Money Can Buy Happiness If You Know How to Spend It: Stuff, Experiences, Gifts | Michael Norton

Money Can Buy Happiness If You Know How to Spend It: Stuff, Experiences, Gifts
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Rapper Notorious B.I.G. perhaps put it best... "the mo' money you make, the mo' problems you get." While most of us aren't hip-hop demigods, we all have experience spending money on things that we think in the moment will make us happy but end up being... just stuff. Because when people accumulate wealth, they tend to spend it on themselves. This might make you temporarily happy but it largely means that you spend more time alone with the things that you've bought. But Harvard Professor (and Harvard’s Behavioral Insights Group member) Michael Norton has found that the more people spend on other people or in an experiential way—be it a concert ticket or simply taking a friend out for lunch—the happier they are overall. Michael's has co-written a book that covers this and other subjects called Happy Money: The Science of Happier Spending. Professor Norton’s studies are cited in The Influential Mind: What the Brain Reveals About Our Power to Change Others by Tali Sharot.
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MICHAEL NORTON:

Michael I. Norton is the Harold M. Brierley Professor of Business Administration at the Harvard Business School, and a member of Harvard’s Behavioral Insights Group. He holds a B.A. in Psychology and English from Williams College and a Ph.D. in Psychology from Princeton University. Prior to joining HBS, Professor Norton was a Fellow at the MIT Media Lab and MIT’s Sloan School of Management.

He is the co-author - with Elizabeth Dunn - of the book Happy Money: The Science of Smarter Spending.
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TRANSCRIPT:

Michael Norton: My colleague Liz Dunn at University of British Columbia and I have been studying the relationship with between money and happiness. And it seems like a simple relationship, which is: we want more money and we want more happiness, so maybe if we get more money we’ll get more happiness.

And it turns out that the relationship is really a lot more complicated than that.

It’s not too surprising to say that money can’t buy you happiness, we’ve heard that phrase a lot. But that doesn’t help us understand then what kind of spending will actually make us happy and what kind won’t. What we tend to find when we look at the data is that the biggest category of things that people spend on is stuff for themselves.

Of course we need to pay rent or our mortgage, we need to have a car, we need to have food and clothes, but it seems as though people are spending an inordinate amount of their money on stuff for themselves, and the biggest problem from our standpoint as psychologists is the percent of money that you spend on stuff for yourself is completely uncorrelated with how happy you are with your life.

It doesn’t make you unhappy, it’s not like if you buy a lot of stuff you’re miserable, which sometimes we think is the case—it’s just the case that it’s flat. No matter how much it seems you buy for yourself, nothing really seems to happen.
And so in our research, and other researchers as well, we’ve tried to look at, well, if stuff for yourself doesn’t pay off are there other things that you can spend your money on that actually do pay off in more happiness?

And what Liz and I have focused on the most is this idea that instead of focusing on yourself all the time, which doesn’t seem to pay off in happiness, when you focus on other people you sort of reverse the arrow from me to you, it seems that on average when people give to others—which can be giving to charity, it can be treating a friend to lunch, it can be buying people gifts—that those actions of giving rather than keeping seem to be associated with more happiness.

And when we send people out and give them money and tell them to spend it on themselves or spend it on somebody else, people who spend it on themselves kind of have the same day they would’ve had anyway, but people who spend on other people actually have a happier day.

So, if you think about the idea that stuff for yourself doesn’t make you happy you can think of two opposites of that. One is stuff for other people, so that’s kind of giving makes you happier than keeping, but another opposite of stuff for yourself is to think about: you can still spend on yourself but change from stuff to something else.

And lots of research over the last decade has shown that on average when people buy experiences it tends to pay off in more happiness than buying stuff for themselves.

[thewrdsmyth]

Seems like most people didn't pay attention to the video. He's talking about how to "buy" happiness and that's by giving or spending on social experiences. He makes no mention of not needing money nor does he discuss getting it. His point is, if you have it and you want it to make you to some degree happier, this is how research shows you should do it.

[Keepturbo]

whoever thinks money doesnt buy happiness can deposit it in my bank account

[krishnarao]

So, in a nutshell,
Spend on others / Give money to others
And have more experiences than stuff.
Got it 👍👍

[dannyvela]

Money doesn't buy happiness, but it buys freedom, and freedom buys happiness.

[SupesMe]

This is true, I recently got a Pay Hike, My expenditures are low in the first place so I use it to buy my friends little gifts and spoil my Wife & Nephews. I'm quite happy

[Fuzzems]

Let me rephrase the title of this vid: money CAN buy happiness AFTER you got everything covered for yourself, so as long as you have no worries on battling life, you can spend it helping others. That is the next step on happiness, I guess. I'm not wealthy enough to know the exact difference, but I might get it right somehow.

[Fuzzems]

If I have nothing, I still care about the rest of the world. I wouldn't do anything different if I had. For me, any living being in this world deserves a chance to make it, and all who need it most, deserve a hand!

[saildawncoyote]

Three minute video with a one minute smoking advertisement that can't be skipped. Welcome to earth....

[FlyingTigersKMT]

Even if I am not happy, I would rather be rich and unhappy than poor and unhappy.

[OutOfNamesToChoose]

Money is spendable form of time. The more of it you have, the more you can afford to have experiences that you can enjoy.

[Recluse]

Money can't buy happiness, but I would much rather cry in a Lamborghini than under a bridge.

[Dirtbiker]

Happiness stemming from a specific cause isn't the happiness we are searching for!!

[FlyingTigersKMT]

I've heard tons of poor and middle class people wishing they were rich. I never heard a rich person wish to be poor or middle class.

[nathanheeren]

Safety and security comes from having money. Particularly more money.

[zenapplejones]

Money is Access, More Choices, The best of this and that, Attraction for the opposite Sex or Same sex, Money is Speed, Money is Security, Money is paying others to do it (something Hard to do), Having Money means not always worrying about Money, unless you like to Gamble.

[lgcseer]

Simple pleasures with others is happiness.

[galerivs]

sharing is ok... but not all people have someone to share with.... that is why those who share are happier... because they have with who to share... by my oppinion have with whom you have to share is happiness ... not having what to share...

[StevenSHHan]

Contents were great, but only one minus was the super bright white background. It was difficult to look at the speaker because of the brightness. Watching on mobile devices would have been better, but on an external monitor, people normally don't change the brightness so often, I guess.

[freedomfitness]

I spent a year buying purses. All kinds of purses. I was just a purse freak. Don’t know why I could not get enough. I think I needed more spirituality and once I found that balance, I don’t really have the desire to buy purses! Now I’ve started selling everything on let go.com

[THEBATMANAHH]

As a studying psychologist I would like to argue that buying a video game system and getting online is also an experience