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What Science Says About Money and Happiness | Dr. Elizabeth Dunn

Oct 30, 2023 1h 2m 17 insights
<p><em>New episodes come out every Monday, Wednesday, and Friday for free, with 1-week early access for Wondery+ subscribers.</em></p> <p>---</p> <p>How to spend your money in ways that will really boost your happiness and a look at the state of happiness research. </p> <p><a href="https://dunn.psych.ubc.ca/" rel="noopener noreferrer" target="_blank">Dr. Elizabeth Dunn</a> is a professor in the Department of Psychology at the University of British Columbia. Dr. Dunn conducts experimental research examining how time, money, and technology shape human happiness. She is the co-author of "Happy Money: The Science of Happier Spending" with Dr. Michael Norton. Her research has been featured in The New York Times, Time, CNN, and more.</p>
Actionable Insights

1. Assess Purchases by Daily Impact

Before making a purchase, ask yourself if it will affect how you spend your time on an average day. If it will make a real positive difference to your daily life, it’s likely a good use of money, even if you’re reluctant to spend.

2. Prioritize Buying Experiences

Spend money on experiences like trips, concerts, or special meals rather than material possessions. Experiences tend to deliver more lasting happiness, especially those that connect you with others, feel unique, or contribute to your sense of self.

3. Invest in Others for Happiness

Use your money to benefit other people, as this robustly promotes happiness. The emotional benefit is greater when you can clearly see or envision the positive impact your generosity is having.

4. Use Money to Buy Time

Combat feelings of time pressure by using money to outsource dreaded tasks, particularly those you least enjoy. People who buy their way out of unpleasant chores are generally happier, as it frees up time for more enjoyable activities.

5. Practice Thoughtful Consumption

Periodically abstain from your favorite pleasures to renew your capacity for enjoyment and turn them back into treats. When you do consume them, do so thoughtfully and less often to enhance appreciation and get more happiness from the experience.

6. Pay Upfront, Consume Later

Pay for purchases immediately and, when possible, delay consumption. This separates the pain of paying from the pleasure of consumption, making the experience feel ‘free’ and can also help to restrain overspending.

7. Donate to Lower-Income Countries

If you have disposable income to give away, consider sending it to lower-income countries. Each dollar donated to these regions can have up to triple the happiness impact compared to donations within higher-income countries.

8. Diversify Charitable Giving

Balance your charitable giving portfolio by donating to large, trusted organizations for their broad impact, and also reserving some funds for smaller, local organizations where you can more directly see the impact of your contributions.

9. Practice Private Generosity

When engaging in charitable acts, keep your generosity private. This approach can enhance your personal joy from giving by removing concerns about reputational motives and fostering a more intrinsic reward.

10. Grant Permission for Happiness Spending

Give yourself permission to spend money on things that genuinely enhance your happiness, even if they seem like a splurge. This includes services that buy back precious time or significantly improve your daily well-being.

11. Balance Frugality with Strategic Spending

While a frugal mindset can help restrain overspending, recognize that sometimes it’s important to strategically spend money on things that can truly make a difference for your happiness, rather than only buying absolute necessities.

12. Live Below Your Means Early On

In your early career, consider living well below your means, treating significant income as a temporary ‘contract.’ This builds financial security and provides flexibility to make happiness-enhancing choices later in life, such as outsourcing help when needed.

13. Experiment with Well-being Practices

Engage in practices like meditation, exercise, or spending time in nature, and observe the benefits in your own life. Personal experimentation helps determine what truly works for your individual well-being.

14. Continue Practices That Work For You

If a particular well-being strategy, such as meditation, exercise, or nature exposure, consistently makes you feel calmer or improves your mood, continue doing it. The lack of broad scientific evidence doesn’t negate its personal effectiveness.

15. Recognize Person-Activity Fit

Understand that different activities work well for different people. Not every happiness-promoting strategy will be effective for everyone, so seek out what resonates with your individual needs and preferences.

16. Follow Clinical Interventions

If a therapist or medical doctor has prescribed a specific intervention, such as exercise or meditation, for a clinical disorder, continue to follow their guidance, as this advice pertains to non-clinical populations.

17. Be Skeptical of Blanket Recommendations

Approach widespread recommendations for happiness-promoting strategies with a critical eye. Scientific evidence for many popular tips, especially for non-clinical populations, may be weaker than commonly perceived.