How spending money can make you much happier

How spending money can make you much happier

by Ross Gittins for the Sydney Morning Herald

THE retailers may be worried we aren't spending enough this Christmas, but that doesn't mean most of us aren't spending a fair bit. We always do. And, of course, for those of us off on summer holidays, the spending doesn't stop on Christmas Eve.

Economists are great apostles of efficiency, which they advocate so we have more money to spend on consumption. Strangely, however, they have little interest in how efficiently we spend our money. Are we spending it in ways that maximise the satisfaction (or ''utility'') we derive? They hardly know or care.

For advice on consumption efficiency we must turn to the psychologists – particularly those who study happiness (another word for utility). This year, three famous psychologists – Elizabeth Dunn, of the University of British Columbia, Daniel Gilbert, of Harvard, and Timothy Wilson, of the University of Virginia – published an article called ''If money doesn't make you happy, then you probably aren't spending it right''.

The truth is that, once you've satisfied your basic needs, getting and spending more money is a progressively less effective way to make yourself happier. The more you spend, the less effective each extra dollar becomes.

But that's partly because some forms of spending are more satisfying than others, and Gilbert's research shows humans aren't very good at predicting what will make them happy.

So the authors propose some principles that psychological research suggests will help us get more bang from our bucks. One that's particularly apposite at this time when we celebrate the birth of Santa is: help others instead of yourself.

Somebody who had nothing to do with Santa once said it was more blessed to give than to receive. Turns out he was right…

…keep reading the full and original article HERE