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Climbing The Hedonic Treadmill

Posted By Jim On 09/27/2005 @ 1:50 pm In General,Personal Finance | 7 Comments

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 [3]. 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 [4], 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.


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[3] Money & Happiness: A Guide to Living the Good Life: http://www.amazon.com/exec/obidos/ASIN/0471714046/ref=nosim/easeoftravel-20

[4] her column: http://finance.yahoo.com/columnist/article/moneyhappy/979

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