David Brooks has written an article on some of the poor trade-offs people make when they spend. In a nutshell, “as we spend more on something, what we gain in privacy and elegance we lose in spontaneous sociability.” Happiness research suggests that this trade-off does not maximise our happiness.
Jonah Lehrer picked up on this piece and raised some issues around what he describes as a paradox:
Our poor intuitions about the pursuit of happiness are a genuine paradox. Daniel Kahneman summarizes decades of happiness research this way: “It is only a slight exaggeration to say that happiness is the experience of spending time with people you love and who love you.” The problem, of course, is that we don’t spend our money in accordance with this psychological principle. Instead, we squander cash on positional goods, saving up for Rolex watches, Louis Vuitton luggage and Prada T-shirts.
A few years ago, the Swiss economists Bruno Frey and Alois Stutzer outlined a human bias they called “the commuting paradox.” They found that, when people are choosing where to live, they consistently underestimated the pain of a long commute. As a result, they mistakenly believed that the McMansion in the suburbs, with its extra bedroom and sprawling lawn, will make them happier, even though it might force them to drive an additional forty-five minutes to work.
I’m genuinely puzzled by our failure to spend money properly. In general, human intuition improves with experience – it gets better as we put in those 10,000 hours of practice, so to speak. And yet, this doesn’t appear to be true when it comes to our intuitions about the pursuit of happiness. … Either psychologists can’t measure happiness or human beings with disposable income are very confused.
The failure of our spending to lead to “happiness” is not a paradox. We did not evolve to be happy. Rather, feelings of happiness reinforce actions that increase our fitness. As a result, happiness adjusts to our current level of status, wealth or condition and relative status affects it. The McMansion in the suburbs may not maximise happiness, but it may be the best way to increase status and signal wealth (at least, that is what they believe). Perceptions of happiness might trigger the purchase, but once done, there is no benefit in further happiness unless it reinforces such actions in the future.
For example, happiness can disappear quickly where new options for increasing fitness arise. Lehrer refers to one example where people lost sight of life’s finer pleasures when shown cash:
The psychologists gathered 351 adult employees of the University, from custodial staff to senior administrators, for an online survey. The scientists primed the subjects by showing them a stack of Euro bills before asking them a bunch of questions which attempted to capture their “savoring ability.” Interestingly, the scientists found that people in the wealth condition – they’d been primed with all those Euros – had significantly lower savoring scores and were less likely to be delighted by the simple pleasures of ”sunny days, cold beers, and chocolate bars.” Furthermore, subjects who made more money in real life – the scientists asked all subjects for their monthly income – scored significantly lower on the savoring test.
Despite there being many reasons why we do not seem to maximise happiness, there is one part of this paradox that I find more interesting, and that is the particular forms of consumption and spending that we undertake. While it does not surprise me that people buy McMansions to increase status despite the costs to happiness, I am not sure that the McMansion is the best status or wealth signal available. Or take this paragraph from Geoffrey Miller’s wonderful book Spent: Sex, Evolution, and Consumer Behavior:
You anticipate the minor mall adventure: the hunt for the right retail environment playing cohort-appropriate nostalgic pop, the perky submissiveness of sales staff, the quest for the virgin product, the self-restraint you show in resisting frivolous upgrades and accessories, the universe’s warm hug of validation when the debit card machine says “Approved,” and the masterly fulfillment of getting it home, turned on, and doing one’s bidding. The problem is, you’ve experienced all this hundreds of times before with other products, and millions of other people will experience it with the same product. The retail adventure seems unique in prospect but generic in retrospect. In a week, it won’t be worth talking about.
That conspicuous consumption makes us happy (or more accurately given the “paradox”, that we believe it will make us happy) seems logical – it is a signal of wealth. The good may also have some utility. But why this particular manifestation of conspicuous consumption occurs and why people don’t seek a more distinct form of consumption or status display is an interesting question. Miller captures the problem nicely:
As a self-display strategy, it is very inefficient to buy new, branded, mass-produced products from stores at the full manufacturer’s suggested retail price. The product comes into one’s life naked and mute, without any social context, memorable circumstances, or narrative value. Nothing about the purchase says anything about one’s traits, except one’s ability to afford the purchase. One can’t talk about the product as a distinctive object with a unique provenance. One can merely own it, use it, display it, and hope that someone appreciates its wealth display function. Almost every other way of acquiring and displaying human artifacts or experiences sends richer signals about one’s personal qualities – though it usually brings less revenue to the retailer and manufacturer.
It may be the case that wealth is the most important signal we can send, or that Miller’s assessment of inefficiency is wrong (always be careful of suggesting everyone is irrational), but my instinct is to agree with him. We did not evolve to be happy, but nor are we evolved to optimise our displays of status in a modern consumerist world.
* My previous review of Spent can be found here.