Happy Money
As someone who has dedicated most of his professional life to open source software, it may seem strange that I think about money a lot. With respect to the company, the decisions I make not only impact myself but all of our employees, and personally money provides a certain amount of comfort and security.
Awhile back I was reading on Dan Ariely’s blog about a new book called Happy Money. I bought it on impulse (which I found ironic) but it took me a little while to get around to reading it.
It’s my kind of non-fiction book, meaning that about a quarter of it is references for the copious footnotes. If you are planning to change my mind about something, it helps to be able to back it up. I am still blasted for my review on Amazon about Life, Inc. which made sweeping and sometimes nonsensical generalizations and the author just expected us to take his word for it (or more likely, he just wanted to make a buck by telling people what they wanted to hear).
The authors of Happy Money, Elizabeth Dunn and Michael Norton, start off with the premise that there are a lot of books out there that tell you how to make money, but few that tell you how to become happier with the money you have. Their book details numerous studies undertaken by them and others, and they found five main things one can do with money that can have a large impact on one’s happiness.
The first thing was to buy experiences versus things. The studies they cite show that people get a lot more happiness out of, say, a trip to an exotic locale than in buying something like a fancy car. While owners of expensive cars reports a higher level of happiness when thinking about the car itself, when thinking about the last trips they took most car owners report about the same level of happiness no matter what type of car was used. So if you are driving to the store in the rain behind a dump truck because you are out of milk, it doesn’t matter if you are in a BMW or a Kia.
One example given in this chapter are the Tough Mudder races. These events are hardcore obstacle courses designed by British special forces. People who complete the course report a very high level of personal satisfaction, and it is in part because these events require teamwork and thus the experience fosters a sense of connectedness with others. While buying a new TV is for the most part a solo experience, working with others to get over a 12 foot wall requires teamwork. There is a bond created among finishers that can’t be purchased.
I occasionally play the lottery. I never win, but I do it for the daydreams I can have while I wait to find out that I’ve lost (I file it under “entertainment”). My rule is that I can spend $1 for every $100 million in jackpot. My spouse and I have talked about what we’d do if we ever won big, and the recurring fantasy would be to move to someplace like Positano, Italy, for a year and immerse ourselves in the culture. Then we might move on to Germany, or Argentina or Japan. Our lottery fantasies rarely include a big purchase.
The second thing they talk about is making things treats. They credit the comedian Sarah Silverman for this wisdom. She loves “pot, porn and fart jokes”, but she insists that you have to make it a treat. To truly enjoy something it helps if it isn’t available all the time. To go back to the car analogy above, most car owners report the same level of happiness with their vehicles, but when asked about a time they drove their car just for the fun of driving it, those with more expensive vehicles reported a higher level of happiness even if it didn’t happen as often.
The book talks at length about this issue of how availability results in “diminishing returns”. One example is candy corn, which tends to be easily available only certain times of the year (the Internet makes year round acquisition of almost anything possible year round, but let’s discount that for now). Or, as I just saw on television, the McDonalds McRib sandwich, which comes and goes off the menu, is available again. There is even a McRib Locator website to help people find them.
One example that I experienced talks about how people are more likely to savor something if they learn it won’t last. I lived in Northern California from 1994 to 1995, and when we decided to move back to North Carolina we rushed to visit Monterey, Alcatraz, etc. even though we had months to do so before the moving deadline appeared. When access to something is presumed to be always available, people are less likely to use it.
The third tip presented is the idea of buying time. I never have enough time, but I’m also cheap and tend to do a lot of things myself. One thing we always did on Saturday morning was clean the house. A couple of years ago, when my bride’s career took off, I was talked into hiring a cleaning service that comes in every other week. While they don’t do the job as well as I would, they do give us back our Saturday mornings, and that time is worth much more than the money I spend on the service.
Studies have shown that wealthier people tend to feel like they have less free time. In my lottery fantasy, having lots of money would give me more free time, but this book points out that people, especially those in my position who bill out their time on a hourly basis, seem to have issues doing things that don’t directly result in revenue. Why take a walk along the lake if that time could be spent helping a client?
The solution suggested by the book is to find ways, such as volunteer work, in order to purposely give time away. Giving time away reduced the feelings that time not spent working is wasted time, and thus increases happiness.
Step number four is to “Pay Now, Consume Later”. In the US our culture is geared heavily toward “Get It Now, Pay Later” which both fosters consumption, such as a new TV, and adds a future burden of payment. Not only is the happiness created by the purchase fleeting, as covered earlier, the added onus of having to come up with money to pay for it later greatly decreases the pleasure obtained by getting the thing in the first place.
However, the anticipation of an event can increase its happiness. Prepaying for, say, a beach trip and then thinking about it as the date approaches provides more pleasure than the trip alone. The book refers to the example of a Virgin Galactic flight. A woman and her husband both dreamed of going into space but couldn’t afford it. Unfortunately, the husband died. His wife decided to use the insurance money to pay the US$250,000 for a seat on a Virgin Galactic flight.
While the time spent in space will be measured in minutes, she gets to experience a number of things before the trip that both increase the anticipation and add to her happiness. There are astronaut-only events, trips to view the test flights and the training for the trip itself.
In my own experience I can think of a number of things where the run up to the event was as fun as the event itself.
The final step was called “Invest in Others” that shows that people tend to get a lot of enjoyment out of spending money on others more than just on themselves (the most pleasure came from spending money on others while with them). They even discuss a study where pre-verbal children seemed happiest when giving things to others (have you ever visited a friend with a small child who insists on bringing you things like their toys?).
While the book gave me a lot to think about concerning my own life, I was happy to find that working with OpenNMS tends to hit on all five. Working with OpenNMS users has provided me with a number of amazing experiences around the world. Due to the fact that I’m almost always traveling, revisiting my favorite places is a treat, from macarons in Palo Alto to Schwarzer Hahn beer in Fulda. I do a crappy job of buying time, but as we grow as a company I’m trying to learn to delegate more. Just this morning we got a notification that the drink machine was low on Fresca, and Tina was there to take care of it instead of me. As for “pay now, consume later” I like to think that all the hard work we put into the company will pay off in the future, and it is exciting to see our product grow over time, and finally the whole basis of free software is the idea of sharing and helping others.
Happy Money is a short read if not an overly easy one, and if you find yourself focusing more on getting money than being happy, you should check it out.
