Money, Gadgets and Life

April 28, 2009 by  
Filed under Money and Behavior

gadgets_moneyOf the millions of blogs published each year, many of the most popular fall into one of two two categories:  technology (gadgets in particular) and money. The ironic parallelism to this phenomenon is that people like to spend a lot of their money on gadgets: cell phones, MP3 players, netbooks, and various other cool whiz bang stuff.

Do Gadgets Make us Happy?

Our appetite for gadgets seems insatiable. Too often we don’t let our lack of cash on hand get in the way of a full course meal at Best Buy or the Apple Store.

What happiness do we actually gain from all of this spending on gadgetry? Well, if you believe in hedonic adaptation, we gain nothing (except perhaps increased credit card balances.)

“Hedonic adaptation” is a concept that has been around the behavioral science community for a while. It recently came to my attention through the experiences of an early retiree. I found his commentary interesting so I decided to pursue it a little deeper.

The theory of hedonic adaptation is that humans can and will adapt to their life circumstances – good and bad – to the point that they will be equally happy in either. It’s sort of like a personal reversion to the mean. If you grade a B+ in happiness when things are good, you will eventually grade out to a B+ when things are bad.  If you want to read more about the science behind the theory, follow this link to the “Hedonic Adaptation” article by Frederick and Loewenstein.

Turning to gadgetry, have  you ever spent any time around the Amish? They are about as ungadgetated (my new word) as you can get. There is an Amish community near our vacation home in Kentucky. Those folks seem happy to me. Clearly they don’t spend any money on technology. So how can they be as happy as those of us who walk around with credit cards dedicated to the care and feeding of iPhones and iPods? Hedonic adaptation.

In 2005, MIT Technology Review published a fascinating article on technology and happiness. Summarizing some of the statistical data, the authors reported the following:

[If] you ask Americans how happy they are, you find that they are no happier than they were in 1946 (which is when formal surveys of happiness started). In fact, the percentage of people who say they’re very happy has fallen slightly since the early 1970s — even though the income of people born in 1940 has increased, on average, 116 percent over the course of their working lives.

The Japanese fared no better:

Between 1960 and the late 1980s, Japan’s economy was utterly transformed, as the nation went from a low-cost supplier of cheap manufactured goods to what is perhaps the worlds most technologically sophisticated society. Over that stretch, the country’s GDP quintupled. And yet by the late 1980s, the Japanese said they were no happier than they had been in 1960.

And how about those Amish who are completely technology deprived?

The Pennsylvania Amish, when asked how much they agree with the statement: You are satisfied with your life (using a scale of 1 to 10), turn out to be as happy as the members of the Forbes 400.

In a sense, this is another variation on the theme of “money doesn’t buy happiness.” Most people claim to believe this phrase when they say it or hear it. If so, why do we spend so much of our money on personal technology? It can’t be that it saves us time. If you believe that, watch all of the crackberry addicts on weekends or even on vacation. Personal technology can be a black hole which gobbles up time and money, all the while annoying people around you who are trying to enjoy life.

The Positive Side of Hedonic Adaptation

Granted there are contrarian views on whether all of us eventually adapt to our circumstances and revert to our normal happiness level. I’m not ready to throw away my all of my tech stuff but I like the theory. I hope it applies to those of us who have been financially affected by economic upheavals in 2008 and 2009. Maybe some of us will retire with a smaller retirement nest egg. But if we can adapt, maybe we won’t care.

Does anyone have any personal experience with testing this theory?

Photo credit:  SlipstreamJC

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8 Responses to “Money, Gadgets and Life”
  1. SJ says:

    I think I am addicted to the internet these days =)

  2. Rob Bennett says:

    We want out friends to like us. We want the sorts of people who we like to like us. If all of our friends one day woke up and said “cell phones are dumb,” we would all of a sudden lose interest in cell phones.

    Some technology is great. There’s no question about it. Some is a waste of time and money. I think we flatter ourselves to believe that we are sorting through it all and making conscious choices as to which gadgets fall into which category. We use shortcuts. We look to our friends for clues and hints and suggestions.

    Marketing of course plays on this. Marketing tries to tell us what our friends will think is cool without us having to check with our friends. The marketers have budgets big enough to be a lot more sophisticated on offense than we can hope to be on defense.


  3. Rick Beagle says:

    I will admit a deep and profound love for the whiz bang gadgets.

  4. kitty says:

    “I think I am addicted to the internet these days =)”
    Me too. I should be in bed sleeping, it’s almost midnight.

    Don’t care much about other gadgets though. I am a fairly late adapter of technology even thought I work in software R&D…

    Yes, humans adapt. It’s more difficult to adapt up than down but after a period of time we just get used to the new state.

  5. SJ says:

    A post in which we can all co-exist and be happy (or be sad at my patheticness grr)
    It’s past midnight here.

    I personally think adapting up is easier… Just worse for you, buying things prematurely that is. Have you seen this skit on … Conan? about this traveler who is pissed that the wifi in AIRPLANES (not airports…) is slow?

    On the bright side I’ve yet to buy any new pieces of tech, I get to “play” with them via research (new desktop and laptop!) along w/ raffles for mp3 players (2 ipods =) ).

    The most high-tech thing I’ve bought is probably my 3 level floor lamp. Switching over from material goods to digital items?

  6. CLB says:

    I think it goes back to a person’s nature. If you are never satisfied with what you have, getting more won’t help matters. On the other hand, if you’re happy with no gadgets, you won’t be any less happy with an ipod. The trick seems to be recognizing the fact that happiness isn’t purchased.

  7. TMN says:

    What nonsense. Of course happiness is purchased. If I enjoy music and I have nothing on which to play it, I can increase my happiness by buying a music playback device. If I enjoy books and have none, I can increase my happiness by buying some (either directly or indirectly by virtue of my taxes funding a library system).

    The critical point you’re ignoring about the Amish is that they’re a self selecting group. Their young adults are actively encouraged to go explore the rest of the world and see what they’re missing out on, and the ones who realize that they are more happy there than in a technology-free environment don’t return to it.

    I think a better conclusion might be that human beings are, on average, just about as good at maximizing their own happiness given limited means as they always have been. Those that find pleasure in expensive things will find a way to get them, and those that value freedom and leisure time over a high income will find a way to sustain themselves as well. It seems quite reasonable that this basic aspect of human nature would remain pretty stable from one decade to the next.

  8. kitty says:

    @TMN – it all depends on your definition of happiness. Yes, I enjoy opera, and it’s great that I can afford nice tickets to the Met. But on the other hand, if my dream is to sing opera, money will be of limited help. Money may be somewhat helpful in the presence of great talent – lessons, travel, no worry for making a living, but money cannot buy talent.

    Nor can money buy really important things – like love, children, health. Yes, if you are a rich man it may be easier for you to find a young pretty thing if that is what you want. With women it may be the opposite – men often feel threatened by more successful women. But in terms of really finding a soul mate or having a good marriage, money have limited usefulness – they reduce contention but may introduce other problems. Do rich really have a smaller divorce rate? Similarly with health: yes, money can help with finding a good doctor, but no money in the world will buy you good genes. Money can buy fertility treatments, but they wouldn’t guarantee someone a child.

    I do agree about your last paragraph though.

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