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If money doesn't make you happy, you probably aren't spending it right [pdf] (harvard.edu)
161 points by reledi 1849 days ago | hide | past | web | 94 comments | favorite

I recently wrote on the topic of the lack of overlap between zealotry for a cause and wealth. I think that to become super-wealthy requires a certain cluelessness when it comes to what to spend money on - or how to spend money to best effect, or more fundamentally how to use money to change the world in a way you believe in, or a lack of the vision needed to see how to spend money.

This is a social evolution sort of a thing: if you are a zealot and you know how to spend money to effect the change you want, then you aren't going to stay on the money-accumulation train for anywhere near as long. You'll spend it, and make some of that change happen.

You need something like this sort of effect to explain why there are any wealthy people at all. Any one of the Forbes 100 could cure a couple of diseases, get a fair way to demonstrating a cure for aging in mice ($1 billion price tag), develop the tech to irrigate the Sahara, etc, etc. But they largely do not, and remain within the process they have built for themselves. Where they do go all out for philanthropy, there is usually a startling lack of imagination - see the Gates Foundation, for example, which is doing nothing more than business as usual in big philanthropy, or the Ellison Medical Foundation which does nothing more than replicate the NIH.

Anyway. Knowing how to spend money "right" (meaning right for you, your vision, having a vision, etc) is not compatible with accumulating money, and only the outliers will fall into both camps.


I suspect that one cause of this is that super wealthy people are often owners of a business. Their money is tied up in what made them wealthy emotionally as well as politically. For instance Buffet was wealthy in Berkshire-Hathaway shares. He recently started contributing significant portions of his wealth to charity because he no longer felt that he needed those shares to retain control. On another point, while Gates Foundation is not nearly as visionary as I would like they are not a traditional charity either from what I have seen. They tried to identify the best place to save lives (in the short term) with money, and started there. They have a good statistical grounding.

While the Gates Foundation may not be flashy or romantic, they do seem to be pragmatic- which in the end is probably a lot more helpful for actually helping the maximum number of people.

I see a lot of disparagement, especially on HN, of the Gates Foundation's methods. I don't find myself questioning Bill Gates when he talks about how unimaginably difficult it is to improve systems like education or cope with malaria.

On a fundamental level - individual scandals and cynicism about Gates' motives aside - what is the foundation doing wrong?

I strongly, strongly disagree with the Gates Foundation's method for improving education, but I am happy that he's at least raising awareness of the problem, forcing discussion, and pushing changes. He's right about the "what", but he's wrong about the "why" and the "how".

Oddly, I'd expect his parents would know better, too.

As I understand, the Gates Foundation has saved ~5.8 million lives through vaccines and healthcare, and seems to be on track to save many more: http://frugaldad.com/microsoft/

I'm genuinely curious-how is that "business as usual" for big philanthropy? Who else is successfully nearly eliminating major fatal diseases?

Gates Foundation, for example, which is doing nothing more than business as usual in big philanthropy

I wouldn't call things like the giving pledge "business as usual" in big philanthropy. I can't think of any prior art for it.


> I wouldn't call things like the giving pledge "business as usual" in big philanthropy. I can't think of any prior art for it.

Andrew Carnegie, in The Gospel of Wealth, railed against inheritance and said, "The man who dies thus rich dies disgraced". He advised fellow millionaires of his era to donate their fortunes during their lifetime to activities that would create greater wealth in the community, such as free libraries for the poor.

Exquisite example. I stand corrected.

It is in many ways a sign of the age - the focus on getting money, and the comparative lack of interest in explaining how to be far better at spending it to attain measurable results than the rest of big philanthropy.

Philanthropy done right looks much more like the Thiel model:



The Gates Foundation would do far more good in the world by splitting itself up into a hundred or a thousand more directed and competing interests, focused on bottom-up change one innovation at a time.

As it is, the majority of its funds will probably eventually evaporate in the grind of top-down existing strategies that have solved nothing permanently - but have instead led to government-bound institutions that do more to perpetuate the problems they allegedly try to solve than generate good in the world, or which have turned into jobs programs for comparatively privileged individuals, disconnected from any need to achieve concrete results.

As it is, the majority of its funds will probably eventually evaporate in the grind of top-down existing strategies that have solved nothing permanently

I agree with much of what you're saying, but my overall outlook isn't that negative. There is a real chance that their work will help completely eradicate malaria. If that's not solving something permanently, I don't know what is.

I'm wondering if people in the position to "change the world" have any desire to make that change?

If I were in the billions of dollars rich, I don't know if I'd want to do much to change the world. You can call me unenlightened, but and the end of the day, I'd be the unenlightened billionaire and you'd just be some person trying to tell me how to spend my money.

If your assertions about the ease of solving those various problems are true, it is even more bizarre that they are not being attacked by collective action.

I am sick and tired of the experience/possession paradigm that infects all consumer happiness research. Yes, all the evidence so far supports it. But, all the research so far has been looking for ways to support the paradigm.

I don't buy experiences, and I don't buy possessions. I buy camping gear, musical instruments and other experiential possessions. But, this concept is lost on consumer researchers, who skew young, female and IMHE, assume the whole world is choosing between a pair of shoes or nice restaurant meal.

(FWIW, I just got my masters in research psychology.)

[Edited for spelling]

The risk with this line of thinking is buying 'great' camping gear is going to have minimal impact on the experience of camping. You can go to more extreme places safely and have a lighter pack, but being able to spend more time camping is probably more important than being able to comfortably go another 2 miles a day.

There is a reasonable minimal threshold, but if your spending more than 500-1,000$ on camping gear a year your probably just buying gear for the same sorts of reasons people buy 100,000$ cars.

Yes, but I don't buy 'great' camping gear: I buy what I need. Apart from clothes, I rarely buy anything new. I have standing craigslist feeds for things that I want. The only new music gear in my studio are items that would be unobtainable used.

If you are focused on buying the minimum you need to go on a fun camping trip without worrying about your equipment breaking then you are really buying an experience, just a requisite part of that is having the equipment.

When I was younger, our school used to host a rock concert about twice a year where student bands would play. Since I was far from being the most popular kid in school I figured that getting up and rocking out on that stage would earn me some cred.

Of course to do that you needed to be in a band, and since I couldn't sing at all being in a band meant you needed to be able to play some instrument. So I went to the local pawn shop , bought the cheapest electric guitar I could find and borrowed a spare amp from a family member. Of course what I really spent the money for was to be able to feel like a rockstar for 20 minutes.

Now if I think about all the people I still know from those days playing in the school hall; apart from one or two who managed to get a career in music, most work in IT , accounting or became plumbers etc. They all now have nice collections of expensive guitars (Les Pauls , Ltd Ed. Stratocastors etc) that they love to show off but rarely play anywhere besides their own homes. Really the amount of pleasure that they get from them is probably nothing compared to the joy we had while rocking out at school playing 4 chord greenday & nirvana covers on our £50 pawn shop axes.

Except I have never seen it counted as such by any happiness/consumer research.

No, I think the resources you spend on camping are very much part of the experiences they are referring. Likewise renting a studio and jamming with your friends is another experience that plays into this. You need tools for any given hobby, but once you invest you have a lot of experiences ahead of you.

That's what I thought at first, but I was informed otherwise by the consumer happiness lab. And, the follow up questions on the number of common measures I have read/taken don't support this classification. It's fancy clothes or a night out, all the way down.

Like I said, the field is overly obsessed with lowest common denominator purchase decisions, that IMHO, are totally at odds with the phenomena they are trying to investigate.

Completely agree, IMO money invested in experiential possessions is an excellent bang-for-the-buck.

Yup. For example, you may buy a fancy camera, and then take tons of pictures with it. You get both the possession and experience aspects.

And yet, only worth sidereal research, since the world revolves around shiny things and waiters.

I thought they explicitly said that some things, like cars bought to go places, straddle the line between being goods and being experiences. So it seems at least here they were aware that there are things that don't neatly fall into the classification.

Having a car provides function, but the difference between a mediocre car and a great car is $10k+.

Spending the extra $10k for a better car leads to less happiness than using that same money for a 2-week vacation in Europe / Asia.

This is the false dichotomy that they keep banging their heads against.

It's often given lip service in the literature, and then everyone goes back to asking easy questions.

I don't buy clothes simply to possess them. I buy them either because wearing them will make me feel better/more confident/fit in/stand out or because they offer some utility that I didn't have before. I'd imagine it's a similar situation for most people. Am I buying the clothes themselves, or the experience of wearing those clothes?

They do mention that some things (they give the example of a car) fall in the middle of the possession-experience spectrum, but I'd argue that almost everything does.

Sure, few things are purchased simply to possess them. The difference is murky, yes. Mulling over it, the line seems to fall somewhere between luxury 'upgrades' to things you already have, vs. inexpensive tools that enable things you couldn't do before.

What does IMHE stand for?

Probably "in my humble experience".


What's "research psychology", btw? Is it "I do research in psychology" or is it "psychology of researchers"? My googles did not yield useful information.

Research Psychology is, uhm Research Psychology. As opposed to Clinical Psychology. I studied people (behaving online, FWIW), I didn't treat them. Wrote academic papers rather than listening to people.

OT: You wouldn't happen to have a blog about that? (Nothing is listed in your profile.)

I've tried many times :) But the main reason I've left academia after my master's is that I realized I liked developing the code to run the experiment much, much more than facing my writer's block.

Ok. Thanks for letting me know.

Oh! For some reason, that didn't occur to me. :P Thanks for clarifying.

Absolutely agree.

Personally I think a better quote is, 'Money can't buy happiness, but it can help solve all your problems'

or from somerset-maugham's, of human bondage, we have the following:

"Money is like a sixth sense without which you cannot make a complete use of the other five."

I have always heard it as 'Money can't buy you happiness but it can make you awefully comfortable while you are miserable'.

I like that a lot...and I've always heard: 'Money doesn't make you happy, but it can make you less unhappy.'

I've always heard: "money can't buy you happiness, but the lack of money can buy you misery"

I have heard that "Money is not everything. But make sure you have enough of it before you talk such nonsense"

"If money can't buy happiness, I guess I'll have to rent it!"

The #1 advice on this paper (experiences, not things) is very relevant for the HN community.

A corollary is "Your startup needs to sell experiences, not features":


Previous discussions ("Money = Happiness, but when it buys experiences"):


"Spend money on experiences, not possessions"


> "Your startup needs to sell experiences, not features"


What about B2B startups? What about any utility application? Say, internet search? I'm going to kill Google (and Gabriel Weinberg) if they turn their search engine into an "experience".

Seriously, guys, can we stop the "startup == social local friend to friend mobile app thing" thing already?

Early Google was an experience. It gave you a few links in a very minimal layout, and that was it. Yahoo and Altavista gave you incredibly big portals with lots of features that didn't really go to bed together. They lost, because theirs were a shitty experience.

The iPod is an experience. Most early MP3s had the same or more features, but the iPod killed them, because it provided an interesting experience of listening to music.

Amazon is just another Walmart, too. But with a buyer experience that's much better than anyone else's. Same thing with Facebook vs. MySpace. Or Steam vs. Origin vs. your local videogame shop.

Search /is/ an experience, and it always has been. Google is just making that experience suck lately.

UX is the most important feature. Canonical example: Apple. Apple "gets" usability. No other pc manufacturer comes close. Their methods are dubious and I don't agree with all of them, but their stuff works nicer than anything else right now (for the latest number of lay people.)

Other pc mfgs don't even try to design beautiful, elegant hardware and market it to everyone. They think that everyone wants cheap crap, so they deliver and iterate on that. All of Apple's offerings are premium, and you can't argue with their success. /people want nice stuff, not cheap plastic crap/ -- but it gets harder and harder to find nice stuff outside of Apple.

Who still makes a laptop with a 1920x1200 display? Apple. HP and Lenovo did too last I checked, but the industry has largely moved to the cheaper-and-worse 16x9 panels. Apple also cares about obvious stuff that other mfgs ignore. Example: trackpad texture. Even on a $3500 gaming laptop from a specialty mfg, they don't get it and the trackpad is too grippy and hurts your finer after 5 minutes.


Quality is just one corner of the triangle; speed and cost are the other two. Many people value speed or cost in their products more than quality (I am not just talking about computers). Your motto sounds great and all, but it's not how business works.

Sorry, I was just trying to dig up the startup-related insights from the study :)

What I guess the article meant to say in another way is that your startup needs to focus on its value proposition, “How will buying/using this ... make my life better?”.

In the case of both Google and DDG, what they deliver to the user. It's no accident Google has Instant, previews, etc (and DDG has DuckDuckHack)... it's all about making the search experience better.

Hmm, i see your point. Yet, I don't think "user experience" and the article's "experience" are at all the same thing. They're related, but only very remotely, IMHO. Therefore I misunderstood your comment.

Given the examples in sibling posts, we have to step back and define what we mean by "experience" as opposed to "utility". Saying "X is experience" for everything renders it pretty much meaningless.

That's a really thought-provoking point.

How about the second item, "consumers should ... use their money to benefit others rather than themselves" -- any ideas for a startup there?

Yes. Tim O'Reilly keep saying that a good business should bring more value (to everybody) that it takes for itself.

So, a startup should be looking at positive externalities of its business.

KickStarter is making money, but it brings new products to life and enables funding models previously unachievable (e.g. a lot of Indie movies).


"Your startup needs to sell experiences, not features"

Check out our startup!


Experiences, not products

Yes, I am definitely experiencing your shameless self-promotion.

It's more of a relevant link....

Your sign up link looks improperly styled. You might want to look at how these guys do theirs: https://squareup.com/

The best way to spend money is to buy time with it.

I concur with this.

Despite the grand importance of time as the absolute foundation of wealth, very little progress has been made in the most obvious optimization of all: creating property that can create more time. More heartbeats, more health, more time spent alive and active. Rejuvenation medicine, capable of repairing the damage of aging. Tissue engineering to generate replacements for worn organs. The cure for cancer. If you could do all that, then the much more productive form of escape velocity becomes possible - longevity escape velocity. Why strive to maintain an empire of property that will crumble to dust when the degenerations of age catch up with you when you could be that fit-looking guy having a blast swimming in the breakers every other Sunday for as long as you like?

Wealth is exactly time, and here we are, bordering the era of biotechnology for the repair of aging. Planning ahead for the best possible personal future starts with investment now. Think about it.

This an academic article written by people who extensively studied this topic. I feel that if you want to contradict them you should at least write a sentence on why you think they are wrong.

I'm not sure he is contradicting them. #1 is buying more experiences. The more time, the more [potential] experiences you have time for. Take a cab vs the bus. House cleaning, etc.

As for #2, I started backing more projects on Kickstarter. It does feel great to see people doing all sorts of cool projects. For example, I wish I had time [and skills] to make a movie with Blender, but since I can't I'll enjoy it through the work of others.


Oh, and I'm helping to build a 10" rocket engine!


My empirical observation: time is an inherently limited resource, money isn't.

Agreed. I was flabbergasted last week when I learned I could pay a service to mow my reasonably large lawn for $45. It took me 3 hours every summer weekend for the past 5 years and totally ate into time with my kids. I was prepared to pay twice that.

I don't get this. I like work, I like my job, and working for a company I make more meaningful impact than I would alone. I have time with family, and time to pursue interests that are not programming related. Other than the ability to quit the second any of the above statements are no longer true, buying time with money isn't appealing.

Paying someone to keep my house clean on the other hand is an excellent idea.

I found it interesting how mentioning return policies in advance might actually undermine happiness. Maybe it's better not to have that "30 day refund" text on your product order page to keep your users happy.

"People seek extended warranties and generous return policies in order to preclude the possibility of future regret, but research suggests that the warranties may be unnecessary for happiness and the return policies may actually undermine it."

I found that interesting as well. The problem is that people predict that a generous return policy will make them happy, and they are more likely to purchase if you give them what they predict will make them happy, not what will actually make them happy.

Perhaps they will be more likely to refer friends to your service if you don't give them a return policy, since rationalization will kick in and they will make themselves happier with your service if they're stuck with it.

Oddly enough, #1(buy experiences, not goods) and #2 (help others) are precisely the first topics tackled by "59 Seconds", by Richard Wiseman, which is a formidable book.

This article is bullshit. Money can't buy achievement. Money can't buy competence. Money can't buy respect. Money can't buy love. Money can't buy wisdom. Money can't buy knowledge. Money can't buy creativity.

The things that make people truly happy are internal, and must be constructed by the person experiencing them. Money can remove discomfort or provide passing distraction from existential malaise, but it can never make you truly happy.

Money can't buy achievement. Money can't buy competence. Money can't buy respect. Money can't buy love. Money can't buy wisdom. Money can't buy knowledge. Money can't buy creativity.

Of course they don't sell these things in shops, but with money, you can create really good environment for yourself to pursue them.

Oh, and money sure can buy achievement and respect. You can enroll in best schools or hire best teachers with money to get knowledge and competence. It's easier to find love if you have money, for a wealthy man seem to be more attractive for women. I could go on, but the point is, don't downplay the value of money.

Hiring good teachers and going to good schools only provides an environment slightly more conducive to success. Motivated people can succeed without these things, and the prodigal will fail despite them. These things are mainly valuable to those around the median of intelligence/motivation distribution.

It is easier to find a relationship with money. The person you are in a relationship with will love your money, and tolerate you. Women do love successful/capable men, but in my experience it is the success that is attractive, not the money. As an example, a bankrupt but famous actor or rock star will massively out-compete a rich hedge fund manager. This definitely isn't just about looks, I once met a very attractive girl who waxed poetic about her desire to thoroughly ravish Phillip Seymour Hoffman.

And what exactly is your point? Obviously it's easier to be pretty if you were born pretty, but with money you can buy cosmetics and/or a surgery, and without money you're hopeless. Obviously you cannot just buy yourself into being a famous and respected actor, but you still will massively out-compete many competitors. Obviously it is possible to succeed without going to good schools, or having good teachers, but it's much, much harder.

I wasn't suggesting that money is always the best solution, but frequently it's a really good, or at least good enough one. More importantly, it's quite general solution that will get lots of your problems solved, which is not the case with being bankrupt famous actor.

It is true that if you were born hideously disfigured, money can get you out of that jam (to some degree, anyhow). I feel that the common thread here is that money can be a huge boon to those who are impaired in some way, and is nice to have in general, but there are rapid diminishing returns with regard to happiness. I agree with the sentiment that you should take care of yourself and provide for your loved ones, just don't lust after money for its own sake or neglect the finer things in life because of it.

My experience (having gone to a good school) is that the most valuable thing they have to offer is contacts. The actual education is vastly overrated. The bulk of my knowledge came from figuring out a problem I wanted to solve, then learning everything that was required to solve it.

I've always said if I was loaded and single I'd pretend to be poor until I found the right girlie

Then it'd be like.... surprise : )

Well, my friend, money can't buy happiness, but a lack of money will sure as hell buy you a lot of misery. Have you ever experienced struggle paying for rent and basic medical care (and living in pain, or with someone in pain, while scrambling to afford it)?

As the article says "Money allows people to live longer and healthier lives, to buffer themselves against worry and harm, to have leisure time to spend with friends and family, and to control the nature of their daily activities". These are very much necessary preconditions to be happy.

> "Money allows people to live longer and healthier lives, to buffer themselves against worry and harm, to have leisure time to spend with friends and family, and to control the nature of their daily activities". These are very much necessary preconditions to be happy.

Yes, but money isn't the only way to achieve them.

There's an apocryphal story about a guy who goes on a fishing trip and tells the guide that he enjoyed it so much that he's going to go home and make a lot of money so he can go fishing every day. The take-away being that the fishing guide is doing just that. (Yes, there's more to being a guide than fishing, but a fishing-bum lifestyle doesn't cost that much.)

"Life" has a burn-rate. Is yours going for things that matter to you?

There is also plenty of research that shows once your rewards are extrinsic instead of intrinsic, you do not enjoy the activity as much. That means once it's a job instead done for the sheer enjoyment, it stops becoming enjoyable.

It's been well known in HR for a long time that money is just a 'hygienic' factor. Pay your employees too little and they'll be bitter, but paying them too much doesn't make them more motivated or more loyal in the absence of other positives.

You pay them enough, and then make sure they have rewarding work, a supportive environment and a boss who understands and empowers them. Money is just the start

How much of it did you read? They go into things like when people spend money on charitable causes, they tend to be happier with the purchase than when they spend it on material goods. One of the take-aways is: spend money on thing which will promote the internal happiness that you mentioned.

Giving a gift to someone buys you their attention for a period of time, and some degree of positive predisposition under circumstances of ambiguity. Respect still has to be developed based on observation of character and discernment of intent. A rich heir who gives to generously and has a negative character is probably attempting to buy influence or assuage a guilty conscience. A guy buying drinks for every attractive girl in a bar is probably slimy. Those acts have no payoff unless someone responds in the manner that the act was performed to induce.

My hypothesis here is that the happiness is coming from creation and strengthening of interpersonal connections as a result of post giving interaction, not from the act of giving itself. I would be interested in studies where someone spent money on others in versus themselves without the opportunity for interaction or feedback upon giving. I suspect that would confirm my hypothesis.

Not sure why you getting downvoted. It appears that anyone with an opinion which is not inline with the general consensus gets downvo... Nevermind..

In any case, I think the idea that true happiness comes from within, which I think is what your describing, makes sense. True happiness cannot be manufactured by buying "experiences". I don't think a laundry list, created by someone other then you, of things to do with your money can make you happy with yourself. If your not happy with yourself nothing you experience will just make you happy.

It starts with you and I'm not sure that money can buy you internal happiness.

A better idea would be to find out how people without money are able to be truly happy. I'd love to see that list...

The internet is a quixotic place.

I have known homeless artists, poets and musicians who were much happier than some very wealthy people I've met. Creative endeavors are the most common, with lots of genuine friendships being high on the list as well.

Not sure why you getting downvoted

Because he takes a scientific study based on actual data, calls it "bullshit", and substitutes his own pet theory of happiness, maybe?

Their whole hypothesis is that money can buy happiness, but there is a weak correlation because people have poor consumption patterns, and if people just had better consumption patterns, money would correlate strongly with happiness. There are a couple of assumptions baked into this hypothesis that I can tear apart on the spot:

1. This assumes that consumptive happiness is additive and unbounded, i.e. if consuming A makes you X points happier, and consuming B makes you Y points happier, consuming A and B makes you (X + Y) happier, ad infinitum. There is no evidence of this, and this is such a strong assumption that to assume it in the absence of evidence is fallacious.

2. Their data surrounding giving does not control for interpersonal interactions, and personality characteristics. Since these two variables are both strongly confounding, their results are weak at best.

Beyond that, this is a review paper containing no new data. They are essentially taking isolated data points and playing connect the dots to generate their own pet hypothesis.

My "pet theory" of happiness is actually the distillate of the idea of happiness as established in a variety of neutral literature (from Aristotle to moderns like Layard and Lyubomirsky), informed to a degree by evolutionary biology. Do you really trust the impartiality of people publishing in journals for "Consumer Psychology"? That reminds me of health studies commissioned by cigarette companies.

Down-vote away, it only saddens me to the degree that it makes people less likely to be exposed to a dissenting but informative viewpoint. I don't care a whit for the popularity contest aspect of it.

Because he is arguing a strawman. The article is not about buying experiences, but about spending money on or for the benefit of others.

Nor do rockets grow on the moon, but going to the moon is a decent goal for a man or woman interested in rocketry.

There is an overarching idea that people want to be numbed into a form of happiness (by using their money, but it could equally be something else). People like a challenge too, am i the only one who doesn't want to be happy all the time?

It seems to me that if you like the challenge, you are in fact happy being challenged...

There was a TED talk on that: "How to buy happiness " http://www.youtube.com/watch?v=PsihkFWDt3Y

This all makes sense. But having read through it, am I the only one who feels this reads more like an advice column disguised as science than the real deal, even with all the cited double blind studies.

Thousands of years ago it was written there is nothing better than for a man to find joy in his labor. Work and stress bring unhappiness in exchange for money. If labor brings you happiness, then you are probably doing better than most in the happiness dept. Don't purchase happiness, Eliminate the unhappiness, and save money by not having to spend money on getting back to equilibrium.

This is our ethos, we're Blink Collective: Experience Marketplace for the UK

Check us out: http://blinkcollective.com/

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