How Money Can Buy Happiness

WASHINGTON (Reuters) - Federal Reserve Chairman Ben Bernanke has added his name to the long list of people who believe we should measure prosperity in terms of happiness and life satisfaction, instead of just dollars and data.

In a recent speech before a group of international researchers, Bernanke talked about the difference between happiness -- a subjective and transitory feeling -- and well-being, which is a longer-term measure. He said that keys to finding long-term life satisfaction include "a strong sense of support from belonging to a family or core group and a broader community, a sense of control over one's life, a feeling of confidence or optimism about the future, and an ability to adapt to changing circumstances."

This is a subject of some long-standing interest to the Fed chief. In 2010 he delivered a memorable commencement address titled "The economics of happiness" (available here, http://www.federalreserve.gov/newsevents/speech/bernanke20100508a.htm ). In both speeches, he conceded that while money may not buy all happiness, it helps.

People in societies that are sufficiently well-off to provide an education, decent healthcare and a clean, safe place to live are happier than those who are so impoverished that they have to struggle for all of those things. Having a lottery-winner's bank account does not guarantee more happiness, but having enough money to buy yourself the occasional treat or luxury helps.

The good news, for folks who agree with the Fed chairman, is that there are well-documented ways to get a bigger (happier) bang for your buck, on a very personal level.

Here's how to deploy your resources to maximize your enjoyment of life. Hint: It's not about the car.

1. Fund a group activity. The factor most highly correlated to life satisfaction is having family, friends and community connections. Maybe that means joining a church, or being in a band or a book club, or hosting regular potluck dinners with neighbors.

2. Go on vacation. There is a lot of research behind the idea that experiences are worth more, in terms of happiness, than things. That is because time improves experiences in memory while it tends to desensitize us to things. So if you get a hot tub or a new TV or car, and you use them day after day, you start getting used to them and perhaps stop appreciating them. But if you take a special trip, you will stop being bothered by the flat tire or lost luggage and instead remember fondly -- if somewhat fuzzily -- how much fun you had while you were traveling.

3. Get tools and supplies for a hobby. Becoming so engrossed in an activity that you lose track of time is called a state of "flow" and it is associated with a higher level of life satisfaction. For some people, that might mean buying power tools and puttering in a woodshop; someone else might get there by learning to use design software, canning jam or playing piano.

4. Buy a treadmill, or a jump rope, or just some sneakers. It doesn't have to be a super-expensive P90X workout plan, but anything that gets you moving stimulates those endorphins that elevate your mood. That's science!

5. Buy a scrapbook or journal. "Savoring" a good experience by writing about it, thinking about it, or even posting your pictures on Facebook actually increases your enjoyment. Or as Bernanke has said, "happiness can be promoted by fighting the natural human tendency to become entirely adapted to your circumstances." If you eat fresh tomatoes three times a day for the entire month of August, you might stop thinking about how delicious they are. At the end of the day, you can take a few minutes to write in your gratitude journal about how truly fresh and sweet those heirlooms were, and that will cause you to enjoy them even more. (But it will probably make you less happy if you go back and read that journal entry next December, when you are eating cardboardy out-of-season tomatoes.)

6. Spend money on systems. Having control over your life provides a huge happiness boost. Sometimes you get to have control over big issues, like taking a stand with your boss or your kid (assuming they are not the same person.) Sometimes, it's just having the right calendar, contact manager and computer backup system.

7. Donate to a small and/or local charity. There is a lot of academic research backing up the hypothesis that money spent on others delivers more good feelings than money spent on yourself. But new research from Lara Beth Aknin at the University of British Columbia in Vancouver takes that further: "The emotional benefits of giving appear to be greatest when the giver feels a social connection with the recipient and also feels that their gift has made a meaningful impact." Hence the little local gift -- it enables you to see the impact your donation has.

8. Buy time. Ben Bernanke did not say this, but if you are working 60 hours a week and arguing with your spouse about who vacuums the living room, you can probably make yourself happy by hiring someone to clean your house. The same principle applies for lawn mowing and the occasional convenience food dinner. Especially if you use the extra time to do one of the other things on this list, and not playing solitaire on your iPhone.