough money just to pay for food or housing.  Plenty of others have had to put off retirement and/or pick up extra jobs just to make ends meet.  And zillions of others have had to downgrade many of the things we’d once taken for granted, like dumping health care, pulling our kids from a good (but expensive) school, or no longer being able to buy our kids fruits and vegetables because they’re too expensive.

Anyone who’s ever struggled financially knows how hard it is to cobble together a life when you don’t have enough money.  As someone who comes from an immigrant family that’s been there, done that, I don’t in any way want to downplay the very real struggles that accompany financial troubles.

And yet, most of us forget how lucky we really are to live in the Western world, where we’re usually able to meet most of our food and housing needs–something a good portion of the rest of the world isn’t.  I’m reminded of this disparity each and every time I visit my Serbian relatives, most of whom have struggled to find work since war broke apart the former Yugoslavia in the 90s.

So how come we keep forgetting how lucky we really are to have a job, a roof over our heads and a family who loves us?  How come we’re only happy when we’re looking for more, more, more?

Check out the following article by Adam Smith, “A new kind of personal wealth,” which appeared in the Spring 2011 issue of Ode:

“Most people don’t know the basic scientific facts about happiness, about what brings it and what sustains it,” wrote researchers from the universities of British Columbia, Harvard and Virginia in a paper published by the Journal of Consumer Psychology.  “So they don’t know how to use their money to acquire it.”

Perhaps our biggest misunderstanding is the link between increased wealth and increased well-being.  In the past few years, the correlation between these two things has been shown to be modest at best.   (Ode, 22)

What has been shown to make a difference, Smith argues, is experiential spending.  That is, the experience you buy with your money (traveling to visit friends, say) is more important than things (another flat-screen TV).  And that’s not all:

Experiences are more likely to strengthen social bonds, too, something that boosts our overall happiness.  “We can take some delight in [the fact] that our well-being is much more driven by our relationships than by our household income,” says Nic Marks, a fellow at the new economics foundation (nef) in London and founder of its Center for Well-Being.  (Ode, 23)

Now, let me take a moment to make sure I’m not undervaluing the zillions of folks out there struggling to pay their rent and put three meals on the table. When I talk about happiness with less, I’m talking about all the stuff that’s above and beyond our daily need for survival.  Above and beyond the stuff that we really need.  What I’m talking about here are our wants–and the endless American drive to buy more stuff, a fancier car, a bigger house.  I’m not talking about having less money to buy groceries or pay rent.

Or course, a lot of our basic needs have also been derailed by this crappy economy.  And yet, Smith argues that there’s a silver lining to our current economic crisis:

It may have taken a recession to remind us of [what’s important], but the lesson seems to be taking hold.  “People are shifting from mindless to mindful consumption,” says John Gerzema, chief insights officer at global marketing services firm Young & Rubicam and co-author of Spend Shift: How the Post-Crisis Values Revolution is Changing the Way We Buy, Sell and Live.

That shift is, of course, not painless—and in many cases, not voluntary.  For those worst hit, re-allocating spending can mean less a boost to their sense of community and well-being than to their stress and anxiety.  Still, a little belt-tightening can lead to a lot more satisfaction…. Non-essential spending—on eating out, fancy groceries and new clothes—has duly fallen away.

That’s made room for simpler pleasures.  In the BCG report published last June, family, home, friends and education figured high on a list of values considered by U.S. and European consumers to be more important than they’d been two years earlier…. And among those Americans polled by Young & Rubicam, two-thirds said simpler, post-recession habits make them happier. (Ode, 22)

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