General, Personal Finance 

Climbing The Hedonic Treadmill

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I mentioned yesterday that Yahoo! Finance added eight new columnists and one of them was Laura Rowley, author of Money & Happiness: A Guide to Living the Good Life. I finally got around to reading her column, titled “Money and Happiness” because that’s what we’re all after, just not in that order (many would prefer to be poor and happy than rich and miserable). In her column, she talks about the concept of The Hedonic Treadmill – the idea that we adapt to the improvements in our lives and demand more. In addition, when we don’t realize those demands, we become unhappy. She goes on to explain that happiness increases quickly until we reach the point where our basic needs are satisfied, then the increase in happiness isn’t proportional to the increase in wealth. Overcoming this hedonic treadmill is one of the keys to happiness. So how do you fight against the treadmill?

Laura goes on to explain that the reason the increase in happiness isn’t proportional to the increase in wealth is that our happiness is derived from our memory of happy events, not the actual experience of them. Since the amount of time in the day is limited and it’s generally understood that people who make more work more, the higher earners have less time to enjoy the spoils of their efforts. The result is fewer happy memories.

The solution, which she doesn’t explicitly state, is that the concept of work-life balance is paramount. You work so you can live; you don’t live so you can work. The folks who are happy find that they live this belief because they make it a point to take time out for the “little things” or the “important things” in life.

Therefore, the next time you look over the fence and see the bigger house or the flashier car, remember that your happiness isn’t in what you have but how you enjoy them. I would bet nine out of ten people would prefer a happy quaint little home filled with family than a great big ornate mansion devoid of people. Life isn’t about chancing the almighty dollar – it’s about enjoying the dollars you already have.

{ 7 comments, please add your thoughts now! }

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7 Responses to “Climbing The Hedonic Treadmill”

  1. Sean says:

    I completely agree, up to a point. If you’re going into debt to maintain even a minimal lifestyle (as I did when I was a poor college student), it’s definitely not any fun. It was tough being happy when I cringed at each additional student loan. In that case, money was a requirement for (my) happiness. However, I don’t think I got too much happier when my income increased. I just found new things to be unhappy about, like, “Oh, great, I’m only putting 30% of our income towards retirement. Now I’ll have to wait until I’m 55 to retire.”

    I guess that last sentence suggests a way to be happy: be satisfied with how things are in your life right here, right now.

  2. John says:

    “I would bet nine out of ten people would prefer a happy quaint little home filled with family than a great big ornate mansion devoid of people.”

    Unfortunately, a person’s family is usually the source of unhappiness and most likely the source to kill you or you killing them. Reality check.

  3. jim says:

    John, you must be a blast at parties. 🙂

  4. John says:

    Statistics show that most people are killed by someone they know. Many times it’s a family member. Americans don’t seem to acknowledged that we’re one of the most violent countries in the world. We have so many people in jails. We have so many mental people walking the our streets. An estimate 1/3 of all people in the USA have mental problems. Probably giving the rest of us mental problems. And none of this has to do with money. Americans are in the wealthest 99% of the world. Money has very little to do with happiness.

  5. Matt (different one) says:

    The truth is, the only reason I want a house at all is to host holiday gatherings for the family. The downside is that doing so means it’ll have to be a pretty BIG house. But the upside is that, as long as my aunt is in sufficiently good health to continue hosting them at her house, there’s no urgency about me getting one.

    Ultimately it all comes down to prioritizing. The smart folks work and save and conserve in order to spend on the things that produce the best returns of happiness for them, and ignore the temptations to waste money onthings that won’t make them as happy.

  6. Dale says:

    One simple way to increase happiness is to earn a living doing something your enjoy. Of course, I mean that it is simple to say it. Put it into practice is a bit more difficult. It involves being proud of what you do, deriving enough of a challenge from it, working for and with people you respect and like, and many other things.

    In many ways, a happy relationship between an employer and employee is similar to a happy marriage. If you, as an employee, enter into it seeking only money or the next rung up on the career ladder, you may fail to notice other qualities that you might want. Conversely, employers can cultivate loyalty and employee satisfaction in lots of ways in addition to paying well. I would never suggest that my employer should underpay me, but there are lots of things that make my work-life happier that don’t cost much.

  7. Michael says:

    Good post, Jim.

    I’ve seen several studies on this: After a certain income is earned, and a moderate standard of living reached, then “more money” rarely ever equals “more happiness.” At this point, there’s a plateau effect. Money can keep growing, but happiness levels off.

    Anyone who’s interested in this topic might wish to pick up Jean Chatzky’s 2003 book, YOU DON’T HAVE TO BE RICH. Not the greatest read in the world, but she and some data-mining company did the surveys and documented the findings.

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