Does Spending Money Make Us More Happy?

The Myth of More discussed in "Why Work Isn't Working Anymore," is alive and well. Unfortunately, those who contine to chase the monetary version of the electric rabbit are doomed to chasing for the rest of their lives and the inability to make more become enough is responsible for much of the unhappiness an dissatisfaction most feel in their lives.

Not surprisingly then an interesting study finds that as a general rule spending money does not make us more happy, but for one circumstance.

"We examine the association between various components of consumption expenditure and happiness in the Health and Retirement Study (HRS), a nationally representative sample of older Americans. We find that only one component of consumption is positively related to happiness—leisure consumption. In contrast, consumption of durables, charity, personal care, food, health care, vehicles, and housing are not significantly associated with happiness. Second, we find that leisure consumption is associated with higher levels of happiness partially through its effect on social connectedness, as indexed by measures of loneliness and embeddedness in social networks. On one hand, these results counter the conventional wisdom that “material goods can’t buy happiness.” One the other hand, they underscore the importance of social goods and social connectedness in the production of happiness."

Source: "Does consumption buy happiness? Evidence from the United States" from International Review of Economics, Volume 57, Number 2, 163-176

From: Barking Up The Wrong Tree, http://www.bakadesuyo.com/does-spending-money-increase-happiness