How Much Is Enough?

How to Increase Happiness Without Increasing Spending; Expert Reveals It’s Not About The Money – And It Never Was

Arun Abey believes the Beatles had it right.

“Money can’t buy you love, or happiness, but how we use it – and if we can learn to use it less – can pave the way for a happier life,” said Abey, author of How Much Is Enough? (www.howmuchisenough.net). “The secret is to figure out how to increase our happiness without increasing our spending. Too many times, people make happiness conditional based on their next big purchase. But this rarely produces lasting satisfaction.

A variety of research studies have found that happiness has more to do with having a plan for your income, than the level of that income, be it from a limited hourly wage or a six figure salary.

“In America, we are always being upsold,” Abey said. “We’re asked if we want fries with that, or if we want to super-size. From the happy meal to the luxury car, we are always being upsold by people interested in making money for themselves, with no interest in our happiness.

We need a strategy to fight back, to help us reframe decisions linked to our happiness. So what researchers from UCLA did was they asked people to choose between a luxury car with the basic features, or the same car with all the bells and whistles, for only 10 percent more cost. Most people, when they made the choice from the narrow perspective of simply comparing the two models, chose the upgrade. A separate group of people were then given the same choice, but these people were also told that buying the basic version was like getting almost the same car as the luxury version, but the difference in cost would be enough to pay for a couple of years worth of gas.  Simply framing the decision a bit more broadly caused most people to choose the basic car. Same choice, same demographic, but the emphasis was on spending less, not more.”

A lesson from this is that instead of measuring the cost of everything in terms of money, its more useful to think of what economists call the opportunity cost which measures cost in terms of the next best thing we have forgone. In this spirit, Abey described the concept of happiness opportunity cost, where the measurement is happiness forgone. Closely linked to that is the idea of happiness arbitrage, which refers to the potential to increase happiness without  spending more.

Abey conducted some research with AXA to show a simple way of getting people to apply this idea.

“We asked a focus group of people what they could do with $10 to $20 to make themselves happy,” he said. “Instead of trying to buy a small luxury item or trinket, they mostly responded that they’d use the money to have a cup of coffee with a friend. The focus was spending time with a friend, and not what they bought with the money. Again, they asked the group what would they do with $100, and most of them responded by saying they’d spend it on an evening out with friends. The centerpiece was the fellowship of their company, not the meal they bought or the show they’d see with them.”

“The most telling thing I encounter is a test I give people in my seminars,” he said. “Shortly after the last episode of wildfires in California, I began asking people what they would run back into their house to save if they could only get one thing before it went up in flames. Do you think they grabbed the $3,000 flat screen TV or the $1,000 leather jacket? No – most people respond by saying they’d rescue photos. Family photos tucked away in a $5 photo album possessed more value than any expensive material good in the house, and that illustration hits home with people more than anything”

“At the end of the day, we need to let the realization sink in that it is not only possible, but desirable, for us to work on increasing our happiness without necessarily increasing our spending. And by having in the back of your mind the things that make you most happy it makes it a lot easier to say no to people trying to upsell you.”

Published on behalf of Arun Abey
Arun Abey has had a diverse career as an academic, an entrepreneur and is now a top executive of one of the world’s largest firms.  He is involved in a number of philanthropic activities and is the author of various international best sellers. A noted strategic thinker and writer, he is Executive Chairman of IPAC and Head of Strategy for AXA in the Asia Pacific, a part of the global AXA group that manages over $1.5 trillion of clients’ money and is ranked as the 15th largest company in the world by Fortune Magazine.

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