Happiness and spending

Happiness and spending

It Might Pay to Follow Your Bliss


Published: June 16, 2007

REMEMBER the fable about the ant and the grasshopper? The ant works hard all summer, socking away provisions for the winter; the grasshopper frolics away each day. The ant warns the grasshopper that he’s being hedonistic and short-sighted. The grasshopper ignores the ant, and continues on his merry way – only to perish when winter sets in.

It’s a rather stern lesson about financial prudence, but there is a reason this tale has survived through the ages – and still preoccupies many researchers who study the eccentricities of human economic behavior. Why do the grasshoppers of the world have such a hard time emulating the ants?

The rewards of the ant’s strategy are obvious: by working hard, planning ahead and saving your resources, you end up healthy, wealthy and warm. The pleasures of the grasshopper’s life are short-lived – and ultimately lead to great stress and suffering (if not a dire end).

Yet economic research has demonstrated that most people find it hard to resist the siren song of ‘seize the day and spend what you have now” – even though a lifestyle based on constant consumption doesn”t enhance anyone’s long-term store of happiness and often puts people on shaky financial ground.

This conundrum also bedevils those who work in the field of personal finance. Why do millions of Americans resist saving for their retirements? Why do so many carry thousands of dollars in credit card debt?

The standard advice for those caught on the treadmill of “getting and spending” could come straight from the mouth of the ant: material kicks don”t pay off in the end, so mend your ways, plan ahead and financial prudence eventually will be its own reward. But this sort of finger-wagging makes few converts in the grasshopper world.

A more compelling approach may be to focus more on what makes you happier – because investing in your own well-being and quality of life may turn out to be more prudent and more profitable than you thought.

Tim Kasser, an associate professor of psychology at Knox College in Galesburg, Ill., studied 200 people who embraced Voluntary Simplicity, a movement focused “less on materialistic values – like wanting money and possessions and status – and more on what we called intrinsic values or goals,” Professor Kasser said. The three main intrinsic values were being connected to family and friends, exploring one’s interests or skills and “making the world a better place,” he said.

He conducted the study in 2005 with Kirk Brown, an assistant professor of psychology at Virginia Commonwealth University in Richmond. The researchers compared the attitudes and behaviors of this group with a matched sample of 200 mainstream Americans.

Although the mainstream group’s income was much higher, an average of about $41,000 a year compared with $26,000 for those aiming to live more simply, “we found the people in the Voluntary Simplicity group were much happier and more satisfied with life,” Professor Kasser said.

THAT doesn”t mean frugal people are happier, said Professor Kasser, adding that research findings on this topic are mixed. But the study found that when people invested more in intrinsic values, like relationships and quality of life, and less in consumption, it seemed to increase their happiness. And, the study suggested, there may be a financial gain to doing so. Those in the simplicity group were far more likely than the control group to say that they were careful about their spending, Professor Kasser said.

Christopher K. Hsee, a professor of behavioral science at the University of Chicago Graduate School of Business, has observed a similar pattern. He points out that when people use their purchases as a semaphore of status, there is “no natural stopping point;” there will always be a bigger house, a fancier car, a more expensive watch to go after.

When it comes to more basic needs, like food or sleep or friendship, most people naturally reach a point of satisfaction. “Consequently, people who value these types of goods may be financially better off,” Professor Hsee said.

As someone who struggles against her own grasshopper nature, wishing she had the foresight and impulse control of the ant, I like the idea that there’s another path to fiscal prudence. Working hard and being practical are ideal skills to have in life, but if those aren”t your bag, investing in a happier way of life may offer the same financial dividend. Too bad the ant didn”t know about that.

M. P. Dunleavey is the author of “Money Can Buy Happiness” (Broadway Books, 2007).

How do your spending habits relate to your happiness?