How money can buy you happiness | Sandra Matz | TEDxUHasselt

Summary

The speaker explores the relationship between money and happiness, asking if money can truly buy happiness. Through personal anecdotes and research findings, they show that money alone doesn't guarantee happiness, especially once basic needs are met. However, money can increase happiness if spent wisely—on experiences, others, or in line with one's personality and preferences. The speaker emphasizes that understanding personal needs is key to making money work for happiness, highlighting the importance of psychological fit and the impact of meaningful spending choices.

Takeaways

• 💰 Money can sometimes buy happiness, but the relationship between the two is not straightforward.
• 👶 Early childhood experiences, like receiving gifts, can bring happiness, but the effect can vary based on expectations.
• 🚴 Happiness from material goods, like a bike, can be influenced by whether the gift matches personal desires or preferences.
• 📊 Research shows that after a certain income threshold (around $75,000/year), more money doesn't significantly increase happiness.
• 🤝 Spending money on others or on experiences tends to bring more happiness than spending on material goods.
• 🧑‍🤝‍🧑 The key to maximizing happiness through spending is ensuring that purchases align with one's personal values and personality traits.
• 🎯 A 'psychological fit' between spending habits and personality traits leads to greater happiness and satisfaction.
• 📖 Studies with students found that introverts and extroverts had different levels of happiness depending on how they spent their money (e.g., books vs. bars).
• 📊 In a larger study with UK citizens, better alignment between spending and personality led to higher life satisfaction, regardless of income level.
• 💡 The ultimate message: It's not about how much money you have, but how you spend it in a way that aligns with your unique personality and needs.

Q & A

What is the main question the speaker is addressing in the talk?

The main question is whether money can buy happiness, and if so, how money can be spent to increase happiness.

How does the speaker illustrate the relationship between money and happiness in their personal childhood experiences?

The speaker shares two childhood stories: one where a garden gnome brought them immense happiness, and another where receiving a bike instead of a Barbie Caravan caused disappointment, illustrating how money doesn’t always guarantee happiness.

What does the research suggest about income levels and happiness?

Research shows that happiness increases with income up to about $75,000 a year, but after that threshold, additional income does not significantly increase happiness.

How can spending money on others or experiences impact happiness?

Studies suggest that people are happier when they spend money on others or on experiences rather than on material goods.

Why does the speaker believe the assumption that the same type of spending increases happiness for everyone is overly simplistic?

The speaker argues that people have unique interests and preferences, so the types of spending that increase happiness vary from person to person based on their personality and individual motivations.

What is the theory of psychological fit and how does it relate to spending?

The theory of psychological fit suggests that people are happier when their experiences, including spending habits, align with their personality and core needs. Spending in line with personal preferences can increase happiness.

What experiment did the speaker conduct with students at the University of Cambridge?

The speaker gave students personality tests and then offered them vouchers for either a bar (for extroverts) or a bookstore (for introverts). The results showed that spending in line with their personality increased happiness more than mismatched spending.

What were the findings of the second study involving bank transaction data from UK citizens?

The study found that people whose spending better matched their personality traits reported higher life satisfaction, regardless of their total income or overall spending.

What is the key takeaway about how to spend money for happiness?

The key takeaway is that it's not about how much money you have, but how you spend it. Spending in ways that align with your personality and fulfill your personal motivations is more likely to increase happiness.

What practical advice does the speaker offer for maximizing happiness through spending?

The speaker advises knowing yourself by understanding your personality and preferences, and then aligning your spending habits with those personal needs to maximize happiness.

Outlines

00:00

💡 Can Money Buy Happiness?

The speaker introduces two important currencies in life: money and happiness. They pose the central question—can money buy happiness? Through personal anecdotes, they explore this idea, beginning with a story of their childhood when their grandmother's gift brought immense happiness. This sets the stage for discussing how spending money doesn't always guarantee happiness, hinting at the complexity of the relationship between money and happiness.

05:01

🎄 A Christmas Disappointment

The speaker recalls a Christmas from their childhood when they received an expensive gift, a bike, which did not bring the expected joy. What they truly wanted was a Barbie Caravan, which their younger sister received instead. This story demonstrates that money does not always lead to happiness, especially when expectations and desires do not align. It reinforces the idea that the connection between money and happiness is more nuanced than it may seem.

10:02

🤔 Money and Happiness: It Depends

The speaker reflects on the previous anecdotes, pointing out that the relationship between money and happiness is not straightforward. The conclusion is that whether money buys happiness depends on various factors. They express dissatisfaction with this simple conclusion and shift the focus to exploring how money can both succeed and fail in bringing happiness, aiming to offer insights on how to use money to maximize happiness.

15:03

📊 When Money Fails to Buy Happiness

The speaker presents research showing that while money improves happiness for people with very low incomes, beyond a certain threshold (about $75,000 annually), it no longer significantly impacts happiness. Even for those earning much more, there is no noticeable increase in happiness. This suggests that wealth, by itself, doesn't guarantee a happier life.

💸 Spending Money the Right Way

Research suggests that money can indeed buy happiness, but it depends on how it's spent. People tend to be happier when they spend money on others or on experiences rather than material goods. However, the speaker critiques this by highlighting that individual preferences differ. What makes one person happy might not work for another, suggesting a more personalized approach to spending for happiness.

👜 Personal Preferences in Spending

The speaker uses an example of a woman choosing between attending a rock concert or buying a handbag, illustrating how different personalities affect the happiness derived from spending. They argue that the type of spending that brings happiness varies from person to person, and it's important to spend money in ways that align with individual preferences rather than following general rules.

🔍 Psychological Fit and Happiness

The speaker introduces the concept of psychological fit, which suggests that people are happier when their experiences match their personalities. They hypothesize that this concept can be applied to spending money—people are likely to be happier when they spend money in ways that align with their personality traits. This sets the stage for a study they conducted to test this theory.

📚 Bar vs. Bookstore: A Study on Spending

The speaker explains a study conducted with Cambridge students to test whether spending in line with personality traits increases happiness. Extroverted and introverted students were given vouchers for either a bar (extroverted spending) or a bookstore (introverted spending). The results showed that students were happier when their spending matched their personalities—extroverts enjoyed the bar, while introverts preferred the bookstore.

📈 A Broader Study on Spending and Happiness

The speaker concludes with broader insights from their study, explaining how spending in line with personal values can increase happiness for different personality types.

Keywords

💡Money

Money is central to the video's theme, particularly in exploring whether it can buy happiness. The speaker illustrates how money can sometimes lead to happiness, such as when the speaker's grandmother bought a garden gnome. However, the video also discusses how money alone does not guarantee happiness, showing that spending it wisely and in alignment with personal preferences is key.

💡Happiness

Happiness is a central concept, as the video investigates the relationship between money and emotional well-being. It highlights that while money can buy temporary happiness, like with the garden gnome, it may not always fulfill deeper desires, as seen with the speaker’s disappointment over not receiving the desired gift (Barbie Caravan) at Christmas. The video further explores how happiness is influenced by how money is spent, particularly on experiences or in alignment with one's personality.

💡Spending

Spending refers to how individuals use their money, which the speaker argues is more important than how much money they have. The video emphasizes that spending money on experiences or others can lead to greater happiness compared to material purchases, and that aligning spending habits with personal preferences or personality traits can enhance life satisfaction.

💡Personality

Personality plays a key role in determining how spending money affects happiness. The speaker discusses how people with different personality traits, such as introversion or extroversion, experience varying levels of happiness from different types of spending. For example, introverts may enjoy spending money on books, while extroverts may prefer spending it on social activities like going to a bar.

💡Experiences vs Material Goods

This distinction highlights a key finding from the video: people are generally happier when they spend money on experiences (e.g., concerts, vacations) rather than material goods (e.g., handbags, bikes). The speaker uses research and personal anecdotes, like their disappointment over a Christmas gift, to illustrate that material possessions do not always bring lasting happiness.

💡Psychological Fit

Psychological fit refers to the alignment between a person's spending habits and their personality or preferences. The video explains that spending money in ways that match one's core psychological needs, like extroverts spending on social activities, leads to higher happiness. This concept is supported by studies showing that individuals are more satisfied when their spending reflects their personality.

💡Income Threshold

The income threshold is a point beyond which additional income does not significantly increase happiness. The video cites research showing that once a household earns about $75,000 a year, more money does not necessarily lead to greater happiness. This suggests that money's ability to improve well-being is limited after basic needs are met.

💡Life Satisfaction

Life satisfaction refers to how content people feel with their lives, and it is closely tied to happiness in the video. The speaker explains that spending money in alignment with one's personality can increase life satisfaction, while merely having more money or spending more does not necessarily lead to greater fulfillment.

💡Social Comparison

Social comparison refers to how people measure their happiness or success against others. In the video, the speaker touches on how people might expect those with much higher incomes to be significantly happier, but research shows that beyond a certain point, additional wealth does not affect happiness. This challenges assumptions that having more money than others will lead to more happiness.

💡Research Studies

The video references multiple research studies to support its claims about money and happiness. These studies, including one involving students at the University of Cambridge and another involving 625 UK citizens, provide empirical evidence that spending money in ways that fit with a person's personality increases happiness, while simply having more money or spending indiscriminately does not.

Highlights

Explores the relationship between money and happiness, focusing on whether money can buy happiness.

The speaker shares personal childhood stories to illustrate how money sometimes buys happiness, but not always.

Research shows that above a household income of around $75,000 per year, more money does not significantly increase happiness.

The speaker emphasizes that it's not how much money you have, but how you spend it that impacts happiness.

People tend to be happier when they spend money on others rather than themselves, and on experiences rather than material goods.

Happiness from spending varies based on individual preferences and personalities, challenging the idea that one-size-fits-all.

The concept of 'psychological fit' suggests that people are happier when their spending aligns with their personality and preferences.

The speaker's research tested the hypothesis that extroverts and introverts experience different levels of happiness based on their spending choices.

Introverts who received bar vouchers reported decreased happiness, while extroverts showed increased happiness, demonstrating the importance of matching spending with personality.

A study with 625 UK citizens showed that the better the fit between personality and spending habits, the higher the participants’ life satisfaction.

Neither income nor total spending was directly related to happiness; instead, it's about spending in ways that align with personal preferences.

The speaker provides practical advice: take time to understand your personality and motivations to optimize how you spend money.

A website, 'Discover My Profile,' offers personality tests to help individuals understand their preferences and maximize happiness from spending.

Money alone won't buy happiness, but spending money in line with your personal needs and motivations can increase your happiness.

The speaker concludes that managing money to fulfill psychological needs, rather than just accumulating wealth, is key to improving happiness.

Transcripts

so today I want to talk about two of the

arguably most important currencies in

our lives money and happiness and the

question that I want to focus on more

specifically is whether we can use one

of them to get more of the other so can

money buy

happiness okay so let's start by looking

at me at the age of three you can see

I've barely changed at all since now my

Grandma had brought me this beautiful

garden gome and I loved it so much that

I just wouldn't stop hugging it even

though you probably agree that it's not

exactly the greatest talking

material so in this case the money my

Grandma had invested really did buy the

happiness it was expected to buy that

day I was pretty much the happiest

person in

life now before we draw any overly

Hasting conclusions from this story

let's look at me again this time on

Christmas Eve at the age of

seven so my parents had scraped together

all their savings to buy me this badass

bike here and they had been excited for

weeks to give it to me now as you can

probably tell from the somewhat fake and

forced smile on my face it didn't quite

turn out the way they had expected it

was basically a Christmas tragedy and

that involved a lot of crying on my end

and a lot of General unhappiness on

Christmas Eve now why because what I had

asked my parents for was not a badass

bike but actually this really really

girly Bobby Caravan

here now imagine how disappointed I was

and when I found out that not only had I

not got the Barbie Caravan but my

younger sister had actually got it

instead

yes um and you can probably tell that I

still haven't fully recovered from that

childhood trauma it'll probably take

years so in this case unlike in the

previous Story the money my parents had

invested clearly failed to buy the

happiness they had hoped

for now what can we learn from these two

stories well first of all I was a pretty

weird kid um but obviously I wouldn't

have been Ed myself so badly here if

there wasn't to be a great educational

lesson to be learned from this because

what these two stories actually show is

that the answer to the question of

whether or not money can buy happiness

isn't really obvious and isn't really

straightforward so the only conclusion

we can really draw so far is that it

depends now if you're like me you're

probably not very satisfied with that

conclusion at the very least it would be

good to know what it depends on and this

is exactly what I want to talk about

today so want to discuss both ways in

which money can and ways in which money

cannot buy you greater happiness so when

I'm done talking I really want you to

have a better idea of how you can make

your money work for you work for your

happiness rather than having it the

other way

around okay so let's start by looking at

ways in which money cannot buy happiness

so what you see here is the annual

household income in the US on the

horizontal axis increasing from left to

right and you get the percentage of

people experiencing positive effect

which is basically a measure of

happiness on the horizontal axis so

let's look at what the relationship

between these two variables looks

like the first thing you see is that

people with very low income so people on

the left hand side they experience

substantially lower levels of positive

effort effect of happiness and that

makes sense because when you think about

it um having very little money available

simply makes many aspects of Life much

harder however what you also see is that

the curve flattens very quickly so above

a threshold of around

$75,000 um a year money doesn't really

do much for our happiness

anymore now you might be thinking well

this scale only goes up to

180,000 clearly millionaires with all

the money in the world and absolutely

nothing to worry about will be happier

right well it turns out that this is not

the case so even when you look at the

very end of the income scale money

doesn't seem to affect happiness anymore

so this tells a very clear story right

and that is that money in and by itself

doesn't really do anything for happiness

now don't despair um because there's

more to the

story because what researchers have

suggested recently is that money can

indeed buy happiness if we're spending

it right so the question is not how much

money we have or how much money we make

but what we do with the money that's

available to us so what this research

shows for example is that people are

happier if they spend money on others

rather than themselves or if they spend

money on experiences rather than

material goods and this is great because

those are two very simple but very

powerful ways in which you can actually

make your money work for you and your

happiness however this research is based

on an assumption and that for me as a

personality psychologist who basically

studies um how people differ from one

another seems a bit overly simplistic

and that's the assumption that what

makes you happy makes me happy so the

idea that the same types of spending

increase happiness for everybody I'm

just going to show you an example of why

I think this is is a bit too

simplistic so let's take this young lady

here and assume that she has a choice to

either spend her money on going to a

rock concert on buying this fancy new

handbag

here now if you think back previous

research would suggest that people are

generally happier if they spend money on

experiences rather than material Goods

but I'm pretty sure that most of you

here would agree with me that in her

case it's fairly questionable whether

she would enjoy going to the Rock

concert more than buying herself the new

handbag now if we take a different

person this can actually shift

immediately so again I'm sure that you

would probably all agree that in her

case going to the Rock concert is

probably a better idea in terms of

increasing her um happiness than buying

the

handbag so once you assume that people

have their unique interests and

preferences the question that we need to

answer shifts from what is the right

type of spending to what is the right

type of spending for this particular

individual and luckily and there's a

wellestablished theory in Psychology

that actually helps us to answer that

question and that's the theory of

psychological

fit now what this Theory suggests is

that people who experience fit in the

lives are

happier for example um there's research

showing that people are happier if they

have Partners who are similar to them

psychologically if they work in an

environment that reflects their

psychological needs or even if they just

live in a residential um area that is in

line with their psychological

motivations now what I have suggested um

in collaboration with my coauthors Joe

Gladstone and David Stillwell is that we

can take the concept of psychological

fed and apply it to the context of

consumption so the hypothesis that we're

putting forward is really that money can

indeed buy happiness if we spend it in

line with our personality so if we spend

it in a way that money matches our most

fundamental needs and

preferences okay so because we obviously

had to test this hypothesis what we did

is we conducted a study with students at

the University of

Cambridge and what we did is we gave

students a personality questionnaire and

we invited the students who scored among

the top 30% and those who scored among

the bottom 30 present of extroversion to

come to us in the to the lab and before

so basically the extroverted group with

was was a group of students like highly

sociable highly outgoing when the

introverted group was kind of made up of

rather reserved um in quiet

students before we told them anything

about the study we actually gave them a

happiness questionnaire to measure their

Baseline happiness so just how happy

were students in general without

participating in our study at all

we then randomly assign students in both

groups to receive either a 7 pound

voucher for the student bar which in our

case was a proxy for an extroverted

product or a 7 pound voucher for a

bookstore as a proxy for an introverted

product we then told students well go

about your lives and spend a voucher

within the next two days and then please

stay in the bar or read the book for at

least 30

minutes and the on this consumption

experience we measured students

happiness at three time points first

once they had received the voucher

second when they cashed a voucher and

third right after they had um consumed

the product for 30 minutes so they had

stayed in the bar for 30 minutes or they

had read the book for 30 minutes and

just to make to simplify the analysis we

took these three measures and we

calculated an overall measure of

consumption happiness that we could then

compare back to students Baseline level

happiness okay so now let's look at what

we found so what you can see here um is

student is the change in happiness in

comparison to students Baseline so how

did the consumption experience affect

students happiness in comparison to how

happy they were before everything that's

above the line means they got happier

everything below the line means they got

less happy so if we start with book

condition we have inters blue extra

wordss in green and the little puzzle

icon just marks the matching condition

so in the case of the book voucher the

matching condition H was the group of

introverted students and the first thing

you can see is they're basically getting

the the book voucher increased happiness

in both groups so Cambridge students

generally seem to appreciate getting a

free book what you also see is as

expected like the level of Happiness

increased more strongly in the matching

conditions so the blue bar is higher

than the green bar now when we look at

the bar condition again here we have

extroverts in green that's the matching

condition and what we see here is a

somewhat more Divergent pattern because

while happiness increased for

extroverted students it decreased for

introverted students which means that

sending those poor introverts to the bar

to have fun with their friends um not

only failed to increase their happiness

but it actually made them miserable

so next time you think about dragging

your inverted friend to the bar well

think twice you might traumatize them

for life just like my parents did with a

Barbie

Caravan okay so but this was generally

good news so these results seem to

support our general idea that spending

money in a way that matches your

personality can actually increase

happiness and no studies perfect and

there were three limitations um to our

little experiment here first one is we

only looked at one personality train so

we only looked at extra version second

one is that we only studied two products

so we only looked at the bar voucher and

the book voucher and the third one is

that it's Highly Questionable whether

Cambridge students are actually

representative of the general population

now having spent three and a half years

there and looking at myself today I have

to say I highly highly

doubted so what we did is we followed up

with a second study in which we

collaborated with an International Bank

and together with the bank we recruited

625 UK citizens to take part in a survey

that measured their life satisfaction

and it also measured their personality

on five distinct personality traits now

at the end of the survey we asked

participants whether they would be

willing to share with us their Bank

transaction data for the six months

preceding the survey so we could look at

participants spending in 59 categories

to get an idea of what they and how they

spent their money on as they went about

their everyday lives so we knew for

example how much money they had spent on

music uh how often they had gone to the

pub or whether or not they were paying

off a mortgage at that

time now what did we

find so again the hypothesis was that

the better to fit between a person's

personality and their overall spending

so they're spending across these 59

categ

would increase life satisfaction and

happiness and this is exactly what we

found so better the better the fit the

higher the self-reported life

satisfaction of participants after these

six months and what's interesting and

also in line with what I discussed

earlier is that neither income nor the

total amount that participants had spent

over these six months actually was

related to life satisfaction so it

really doesn't matter how much money you

have or how much money you spend what

matters is that you spend the money

that's available to you in the right way

now you might be thinking well how can I

use these insights to really maximize

the happiness that I gain from my own

consumption experience and the way that

I see there's basically two things you

have to do the first one is well not to

lay down a die as this image here might

suggest but actually to know yourself so

just take a few minutes sit down and

think about what really motivates and

drives you so do you like to be

constantly surrounded by other people or

would you rather spend most of the time

by yourself or do you like to go out and

explore or would you rather go back to

the same place again and

again and if you want to do that in a

slightly more systematic way um and

learn about your personality the way

that psychologists think about it we

have developed a website that's called

discover my profile where you can take

free psychological tests personality

tests and then get immediate feedback on

your responses so check it out if you

want why is this step important it's

important because the more you know

about yourself the better you understand

yourself the easier it it'll be for you

to then identify the types of spending

that are in line or that speak to these

motivations in the Second Step so once

you have a clear idea of your personal

needs and preferences this will be

pretty easy and youon don't find it too

difficult to really find suitable ways

of spending your

money okay so the the message that I

want you to take away from this talk is

really that it doesn't depend it doesn't

matter how much money you have it

doesn't matter how much money you spend

what really matters is is that you spend

what you have available in the right way

so money alone won't buy you happiness

but if you manage to spend it in a way

that really speaks to for your needs and

fulfills your motivations then there's a

pretty good chance that your money will

actually help you to buy happiness thank

[Applause]

you