Six keys to happiness
The United Nations’ annual World Happiness Report incorporates quality-of-life factors beyond money to measure global happiness.
Researchers now study different kinds of happiness, and their work falls into essentially two camps. One focuses on overall well-being, or life satisfaction, which can involve factors such as money, religion, politics, culture, and marriage. The other looks at shorter-term happiness derived from consuming certain things. This is the branch that includes hedonomics, as well as more general judgment and decision-making. Chicago Booth’s Richard H. Thaler, a Nobel laureate, coined the term “hedonic editing” in the 1980s, when he started to explore how people could make decisions to maximize their happiness—for example, by spreading out fun events over time but scheduling unpleasant ones back-to-back.
A 2005 paper by University of Central Florida’s Peter Hancock, Aaron A. Pepe, and Coventry University’s Lauren Murphy was one of the first to use the term “hedonomics,” which originally referred to the study of ways to interact with machines, a still-topical issue as automation and artificial intelligence merge.
Use existing resources differently
Hsee and his Chicago Booth colleague Reid Hastie redefined the term in 2008. Their version of hedonomics is premised on the idea that people don’t need more resources to be happier; they need to use existing resources differently. For example, suppose a child initially enjoys playing with wooden blocks but grows tired of them. Hedonomics suggests the child doesn’t need more blocks to be happy; she needs to change how she plays with those blocks.
If not blocks, say a person has 20 pieces of chocolate. To optimize happiness, consume them over several days, not all at once, explains University of Florida’s Yanping Tu, a recent Chicago Booth PhD graduate. The same principle applies to experiences. Instead of binge-watching a TV show, watch two episodes per day. Or better yet, apply a more sophisticated method: say you have six episodes to watch. You could watch two a day, or you could watch one on the first day, two on the second day, and three on the third day. That’s an improving sequence. Or you could do the reverse, in a decreasing sequence, by watching three at the start and winding down. “Hedonomics would suggest you take the first approach, arrange consumption in improving order,” says Tu.
Instead of optimizing their resources, many people instead seek to add resources. Hsee, who has devoted much of the past decade to researching hedonomics, says that can backfire and lead to a phenomenon known as the “hedonic treadmill.” This phrase, coined in 1971 by the late Philip Brickman of Northwestern University and the late Donald T. Campbell of Lehigh University, refers to the psychoeconomic version of a rat race.
What sets the top 10 apart
GDP and social support explain more than half the difference between the top and bottom 10 countries in the 2018 World Happiness Report.
Hsee, who grew up in China, recalls when “just having the ability to buy a cheap bicycle” in his city was a big deal. But by 2012 in China, according to the UN World Happiness Report, “virtually every urban household had, on average, a color TV, air conditioner, washing machine, and refrigerator. Almost nine in ten had a personal computer, and one in five, an automobile.” Hsee sees his friends, some now able to afford expensive cars, stuck on the hedonic treadmill as they seek to maximize their well-being.
The problem is that it takes more and more things to make people happy. In a recent study, for example, Hsee and recent Booth PhD graduate Raegan Tennant find that upgrading the screen size of an e-reader from medium to large made people happy initially, but over time the happiness faded. (See “Why a bigger house doesn’t always make you happier,” below.)
Invest in needs, not wants
The hedonic treadmill fires up because people misunderstand what will actually make them happy, research suggests. People gain more happiness when they satisfy their inherent rather than learned preferences—needs rather than wants.
Hsee and a group of researchers—University of Florida’s Yang Yang, Shanghai Jiao Tong University’s Naihe Li, and Chinese University of Hong Kong’s Luxi Shen, a graduate of Booth’s PhD Program—interviewed residents from 31 Chinese cities during one winter, asking how they felt about the temperature of their homes as well as the jewelry they owned. Home temperature was meant to signify an inherent preference, more of a biological need, whereas jewelry represented a preference developed in a cultural and social context. These learned preferences drive why someone might pick a French wine over a California wine, or a Gucci over a Coach bag.
When it came to inherent preferences, warmer room temperatures in the winter made people happier. This was true both within a given city and across cities: for example, within Tianjin, people with warmer home temperatures were happier—and on average, residents in Tianjin, where most homes were heated, were also happier than residents in Nanjing, where home heating was less prevalent.
But when it came to learned preferences, more expensive jewelry made people happier only within a given city, not across cities. Within Nanjing, people with more expensive jewelry were happier, but the average resident of Nanjing, who owned more expensive jewelry, wasn’t any happier than the average resident of Lanzhou, who owned less expensive jewelry.
“How warm the temperature is in relation to your happiness is absolute; it does not require social comparison. By contrast, how much jewelry makes you happy is relative; it requires social comparison,” Hsee says. A person is unlikely to compare herself to someone halfway across the world, but her envy and unhappiness are likely to increase if her immediate neighbors possess more than she does.
And the happiness generated by fulfilling needs lasts longer. Tu and Hsee asked people to recall a purchase—durable, and between $50 and $500—that they’d made in the previous year. Then the researchers asked how happy people had been after making the purchase, and how happy they were at the moment of the study. Regardless of which preference the purchase satisfied, inherent or learned, people’s happiness declined over time—but it was more persistent if the purchase satisfied an inherent preference.
Less of a decline
Assessing people’s happiness with significant purchases, the research reveals more staying power in fulfilling needs rather than wants.
Jessica has been here for a very long time. For the past twenty years she has held positions in Admissions, Diversity Affairs and Student Life.
While Harrell provides an extreme case study in the perils of sudden riches, researchers have been studying how long happiness sticks around—or evaporates—after a change such as a lottery win.
According to ideas42’s Raegan Tennant, a graduate of Chicago Booth’s PhD Program, and Booth’s Hsee, happiness will endure the closer it comes to helping a person meet an objective need or cross a defined threshold. Once the threshold is crossed, and the further away someone gets from that point, happiness due to sudden riches or another positive change is more likely to decay.
For several decades, psychologists have been studying hedonic durability, or how long happiness sticks around after a change. Tennant and Hsee investigated this by looking at how long happiness (or unhappiness) lasts in cases involving an objective variable—such as readable type size.
The researchers designed a study using various sizes of e-readers, including some with small screens on which the type was harder to read. In one experiment, they asked participants to read from two devices. Some read on a relatively large screen before switching to a medium-sized one. Others started on a medium-sized one and then moved to something smaller. They generally read for about two minutes on the first device and around 10 minutes on the second. At various points, the participants answered questions about what they were reading and how happy they were with the experience.
The researchers observed that everyone was initially unhappy moving to a smaller screen, but the unhappiness persisted only for people who were downgraded to the smallest screen. Similarly, in another experiment that involved people reading on devices of increasing size, the upgrade led to longer-lasting happiness only for people who started on the smallest screens.
These findings, Tennant and Hsee suggest, are not limited to screen sizes but are applicable to other domains as well. For example, someone moving from a tiny studio to a medium-sized apartment and someone moving from a large house to a huge mansion will both be happy initially, but over time, the happiness of the first person will stick and the happiness of the second person will fade. The reason is that an upgrade from a studio satisfies one’s inherent or basic needs for living, but an upgrade from a large house only satisfies a learned desire for bigger houses.
Upgrades have their limits
The researchers find that people liked switching from a smaller e-reader to a larger one, but that happiness faded.
One curiosity experiment had two set-ups. In the first set-up, researchers told study participants that only humans and certain whales experience menopause. In the second, the researchers asked which animals the participants thought were affected by menopause, prompting the participants to think before receiving the answer. The people in the latter situation reported higher levels of satisfaction, apparently happiest when curiosity was stoked and soon resolved.
Hsee says he applies this finding in his teaching by asking students questions and giving them time to ponder before supplying answers. Children also benefit from learning to appreciate the power of curiosity, he says, suggesting individuals can put this finding to work for them, for example by reading questions about art before visiting a museum, or by reading questions about a new city before heading there. In this way, hedonomics teaches, tourists can extract happiness from a vacation to, say, Paris without having to visit more cities.
Limit your choices
According to traditional economic theory, more choices are always preferable to less. A person faced with too many choices can always turn down the ones she doesn’t want. But this is a hot topic in decision-making research, as behavioral scientists have established that sometimes people prefer fewer choices. And hedonomics indicates that more choices may lower happiness and rev up the hedonic treadmill.
London Business School’s Simona Botti and Hsee ran a series of experi-ments in which they offered a number of people in a group more choices, some fewer, and some the chance to state which option they’d prefer. For example, in one experiment, they had people imagine having $10,000 to invest in a certificate of deposit and asked them to find the best CD available to them, any of which would pay between 3.01 percent and 4 percent. One group paid $7 for one set of three randomly generated options. A second group did the same, but was also given the option of spending another $7 for three more options, and so on, in a bid to find the best interest rate. A third group heard about both options, and then said which they’d prefer and predicted which would generate the best return.
The group told of both options preferred the freedom to have more choices, which they predicted would generate a better return. But in fact, people with more choices oversearched and ultimately earned less than people whose choices were restricted. There was a clear cost for more choice, $7, but people undervalued it. And the researchers find the same pattern in other experiments.
The amount of time people spend making purchasing decisions may lead to “faulty decisions and undesirable outcomes,” Botti and Hsee conclude. More choices led to worse outcomes, and by extension, to lower happiness. When it comes to choice—as industrial designer Peter Behrens said, and his protégé architect Ludwig Mies van der Rohe often repeated—less is more.
Lessons for policy makers
The findings from hedonomics will have increasing importance as countries around the globe get richer. In many developing countries, the middle class is growing, which means millions more people will find themselves choosing between different types of televisions and countertops—and wines, purses, and jewelry—and looking for happiness in this newly acquired stuff.
In the US and other developed countries, where the middle class is shrinking, the lessons of hedonomics could be helpful for policy makers planning for demographic and workforce changes, Hsee says. The baby boom generation is aging out of the workforce, and up to half of today’s jobs may be automated in coming decades, according to a 2016 White House study. This transformation could leave a lot of people searching for work that might not exist, making potentially millions of people idle. Some economists, as well as business leaders, have expressed support for the idea of giving people a universal basic income—guaranteeing income of a certain amount to people who may find themselves unemployed and unemployable.
In a strict sense, this may not seem like a problem that can be addressed by hedonomics, which is about extracting the most happiness from a set amount of resources. A universal basic income could make people happier by making sure they can meet their basic needs.
But Hsee sees large numbers of idle people as a problem with political and social consequences—and essentially another problem that involves getting more happiness from one set of blocks. “You can make idle people happy by giving them a reason to ‘play with the existing blocks’ without accumulating more blocks,” he says, proposing the government consider programs that give people tasks to do, not unlike the Works Progress Administration of the New Deal era, which put people who were unemployed after the Great Depression back to work. Governments, he says, may need to find ways to engage people with activities.
Whatever the policy implications may be, and whatever form they could take, the research confirms the homespun wisdom that more money doesn’t necessarily buy more happiness. Instead, Hsee says, cherish what you have and make the best use of it.
- Simona Botti and Christopher K. Hsee, “Dazed and Confused: How the Temporal Costs of Choice Freedom Lead to Undesirable Outcomes,” Organizational Behavior and Human Decision Processes, April 2010.
- Philip Brickman and Donald T. Campbell, “Hedonic Relativism and Planning the Good Society,” in Adaptation-Level Theory: A Symposium, ed. M. H. Apley, New York: Academic Press, 1971.
- Richard A. Easterlin, “Does Economic Growth Improve the Human Lot? Some Empirical Evidence,” in Nations and Households in Economic Growth: Essays in Honour of Moses Abramovitz, eds. Paul A. David and Melvin W. Reder, New York: Academic Press, 1974.
- ———, “The Economics of Happiness,” Daedalus, Spring 2004.
- ———, “Paradox Lost?” Discussion paper, January 2016.
- Peter Hancock, Aaron A. Pepe, and Lauren Murphy, “The Power of Positive and Pleasurable Ergonomics,” Ergonomics in Design, January 2005.
- John F. Helliwell, Richard Layard, and Jeffrey D. Sachs, World Happiness Report 2018, New York: Sustainable Development Solutions Network, 2018.
- Christopher K. Hsee, Yang Yang, Naihe Li, and Luxi Shen, “Wealth, Warmth, and Well-Being: Whether Happiness Is Relative or Absolute Depends on Whether It Is about Money, Acquisition, or Consumption,” Journal of Marketing Research, June 2009.
- Christopher K. Hsee, Jiao Zhang, Cindy F. Cai, and Shirley Zhang, “Overearning,” Psychological Science, April 2013.
- Daniel Kahneman, Thinking, Fast and Slow, New York: Farrar, Straus and Giroux, 2013.
- Daniel Kahneman and Angus Deaton, “High Income Improves Evaluation of Life but Not Emotional Well-Being,” Proceedings of the National Academy of Sciences, August 2010.
- Kristin Lee, “Artificial Intelligence, Automation, and the Economy,” Whitehouse.gov website, December 20, 2016. (https://obamawhitehouse.archives.gov/blog/2016/12/20/artificial-intelligence-automation-and-economy).
- Raegan Tennant and Christopher K. Hsee, “Hedonic Non-durability Revised: A Case for Two Types,” Journal of Experiment Psychology: General, December 2017.
- Bowen Ruan, Christopher K. Hsee, and Zoe Y. Lu, “The Teasing Effect: An Underappreciated Benefit of Creating and Resolving an Uncertainty,” Journal of Marketing Research, forthcoming.
- Luxi Shen, Ayelet Fishbach, and Christopher K. Hsee, “The Motivating-Uncertainty Effect: Uncertainty Increases Resource Investment in the Process of Reward Pursuit,” Journal of Consumer Research, February 2015.
- Alois Stutzer and Bruno S. Frey, “Stress That Doesn’t Pay: The Commuting Paradox,” Scandinavian Journal of Economics, June 2008.
- Richard H. Thaler and Cass R. Sunstein, Nudge: Improving Decisions About Health, Wealth, and Happiness, New Haven: Yale University Press, 2008.
- Yanping Tu and Christopher K. Hsee, “Consumer Happiness Derived from Inherent Preferences versus Learned Preferences,” Current Opinion in Psychology, August 2016.
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