It seems that money can buy happiness but only if you spend it in the right way. In their new book, Happy Money: The Science of Smarter Spending, Elizabeth Dunn and Michael Norton lay out the five principles for turning cash into pleasure:
- Buy experiences. Activities like concerts, days out and vacations are more satisfying than buying objects.
- Make it a luxury. Only have your favourite things occasionally, that way you will continue to enjoy them.
- Buy time. Extra time and the freedom to do what you want are more satisfying than money.
- Delay gratification. Having to wait will make you appreciate things more, so buy now and experience later.
- Treat others. Spending money on other people makes us happier than spending it on ourselves.
What’s this got to do with business? To pick one of the above – Make it a luxury – this can be used to shape behaviour by using the power of scarcity. People are programmed to want things more if there is limited availability (the power of ‘sales’); and if it’s memorable, which can of course be enhanced by having to wait (the power of anticipation)…
Book: Happy Money: The Science of Smarter Spending by Elizabeth Dunn and Michael Norton (Simon & Schuster, 2013)
Talk: Great presentation by Michael Norton: