How to	buy happiness
Measuring happiness
• Oxford	Happiness Inventory(Argyle and	Hill)
• Subjective Happiness Scale (Lyubomirsky&	Lepper)
• Satisfaction with Life Scale (Deiner,	Emmons,	Larsen and	Griffin)
• Panas Scale (Watson,	Clark,	Tellegen)
• Experience sampling
• Money	can buy things that bring happiness:	wealthypeople have better
health care and	nutrition,	more	free time,	live longer,	etc.	
• When asked to	rate	their lives in	general,	richer people report	beingmore	
satisfiend than people with less money.	When asked how happy	theyare	
at	the moment,	difference vanishes (Diener,	Ng,	Harter,	Arora,	2010).
• Why?
Money HappinessMoney Good stuff Happiness
People are	bad at affective forecasting
• We can‘t predict what will make us happy,	
how happy	it will make us and	how long the
happiness will last
What should I	buy then?
1.	Buy experiences
• Experiential purchase:	„purchase made with the
intention of acquiring a	life experience:	an event or	
series of events to	live through“
• Carter &	Gilovich (2010)	asked respondents to	think
about material and	experiential purchase they had	
made with the intention to	increase happiness.	57%	
reported Exp.	p.	made them more	happy	(34%	
reported M.	p.	made the more	happy).	
• Nicolao,	Irwin,	Goodman (2009)	did an experiment:	go	
spend $7	on	experience/something nice.	Happiness
boost lasted longer for experiences.
Why?
• To	things,	we adapt faster.
• We anticipate and	remember experiences more	than
things (83%	„revisit“	their experiential purchases
more	than material ones (Van Boven,	Gilovich,	2003))	
• Things make us happy	only when we use them
(Loewenstein,	1999)
• Experiences are	unique
• Experiences are	more	likely to	be shared with others
2.	Spend to	benefit others
• Humans are	social animals.	If we improve our
relationships,	we become happier.
• Dunn,	Aknin,	Norton (2008)	survey:	people who spend
more	to	benefit others (charity	donations +	gifts to	
others)	report	being more	happy.	Spending more	on	
self had	no	relation to	happiness.		...wait a	minute!
• Experiment	(Dunn,	Atkin,	Norton,	2008):	subjects given
money to	spend on	themselves/others.	Those who
spent on	others were happier by	the end	of the day.	
• MRI	study	(Harbaugh,	Mayr,	Burghart,	2007):	donating
to	local food bank	activated areas of the brain
associated with receiving rewards
Why?
• Strong social relationships are	critical for well-being
(Diener,	Seligman,	2002).	Prosocial spending =>	better
relationships.
• Positive self-presentation =>	elevated mood (Dunn,	
Biesanz,	Human,	Finn,	2007)
• Affective forecasting error:	majority		thinks spending of
themselves would make them happier than spending
on	thers (Dunn et al.,	2008)
• Merely thinking of money makes us less likely to	
display	prosocial behavior (Vohs,	Meade,	Goode,	2006)
3.	Prefer many small pleasures
• Hedonic adaptation
• Diener,	Sandvik,	Pavot (1991):	happines
related to	frequency of positive experiences,	
not their intensity.
• Continuous massage (180s)	less pleasurable
than interrupted massage (80s-20s	break-80s).	
Again:	people failed to	predict.
Why?
• Frequent small pleasures are	different,	thus
hard to	adapt to.	The car stays the same,	but
each cooking class lesson is different.
• Diminishing marginal utility.	Eating a	cookie
does not bring twice as much joy as eating
half a cookie.	Breaking up an experience into
series of small ones brings more	pleasure
(Kahneman,	1999;	Mellers,	2000).
• Anticipation also boosts happiness
4.	Buy less insurance
• People adapt not only to	good,	but also to	bad
stuff (Ubel,	2006).	
• People overestimate the psychological impact
of negative event (Bonanno,	2004).
• Emotional attachment to	purchases.	MY	
phone
• Overestimating the probability,	and	the
psychological severity of negative event.
• Opportunity to	return purchase =>	less happy	
with the purchase.	
• When asked,	people prefer to	have the
opportunity to return (Gilbert,	Ebert,	2002).
• We fail to	predict how will various events
make us feel
5.	Pay now,	consume later
Why?
• Anticipation =	„free“	happiness.	People who
spend more	time anticipating positive
experiences report	being happier in	general
(Bryant,	2003)
Why?
• Delayed consumption promotes well—being
related choices.	
• Choose now,	eat now:
• Choose now,	eat next week:	(Read,	van
Leeuwen,	1998)
Why?
• Uncertainty
• Experiment	by	Kurtz et al.	(2006).
• Group A	received two gifts,	they knew what it
will be
• Group B	received one gift,	knowing it will be
one of three gifts available.
• Group B	happier when given the gift,	AND	
during the waiting period.
7.	Follow the herd
• Best way to	predict how much will we enjoy
something is to see how much someone else
enjoyed it
Before we set	our hearts too much upon anything,	
let	us first examine how happy	those are	who
already posses it
Francois de la	Rochefoucauld
• Others can predict how we will like something
better than we do.	Experiment:
• Seeing me seeing the snack,	other people predict
my	liking of	each snack better than I	can.
How to	spend your money to be happy
• Buy experiences
• Spend to	benefit others
• Prefer many small pleasures to	one large
• Refuse extended warranties
• Delay consumption
• Look what others do
Your	assignment
• Spend	100-200	CZK	and	make	yourself	happy
• Write	one	page	about	it:
– What	did	you	spend	the	money	on
– Provide	explanation	why	you	chose	this	(do	your	
research!)
– Describe	which	mechanism	from	today’s	lecture,	
or	other,	did	you	employ
6.	Beware of comparison shopping
• In	comparison shopping,	we focus on	what is
different,	not what is important (Dunn,	
Wilson,	Gilbert,	2003)
• Comparisons while shopping are	not the same
as comparisons while consuming (Morewedge
et al.,	2010).	Other options,	relevant when
choosing,	disappear from focus when we
consume.