Benjamin Franklin got it wrong.
“Time is money,” the Founding Father famously wrote. But Elizabeth Dunn and Michael Norton, the co-authors of the new book Happy Money: The Science of Smarter Spending, say research shows that embracing Franklin’s view of time can actually undermine your happiness. When people see time as money, the professors write, “they find it difficult to reap joy from the unpaid pleasures of daily life.”
So how can you turn money into happiness? One way, the authors say, is to view happy time as an end in itself instead of seeing time as a vehicle to get more money.
To find out more about how those of us in midlife can squeeze more happiness out of every dollar, I rang up Dunn, a young, chipper and amusing associate professor of psychology at the University of British Columbia in Vancouver, Canada.
I wasn’t expecting to find out that her answers would involve comedian Sarah Silverman, a ginger kale smoothie and what she and Norton call “the drool factor.”
Highlights of our conversation:
Next Avenue: What’s the problem with the way we spend money?
Dunn: Research suggests that a lot of spending choices people typically make are not providing much in the way of lasting happiness.
What type of spending does make us happier?
The combination of using time and money to engage with somebody else is the magic formula for happiness.
Buying a gift for your grandchild or nephew can be great, but it’s even better if you combine that with the gift of time. If you’re going to get your 8-year-old nephew a Frisbee, go toss the Frisbee around in the park with him instead of just buying it and letting him play on his own.
You found that buying a house doesn’t make someone happier. Why not?
This was one of the most surprising findings I came across. It’s quite striking that what so many of us are pouring our incomes into turns out not to have that big an impact on happiness.
The human happiness system is fundamentally attuned to change and houses are very stable.
Does that mean people shouldn’t spend so much on their homes or buy the biggest house on the block?
The primary issue is one of opportunity costs. Where I live, in Vancouver, so many people talk about being "house poor." That’s not good for happiness. If you’re giving up the opportunity to travel or go out for dinner for Valentine’s Day with your spouse in order to have the biggest, most beautiful house you can own, I think that’ll be counterproductive for your happiness.
So downsizing your home when you retire can make you happier?
Yes. Although downsizing is hard because your mind is drawn to the change and how much smaller the new home is compared to where you had been living. But you’ll get used to that and it’ll give you an opportunity to afford to do things you wouldn’t otherwise be able to.
Is going into debt and paying for purchases with credit cards bad for our happiness?
If there’s one thing you could do to improve your happiness through money, it’s to get out of debt and avoid debt.
(MORE: Pay Down Debt or Save? The Spock vs. McCoy Debate)
Not necessarily all debt – if you can pay your mortgage every month without a problem, that’s OK. But many people have credit card debt hanging over their heads and that can make them miserable.
This relates to your view that people should “pay now and consume later” to increase their happiness.
So many things in society push us to consume things right away and pay for them much later – like with a credit card. In our book, we’re arguing that people should do the opposite.
For example, if you’ll be going on vacation on Labor Day, you should pay for it now. Then, you’ll enjoy the pleasure of anticipation all summer. Engaging in that anticipatory excitement can actually make the experience better. By the time Labor Day rolls around, the vacation feels free.
Your book recommends people should buy experiences instead of stuff, especially if they’re over 50. Why would that make someone happier?
A compelling body of research shows that people get more happiness from buying things like trips, concerts and special meals out than from material things like sofas, flat screen TVs and houses.
One study of adults over 50 found that the only category of spending that predicted happiness for them was leisure. When you feel like this may be the last big trip to Hawaii that you’ll go on, that can make you really appreciate it and get the most out of it.
Why do experiences make people happier?
For one thing, experiences are more likely to be shared with others.
And buying experiences tend to make you better liked. When you ask people to talk about their material purchases or about their experiential purchases, people leave the conversation liking each other more when they talk about experiences they bought.
People who talk about material things tend to be thought of as materialistic. Marble countertops, as pretty as they are, just don’t make interesting stories.
You’ve also found that investing in others brings happiness. Tell me about this.
There is a good deal of research showing that doing things that are helpful and kind for other people seems to be beneficial to your own happiness.
We sent our University of British Columbia graduate students out with $5 and $20 bills and they then told people this was their money for participating in our study, but that they’d need to spend it by the end of the day and we’d tell them how to spend it.
We found that people were happier at the end of the day when they were instructed to spend the money on somebody else.
What was really surprising was that we were able to observe the same effect even in poor countries of the world. We asked people in Uganda and Canada to reflect on times when they spent their own money and had the greatest happiness — and found they were happiest when they spent it on others.
You’re a fan of comedian Sarah Silverman’s mantra "Make It A Treat." What’s that all about?
Rather than having the things we love all the time, and unfettered access to them, we might be better off having the things we like best less often and having restricted access to them. Once you get used to something, you don’t get the same degree of pleasure from it as you once did.
My husband and I own a one-bedroom, quarter-share condo in Whistler because we’re big skiers and mountain bikers. It’s quite small, but much fancier than our home. Because we only go there one week out of every two months, each time we’re there I think "Wow! This is so nice!" It’s a treat. But if I lived in a place that nice all the time, it would cease to give me that boost.
What’s “the drool factor” and how does that make people happier?
It’s fairly intuitive that we enjoy something more when we’re looking forward to it. The period of anticipation can make the eventual consumption experience better. And having a visceral anticipation – that’s the drool factor – can help build up our enjoyment of the experience itself.
Delaying things like a root canal won’t be beneficial for the drool factor. I’m talking about pleasurable consumption, where we get the opportunity to develop positive expectations.
I’ve started buying this amazing $7 kale and ginger smoothie. I have one on my desk right now. But yesterday, I was too busy to get it until 5 p.m. By then, the smoothie tasted so good because I had wanted it for hours. Looking forward to that smoothie made it more enjoyable once I finally got it.