Your happiness may be tied to how you spend money: or vice versa


What type of money spender are you?

Happiness is probably one of the most important aspects of brain health. I am not talking about rolling on the floor laughing happiness but real everyday happiness. If you don’t believe me just ask somebody who is sad or depressed.

In the current depressing economic downturn many are taking a fresh look at their spending habits in an attempt to reduce spending (though I would argue maybe everyone should have been doing this before this crisis).

New research by Dr. Tatzel (presented at the 116th Annual Convention of the American Psychological Association as reported by sciencedaily) broke spending habits into 4 categories:

Big spenders: these people would be considered materialistic and not frugal. These are the ones that have high credit card debt (over half of current Americans?) and use all or most of their money to buy things (and obviously even borrow money to spend to buy things – SUVs, off road 4 wheel ATVs, ski boats, snowboards, electronic gadgets, etc).

Value seekers: actively search and look for sales on high price items, so they are frugal in this sense but are also materialistic in that they want these consumer driven objects.

Non-spenders: These people are not driven by materialism and are the classic frugal type and watch every penny.

Experiencers: They are not frugal and don’t really pay attention to price, but are also not materialistic.

Of these 4 times of spenders who do you think according to the study is the happiest and who are the least happy?

The least happy, as most of you might have guessed, are the Big Spenders. The happiest turn out to be the Experiencers.

With a large percentage of Americans falling into the big spender category, as defined by the percentage of citizens with high debt (see my previous pieces here and here), it might be a time for change.

Then the big question is can you change?

Now of course your happiness is not determined by how you spend necessarily because we do not know which way the causal chain is occurring (potentially bidirectional) in this relationship between spending habits and happiness. And more than likely it is your general thinking/mind-set that are producing both your degree of happiness and spending habits. But still if one works on changing one of these variables maybe the results will be seen in the other. If you were happier in general with your life maybe it would change your spending habits, or if you changed your spending habits it might alter your happiness levels.

There are polymorphism of a number of genes which affect how much an individual discounts the future, and hence likely to play a role in spending/saving habits. Next week I will cover some of these potential genes which could be influencing our spending habits and happiness.

But for today you might just want to ponder what type of spender you are – and if need be how you might change your spending habits – even if it is only a bit.

3 comments for “Your happiness may be tied to how you spend money: or vice versa

  1. CC
    October 21, 2008 at 8:55 pm

    I don’t usually spend much on unnecessary/luxury items. However, when I feel bad, like bad day at work, I feel the urge to hit the mall and spend. Perhaps it gives me back ‘a sense of control’, which I lost at the workplace?
    I wonder why spending money is such a common way people use to gain happiness…well I guess it’s better than hitting someone, letting your anger out on family/friends…hm…
    Maybe we DO need more shopping malls…

  2. October 23, 2008 at 6:48 am


    The point about “Experiencers” is in some ways counter-intuitive. You would think that people that spent money on tabgible things would derive more long-term pleasure from them than on a transient experience.

    In fact the opposite is true since the pleasure in owning a thing quickly fades (as it become worn out or out of fashion or just taken for granted). In contrast the enrichment of experiences lives on in your mind for as long as you.


  3. Ward
    October 23, 2008 at 8:17 am

    so you go shopping to take out your anger :)


    you make a good point regarding the results of the ‘Experiencers’ are the happiest at first feel counter intuitive. No long term tangible (ownership) things – but as you pointed out long term those experiences seem to be the most valuable for our happiness.
    thanks for your thoughts.