Claudia Buck

Personal Finance: How money buys happiness

Published: Sunday, Jun. 9, 2013 - 12:00 am | Page 1D
Last Modified: Monday, Jun. 10, 2013 - 8:54 am

It's an age-old question: Can money truly buy us happiness?

The answer is, well, it depends. And it's not for a lack of effort in debating, analyzing and quantifying the question. In the last few decades, there have been innumerable books, blogs, essays and Ph.D. dissertations on the money-equals-happiness equation.

More recently, a San Francisco State University researcher and associate professor of psychology, Ryan T. Howell, is putting the question to the public.

Howell, 38, and his colleagues host a website,, that offers a free series of psychology quizzes designed to help us understand why we buy stuff and whether it makes us happier or not.

We recently talked with Howell by phone. Here's an excerpt:

So right to the point: Can money buy us happiness?

Of course. No question that money can buy you happiness. Nobody has ever shown there's zero correlation between money and happiness. But it's surprisingly weaker than we would expect.

Money's biggest impact is financial security, your lack of worry. But if you blow it on a poor (spending) decision, that's detrimental. Money might not buy you happiness if you spend it wrong.

How does your site work and what's behind the name?

Our mission at is to help people understand the relationship between money and happiness. To learn about what might be influencing how you spend your money. We ask people to register (for free) … and then they can take any of our 30 happiness quizzes, as well as consumer psychology surveys and personality tests. After each quiz, we provide personalized feedback and happiness tips. … The name came from a student in my master's (degree) lab class. We were batting around different ideas, like Money Manatees and Spending Gorilla, and she suggested Beyond the Purchase. It's the idea there's more to the purchase than meets the eye. …

Among the many books and research papers on money and happiness, the common denominator seems to be that it's better to acquire experiences than things, that we get more satisfaction from "doing" than "having." Has that proved true among your respondents?

Yes. We have two published papers demonstrating quite robustly that people are happier when they are doing instead of having.

There are mountains of data showing that one of the ingredients to happiness is having social connections.

… If you're spending your money in ways that bring you closer to friends and family, in ways that are true to who you are, and you are not trying to impress others with your money, then your spending choices are likely to make you happier. … "Life experiences" tend to have more of those ingredients.

When it comes to spending money, your site makes the point that it's not necessarily how much you spend but what you're doing and who you're doing it with. So unless you're a serious foodie or sports nut, happiness doesn't depend on dining at the priciest four-star restaurant or sitting in luxury seats behind home plate at a baseball game, correct?

Exactly. How much you spend has very little to do with your happiness. What you are spending your money on – and who you are with when you are consuming those purchases – matters a lot more. You can collect a lot of really cool memories and not spend a lot. …

Everyone's values are different. When I get organic eggs at the farmers market, I pay more. But I feel better about buying them, I feel they're higher quality, I enjoy their taste. But those same values wouldn't make my dad happier, so he shouldn't buy the eggs.

We all make mistakes in buying things we think we need or want, but that wind up gathering dust. How do you avoid those purchases?

Every time you make a purchase, run through the list: Will my emotional state be that much different a week (from now)? How much will it bring me closer to other people? Is it a true expression of who I am?

When my wife and I moved to San Francisco, we bought a fondue pot, thinking we'd have "Fondue Friday" parties that would be a great way to socialize with friends. It's still in the box.

You can buy an expensive bike thinking it's a way to get exercise, fresh air and spend time with friends or (family). And it can gather dust in the garage. …

We can buy things with great intentions but never use them. It's often a trick people use to make themselves do something they think they should: If I buy these expensive running shoes, it'll force me to run. That rarely works. In fact it can end up backfiring: You don't (start running or biking) and have less money and more guilt.

I'm not saying you should never spend your money on certain things. Or have a bucket list of activities you should experience. Your personality and values play out. The ingredients are different for each person.

In your research, you talk about the value of "memory capital." Can you explain that concept?

Every life event is something you're putting into a memory bank, that you can retrieve at any time and feel happiness. Like my wedding day. It was 14 years ago, but it never degrades in value. It appreciates, much like an investment. You forget the little annoyances but remember the intense moments. … The memory gets better in time, not worse.

Whereas the computer you bought five years ago is probably already obsolete. Its value goes down.

What are some of the common purchasing pitfalls?

One theme we see is when people buy things to impress other people. We see it a lot with clothes (by both men and women). 'I wasn't feeling happy so I went to the mall and bought this cute outfit. It made me feel good about myself. … If I wear it, friends will tell me how cute or cool I look.'

There's nothing wrong with that, but that (happiness) effect fades with time. When your happiness is dictated by how much other people respond to what you bought or what you did, you'll be disappointed.

Call The Bee's Claudia Buck, (916) 321-1968. Read her Personal Finance blog,

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