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The Hedonic Treadmill (wikipedia.org)
22 points by MikeCapone on March 27, 2010 | hide | past | favorite | 12 comments

As someone who has been both near-poor and affluent, I can tell you, I'm a hell of a lot happier with money. I live in a neighborhood today that is made up of relatively affluent people, and these people generally are certainly a lot happier than the folks I grew up with in the Bronx.

Now, most certainly the scale changes. That is, if you compare me to when I'm worth $1000 dollars to when I'm worth a million dollars, that's a 1000 times difference. But it's not the same 1000 times difference if I were to go to a billion dollars. The first 1000 times is worth a lot more. The difference between your first billion and your tenth billion has got to be vanishingly little. But that first 1000, from a $1000 to a million? Hoo hoo hoo!

I think anyone who says money doesn't make you happier should go a day with miss-meal cramps.

At the very poor extreme I agree, but I haven't found much of a correlation, and perhaps even a weak inverse correlation, once you get past "can afford to feed yourself". In particular, the people I know with professional jobs making $100k+ seem to mostly be less happy than the just-sort-of-making-it artist/musician types I know. And my Greek relatives are generally happier than my American relatives, despite being considerably poorer.

For my own part, I've been a grad student with a $20k stipend for years, and am pretty happy about it; I even feel reasonably well off, since there are tons of ways I could be more frugal if I really needed to (I spend a lot on beer and eating out). I guess having $30k or $40k or $100k might be nicer, but I can't imagine it'll be that big a difference? We'll see, I suppose.

See, the biggest part of my happiness comes from the independence of doing what I want to do, without having to sacrifice the things I'd like my family to have. I can do a startup any time I want; I don't have to worry about my job. You don't get that, along with a family, on 30K or 40K or even a 100K unless you've saved for a long time.

The real problem is that people don't know what'll make them happy. Things that money buy don't make you happy? That's bullshit. Yes, there are very important things in life that money can't buy, but there are quite a few things that money buys that does get you happiness. For me, money has bought me independence of action that has made me very, very happy.

So people don't know what will make them happy, and the researchers are asking the wrong question and reaching the wrong conclusion. What keeps people from getting happy is that they think an extra 400 square feet of home, when they've already got 2500 square feet will make them happy; or that a car with 300 hp will make them twice as happy as a car with 150 hp. And then the researchers are coming along and saying hey look, these people have more money but they ain't happy, so money doesn't make you happy. No, all it says is that buying the wrong things with money is not going to make you happier.

Don't tell me that those billionaires that spent those millions of dollars with the Russians to go out into space weren't made deliriously happy with what their money bought them. They just knew what to buy to make them happy.

I agree freedom of action is a good feature of money, though it's really more like a freedom-from-need-to-make-money-to-survive, a kind of defensive benefit of money as opposed to something actually positive about money. I don't think you need to make a ton of money for that if you have a frugal lifestyle, though. I have enough savings to sustain my current lifestyle for years if I quit grad school tomorrow and never got a job, and I've never made >$40k in my life. But when I was making around $40k (thanks to a nice combination of fellowships), I saved almost half of it each year, and that plus some investments adds up quickly. I guess I could've spent more instead of saving it, but I honestly have no idea what I would've spent it on; I wasn't exactly living a deprived life just to save money.

Admittedly, I expect it'd take more than $20k/year to live comfortably if I had a family!

No, it's more than just not needing the things. For example, I'm involved with a startup right now and the founders needed a decent amount for ongoing expenses until VC and angel funding can be arranged. Well, I can provide that money very quickly (for stock that I hope will be worth a lot more at some point) since I'm very involved and a lot of due diligence is not required. My first startup was self-funded with several other founders; that meant coming up with a pretty sizeable amount of money up front to get the company started (there were hardware components involved), and then go for a long period of time with absolutely no income.

Independence to take action means also being able to afford to take that action; not just that you can learn to avoid expenses.

Yeah, I could see that. I guess the world I live in---my own situation, and those people I know---just doesn't involve lots of money ever being needed to take action. It's nice to have some cushion, so e.g. I can fly to Boston tomorrow if it turns out to be needed for some reason, and can pay my rent for a year or two if I decide to suddenly take off, but I just don't have any situation where I could see needing $500k or something in order to take action.

I know plenty of people doing startups, and I could even throw $10k their way if it'd help out (I've offered), but they just don't need it. The web side of things is so capital-free these days that they have no trouble self-funding, and what money they do need is easy to get from a few consulting gigs here or there (web-dev stuff seems to pay insane hourly rates).

I can imagine things I would do if I had infinite money, but they're more pie-in-the-sky "establish a fund for [x]" sort of philanthropy things. In my normal life, I just don't run across action I really want to take that is money-constrained.

One thing is to consider happiness and unhappiness on separate scales, rather than ends of the same scale. Someone who is poor can be both unhappy and happy simultaneously. Someone who is say, middle class, may be happy but not very unhappy. And someone who is filthy rich could be moderately happy and desperately unhappy at the same time.

One response to this is to plan your own changes in experience: given that you'll enjoy but then adapt quickly to improvements, you can increase your enjoyment over time by alternating between simple and indulgent lifestyles, with simplicity being the ice-water to complement the ice cream.

In a similar vein, another recommendation is to favor differential experiences over static improvements, e.g. traveling rather than buying a nicer car. Your expectation of enjoyment from the car is overestimated because you consider the enjoyment relative to your current state, discounting your own adjustment once you have it, while travel is continually changing by definition, both with your departure and your return.

Interesting subject, hacking your own enjoyment of life.

Interestingly, the latter part of your argument may not hold true for certain types of experiences: http://news.ycombinator.com/item?id=1224308

You do adapt to travel as well, though. Seeing a new thing every day eventually does become "normal."

If you haven't seen it, Dan Gilbert's TED talk -- "Why are we happy?" -- presents some good experimental results on this topic. http://www.ted.com/talks/lang/eng/dan_gilbert_asks_why_are_w...

The Wikipedia article (and even the choice of the word "treadmill") suggests that people maintain a roughly constant state of happiness despite improvements in their life. But it also works the other way -- people return to a baseline of happiness even with huge disasters in their life.

Seems like the ideal scenario is constantly accelerating wealth.

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