The economics of happiness

What matters more, success or happiness? We can argue over this issue for a long time and not come to any conclusion. In fact, this issue is nearly impossible to resolve because of the biases and agendas people have. While I outsource this issue to a philosopher in India, let’s focus on practical steps we can take to increase the latter. \nThe looming question is: Does more money make us happier? A lot of research has been done on this question. The basic answer has been that it has a neutral effect; it simply makes us more comfortable. The problem, however, is that the question is so broad that the answer is useless. \nThe real questions, ones most researchers have ignored, are when does money make us happy, and when does it decrease our happiness? From my personal experience, I have spent money in certain ways that have consistently improved the quality of my life. \nSpending on services, in my experience, is one of the surest bets. Anything that takes a hassle out of your life will automatically increase your quality of life. Another sure bet is good entertainment; restaurants, concerts and parties are positively correlated with happiness levels. \nIn regards to products, the media likes to blame “consumerism” for Americans’ unhappiness. Again, the issue is more complicated. I have a simple rule: buy few but buy the best. The average person has a lot of marginal items and only a few top-quality things. Let’s call it “the $25 jean problem.” After a year or so, the individual has eight pairs of $25 jeans. The closet is cluttered and he or she no longer wears four of the pairs. The solution is purchasing three to four pairs of $50 jeans. Be the biggest pimp in the club (like my roommate Dmitrii Gabrielov) and decrease your clutter.\nWhat is most interesting about happiness is how unaware most people are about what makes them happy. Most people do not differentiate between short-term and long-term happiness. Going on spending splurges offers the individual short-term pleasure, which is good. The problem is money and items quickly become part of our endowment, which leads to us taking them for granted and not gaining satisfaction from them (read “Paradox of Choice” by Barry Schwartz). There is, as with everything, a loophole. The loophole in gaining sustainable satisfaction is being thankful and imagining how bad things could be. It works.\nThe answer to increasing happiness is simple math. Rather than searching for the “ultimate happiness,” the key to personal satisfaction is to increase the things that make you happy on a daily basis. Alan Cohen, author of “Why Your Life Sucks,” proposes going around for a day and noting on a scale from negative 10 to positive 10 what makes you happy and what pisses you off. For Cohen, the goal is increasing the happy activities and minimizing the things that piss you off. It really is that simple.\nRemember, diversification is the best hedge against volatility in both business and your personal life. I invest in my relationships with my family and friends. When problems arise in any of these areas, I am fortunate enough to have people who support me.\nIt has been a pleasure writing this column for the past three years. Do not hesitate to e-mail me at dweisburd@gmail.com if you would need my help or liked my column. Add me on Facebook and LinkedIn. Thank you and God bless.