January 2007

“I’ve been rich, and I’ve been super-rich,” says a well-to-do gentleman in a Bob Mankoff cartoon published in The New Yorker. “Super-rich is better.”

With all due respect to Mankoff’s wealthy character, super-rich isn’t that much better, according to a new body of research about happiness.

Americans who earn $50,000 a year, for instance, are much happier than those who earn $10,000, according to Stumbling on Happiness, Harvard psychology professor Daniel Gilbert’s new book. But Americans who earn $5 million a year are not much happier than those who earn $100,000.

Forbes 100 wealthiest Americans are only slightly happier than average, according to a survey by University of Illinois psychologist Ed Diener. And Americans today are twice as rich as we were in 1957, but a little less happy, according to the National Opinion Research Center (NORC)’s General Social Survey.

“Money can buy a warm house, a car that runs, food and the basic necessities of life,” says Preston C. Came, CFP, a wealth strategist for Northern Trust. “But after that, we’re all dealing with the same issues—getting stuck in traffic, taking care of the kids, handling irritations at work—no matter how wealthy we are.”

So how can you use your money to buy happiness? Follow these approaches:

Invest in relationships
People with five or more close friends, not including family members, are 50 percent more likely to describe themselves as “very happy” than respondents with fewer, according to NORC’s 2004 General Social Survey.

So invest your time and money in nurturing your friendships, and you’ll be happier.

You might, for example, take a couple of dozen of your favorite friends to Alinea, Chicago’s celebrated contemporary American restaurant, for chef Grant Achatz’s legendary 24-course, five-hour extravaganza. You’ll have plenty of time between the truffle-juice ravioli with melted leeks and the bison with Iranian pistachios to catch up with each other.

Celebrating an important birthday or business success? Fly the gang to Tokyo for a dinner of hand-fed Kobe beef at Aragawa, the most expensive restaurant in the world. The meat literally melts in your mouth — and you and your pals will be melting with pleasure.

More important, don’t get so wound up in work, philanthropic endeavors and other must-do’s that you don’t have time to entertain often. Moments spent socializing are among the happiest of the day, according to a study by Nobel Prize-winning Princeton psychologist Daniel Kahneman.

Choose experiences over things
Acquiring life experiences will make you happier than pursuing material possessions, according to a study by Leaf Van Boven, a University of Colorado psychologist. Materialism, on the other hand, makes people less happy and satisfied.

That doesn’t mean that, say, the Annaliesse, a $103 million, 280-foot yacht, couldn’t make you happier. Use it to take the family island hopping in Greece, and it could make you—not to mention your significant other and the kids—quite blissful. But keep it buffed and polished and shiny at the yacht club, and it probably won’t do much to lift your mood.

“Spend the summer in Venice, and the family will have the pleasure of planning for the vacation, enjoying the trip and remembering it after you return,” Came says. “Buy a car that parks itself, and the shine wears off pretty fast.”

Buy a house closer to work
Get out of the car: Moments spent commuting are among the worst of the day, according to Kahneman’s study.

No wonder! What with rush hour, road rage and rubberneckers, it’s enough to make anyone dream of chauffeurs or home offices. “Driving in traffic is a different kind of hell every day,” he writes.

So why not move out of the suburbs and buy a home closer to the office?

In New York, $32 million and change will get you a 15-room apartment that takes up the entire 79th floor of The Time Warner Center, the most expensive condominium in the United States. It has eight bathrooms, wall-to-wall windows, 12-foot ceilings and 360-degree views of the city—not to mention turn-down service, a spa and a glass-enclosed pool. And, if you happen to work at Time Warner, you can take the elevator to the office.

Don’t like the idea of condo living? You can move into a landmark mansion in Chicago’s exclusive Gold Coast for $15 million or so. Not only will you reduce your commute to work, but you’ll be able to get to your favorite shopping meccas, such as Prada and Barney’s, without ever getting behind the wheel.

Spend money to save time
People tend to be happier when they have more time to sleep, meditate, exercise and have more fun. They tend to be less happy when handling irritating chores or running endless errands.

But as people’s incomes rise, they tend to spend more time working, commuting and maintaining their homes and less time on leisure activities, according to Kahneman’s research.

So why are you addressing your own invitations and taking the Shih Tzu to the doggy spa?

Hire a personal assistant, and delegate those onerous chores. You’ll free up your time for more pleasurable pursuits.

“The only thing you can’t buy is time,” Came says. “But you can save time for more enjoyable experiences.”

Get off the treadmil
The wealthier you are, it seems, the wealthier you want to be.

“Once we’ve eaten our fill of pancakes, more pancakes are not rewarding, hence we stop trying to procure and consume them,” Gilbert writes. “But people in wealthy countries generally work long and hard to earn more money than they can ever derive pleasure from.”

Instead, invest your time in things that will bring you joy. “Invest in your family, in time together and in the character and education of the next generation,” Came advises.

That will make you far happier than another sailboat ever could.

Stop thinking about the Joneses
Turns out wealth and happiness are relative.

Being the richest guy on the block will make you happier, according to research by Erzo F. P. Luttmer, a Harvard University economist. Being the poorest guy on the block will make you more miserable.

One problem with being wealthy is that it causes you to compare yourself to other wealthy people. Unless you’re Bill Gates, you’ll never win.

Thinking of moving on up to an even more exclusive neighborhood? It probably won’t make you more happy (unless you’re the new “Bill Gates” on the block)—and it might well make you less so.

Just do it
What have you been waiting to do?

Build a park in your neighborhood? Fund a children’s wing at the cancer institute? Set up a scholarship program at your alma mater?

Do it now.

“People of every age and in every walk of life seem to regret not having done things much more than they regret things they did,” Stumbling on Happiness’s Gilbert writes.

So what are you waiting for?

“Give to the hospice or church or university now, so you can see the results of your philanthropy during your lifetime,” Came suggests. “You’ll derive great joy from that.”

And that, after all, is what it means to live richly.