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L7, Money, consumption and happiness

Q: What are 2 measures of subjective well-being?

1 emotional well-being : emotional quality of everyday experience. 2 life evaluation : thoughts about one’s life (satisfaction or Cantril ladder: worst vs best possible life ranking on ladder).

Q: What are 5 reasons experiential consumption makes one happier than materialist consumption?

Experiences are more: 1 self-defining and connected to self: choose what fits you best 2 unique : no experience is the same 3 harder to compare to foregone alternatives: in material consumption it is clear what your alternatives were 4 resilient to hedonic adaptation : resilient to happiness wearing off, since memories always produce happiness (new iPhone becomes 'normal' over time (materialistic purchase)) 5 interpersonally connecting : experiences provide opportunity to connect with other people

Q: What are 2 types of subjective well-being? Explain.

1 hedonic well-being : pleasure and happiness is the result of hedonic moments 2 eudaemonic well-being : well-being that results from living well or doing what is right, what is intrinsically worthwhile

Q: What are 3 moderators that influence (the effects) of pro- social spending?

1 connection between giver and receiver : the stronger the tie, the stronger the relation between spending and happiness. Face-to-face also has a stronger relation with spending than anonymous. 2 giver knows about specific impact : if there is a specific impact and the giver knows they are happier spending, in stead of a more global cause. 3 feedback loop : prosocial spending reinforces prosocial spending in the future

39 important questions on L7, Money, consumption and happiness

What are 2 measures of subjective well-being?

1 emotional well-being: emotional quality of everyday experience.

2 life evaluation: thoughts about one’s life (satisfaction or Cantril ladder: worst vs best possible life ranking on ladder).

How does defining happiness differ at population and individual level?

Population level is less strong relations. At individual level, earning a particular income may define happiness in a country depending on what you can spend and how you live your life there.

What is the relation between income and well-being & life evaluation?

As income increases:
- Overall life evaluation stays increasing
- Emotional well-being will not increase infinitely, it will satiate at some income

Why is materialism negative for subjective well-being? And why would one still continue?

It 1 raises (more) negative feelings (money over relations for example),
2 lowers life satisfaction.

People still pursue it since they have other goals that are more important, social pressure, need of status, want short-term satisfaction

What are 5 reasons experiential consumption makes one happier than materialist consumption?

Experiences are more:
1 self-defining and connected to self: choose what fits you best

2 unique: no experience is the same

3 harder to compare to foregone alternatives: in material consumption it is clear what your alternatives were

4 resilient to hedonic adaptation: resilient to happiness wearing off, since memories always produce happiness (new iPhone becomes 'normal' over time (materialistic purchase))

5 interpersonally connecting: experiences provide opportunity to connect with other people

What is materialism and why is it pursued?

Materialism is a way of life characterized by the pursuit of wealth and possessions. It argues possession signal success, possessions used to communicate, valued over relationships.

What is pro-environmental behaviour?

It is considered a form of pro-social behaviour. It is behaviour for the benefit of society at large.

What are 2 types of subjective well-being? Explain.

1 hedonic well-being: pleasure and happiness is the result of hedonic moments

2 eudaemonic well-being: well-being that results from living well or doing what is right, what is intrinsically worthwhile

What are 3 moderators that influence (the effects) of pro- social spending?

1 connection between giver and receiver: the stronger the tie, the stronger the relation between spending and happiness. Face-to-face also has a stronger relation with spending than anonymous.

2 giver knows about specific impact: if there is a specific impact and the giver knows they are happier spending, in stead of a more global cause.

3 feedback loop: prosocial spending reinforces prosocial spending in the future

Why can actions still lead to eudaemonic well-being even if this happiness does not come for pleasurable moments?

Even though some actions might not give pleasure/hedonic feelings, it might give you an increase in well-being because you find these actions important. Self-signalling of doing what is right increases self-worth, because you belief you are a good person and moral.

What are 4 requirements for something to be related to eudaemonic well-being?

1 intrinsically and autonomously motivated to do so
2 deliberately choose for a sustainable lifestyle
3 evaluated as the right thing by the individual
4 socially dependent but not the result of social pressure.

What are 2 exceptions when individuals behave irrationally? And what is this irrationality called by modern economists?

1 information is too costly

2 information is not generally available

= bounded rationality for modern economists

Easterlin: What is described with the Easterlin paradox?

Although higher income leads to higher happiness across individuals and countries at a point in time, happiness does not trend upwards as income continues to grow over time.

What is one limitation of this model, using the homo-economicus as starting point?

It assumes that the agent is fully informed and is free to make choices that will make them happy. It is possible to make choices that bring no positive consequences, due to bias or other goals.

What could overall life satisfaction depend on?

How good one feels about own life, how one compares own success in life with societal standards, how one compares with experiences of family

How do standards relate to conditions/circumstances?

If conditions are favourable, standards will rise. If conditions deteriorate, standards will gradually decrease. This means that happiness is a state of mind that is not sensitive to actual conditions of life, because someone could be subjectively happy in objectively bad circumstances.

Veenhoven: according to Veenhoven how could happiness be defined?

The degree to which an individual judges the overall quality of his life favorably // life satisfaction.

It is a relative and subjective feeling about one’s condition of life.

How could satisfaction with life be further categorized into 4 main domains?

1 pleasure: passing enjoyments of life

2 domains satisfaction: satisfaction on large subjects, like job or marriage

3 peak experience: the combination of passing enjoyment and overall appraisal of life. A moment of bliss that is intense and creates short-term happiness.

4 life satisfaction:

Maslow: What is the difference between needs and wants?

Needs have a normative dimension related to human functioning. Needs also have a social dimension and change due to people’s interaction within society and culture (Hamilton).

Wants are a matter of personal taste without any moral dimension.

What does the “relative theory of happiness” describe?

It holds that happiness stems from subjective comparison, rather than objective good, and that the standards of comparison are arbitrary and adjusting under changing circumstances.

Veenhoven: What are 4 qualities of life that are important for individual happiness according to Veenhoven?

1 Livability: expresses whether and how good living conditions provide access to goods and services.

2 Life-ability: how much an individual is capable of dealing with the problems of life.

3 utility of life: subjective appreciation of life associated with value.

4 inner appreciation: subjective well-being or the inner outcome of life.

What 2 types of qualities does income have and how do these relate to SWB?

Income can be functional and symbolic.

Functional: income can be used as a resource; buffer or basic needs
Symbolic: income may depict once’s status in society positively or through comparison processes negatively because a gap between actual and aspired income

Functional: income may enhance SWB as a means to obtain goods and services that need fulfilling

What are 2 ways that additional income is spent in an not so ideal way?

1 people spend the vast majority of their income on material goods for themselves

2 money spent on stuff for oneself typically fails to pay off in happiness.

What are 2 ways additional income could be spent that increases happiness?

1 prosocial spending
2 buying experiences

Dunn and Weidman: How could the value of consumption be classified in 3 stages?

1 value linked with the perceptions of consumers about the future use of the product

2 momentary value that is experienced while consuming a product

3 afterglow value that is related to the memories of past experience with the product

What could be 2 different motivations for consumption?

Intrinsic or extrinsic motivation. Intrinsic is focused on meeting non-material goals, while extrinsic motivations follows from a global desire like being rich. Extrinsic consumption does not increase happiness whereas intrinsic motivation (consumption) does positively associate with happiness.

How could the concept of prosocial spending be described? In relation to happiness?

Prosocial spending is the spending on others. The more people give, the happier they are.
The giving-happiness relationship appears to be universal. Feeling happy from giving is not merely driven by social norms.

What are 3 overall commonly accepted meanings of happiness?

1 feelings of joy and pleasure,
2 overall contentment with life,
3 quality of life achieved by fulfilling one’s potential (eudaimonia)

What are 3 critical moderators of the link between generosity and happiness?

1. emotional ties and anonymity; stronger emotional ties between giver and receiver or spending face-to-face enhance happiness from prosocial spending.
(rather than weak or anonymous)

2. knowing specific impact; when the giver is aware of the specific impact they have by giving this enhances well-being (specific charity rather than large charity with many functions)\

3. earlier spendings; if they were happier after giving at time 1, they will more likely give at time 2 “positive feedback loop”

How could the concept of buying experiences be described? In relation to happiness?

From buying stuff to buying experiences. Experiential purchases induce greater happiness than material purchases. Waiting for experiences also feels like excitement, where waiting for stuff is felt as impatient.

What are factors of experiential consumption that are responsible for the happiness of these purchases?

1 self-defining
2 experiences are unique
3 they are harder to compare against forgone alternatives, material purchases could be easily compared to all other options that were possible
4 less prone to hedonic adaptation (= happiness wearing off)
5 interpersonally connecting, cultivate social connection

How are time and happiness associated?

Focusing on the broad notion of time increases happiness.

Thinking about time in a particular way (expansive or limited) can influence how much happiness people experience AND how they experience happiness (e.g. excitement for young or calm for older).

Extraordinary vs mundane experiences, from the article of Mogilner and Norton (2016).

Also documenting the potential happiness from ordinary experiences, Zhang, Kim, Brooks, Gino, and Norton [47•] asked people to create ‘time capsules’ of either mundane or out-of-the-ordinary daily events. When participants viewed their time capsules months later, those who rediscovered ordinary experiences were happier than those who rediscovered extraordinary experiences; people were more likely to have forgotten their mundane experiences, thus feeling greater joy from the chance to remember.

''Too great an obsession with extrinsic goals leads to materialism, which is negatively associated with happiness.'' - what is materialism and why is it negatively associated with happiness?

In a nutshell, materialism is a belief that money can buy happiness so it puts money and possession of goods at centre stage. Materialists lack close and committed relationships due to their life priorities. One of the findings from happiness research shows that materialism also has a negative impact on the strong positive social relations that are key to a happy life (Ahuvia, 2015). Materialists spend more on purchasing goods than investing in social relations. They are quite motivated to increase their income.

What was the definition of happiness given during the lecture?

Overall happiness is the degree to which an individual judges the overall quality of his/her own life-as-a-whole favorably.

What can you tell about the income-happiness relation, on national level and individual level?

At population level:
- not much evidence for a strong relation

countries with a low GDP, high on happiness
wealthier countries, happiness rather stable

At individual level:
- earning a particular income (75.000$), higher does not directly mean happiness anymore.

What did Kahneman and Deaton 2010) find about income and well being?

More money does not necessarily mean more happiness, but less money is associated with emotional pain.
Poverty increases the impact of life conditions on emotional wellbeing

Why is hyperbolic discounting one of the reasons why people still purse money despite the limited effects to be expected from increasing income on happiness?

The most important consequence of hyperbolic discounting is that it creates temporary preferences for small rewards that occur sooner over larger, later ones. Individuals using hyperbolic discounting reveal a strong tendency to make choices that are inconsistent over time – they make choices today that their future self would prefer not to have made, despite knowing the same information. This dynamic inconsistency happens because hyperbolas distort the relative value of options with a fixed difference in delays in proportion to how far the choice-maker is from those options.

What is the difference between eudaimonic and hedonic well being?

Hedonic well-being:
● maximizing pleasure and absence of suffering
● happiness is totality of hedonic moments

Eudaimonic well-being:
● living well or pursuing the right ends (focus on what
is intrinsically worthwhile)
● Having a purpose in life
● Realizing valued human potential

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Lifestyle and consumption

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