Michael Norton is an associate professor of marketing at Harvard Business School. He is co-author of the new book, Happy Money: The Science of Smarter Spending, which explains how the latest social science research can help you spend your money in ways that improve your happiness. (More on the book here.)
Mike and I spoke about how time affects happiness, why money is so motivating and how Netflix might just be making us less happy.
My conversation with Mike was over an hour long, so for brevity’s sake I’m only going to post edited highlights here.
If you want the extended interview I’ll be sending it out with my weekly newsletter on Sunday.
Why are we so obsessed with money?
It’s one of the most fascinating things that humans do: we can know something and yet it doesn’t influence our behavior at all. It’s amazing how good we are at that. I know I should exercise and I don’t. I know I should eat healthy and I don’t. I know I should spend time with my kids and I don’t. I know that, yes, money isn’t going to make me happy and I still keep trying to make money. It’s an amazing thing about humans that we have these mistakes that we make all the time and it’s not lack of information.
So, one of the things that we want to feel about ourselves is that we’re getting better over time. My life is getting better or I’m making progress or I’m growing or learning. It would stink if you felt every year was worse than the year before.
So money is a metric?
Yes. Exactly. We’re looking around for, “Am I better off than I was last year?” Some things are hard to measure. So, “Am I a better dad than I was last year?” Well, there’s no objective scale where I can look back and someone says, “Last year you were a 71 dad. This year, you’re a 74 dad.” Or spouse or whatever it might be, it’s very, very hard to know. The things that we can know are things we can count, and one thing that is really, really easy to count is money. So, if I want to know if I’m better off this year than last year, one of the first things I can do is say, “Do I have more money?” I think that alone makes it very, very motivating.
It works with things like the size of your TV, the square footage in your house, all of these things that we can . . . The number of cars you have. “Am I better than I was five years ago? Well, I have five cars. I had no cars. I guess I’m better.” We’re just unable to correct for it because the other things that are important are hard to count and counting is great. It feels like math and math feels like science and we feel like we’re better off because there’s a confidence that I’m doing better, and it also works better with other people: “Am I better off than you? I don’t know, but if I have a bigger house than you, I beat you.“
“Is life nasty, brutish and short?”
So, in a very Hobbesian turn, you did a study on “Is life nasty, brutish and short?” Can you talk about that?
We started with the Hobbesian “Is life nasty, brutish and short?” and we tested it in a very simple way, which is we just asked people two questions and you can answer them yourself. One is, “Is life short or long?” The second question is, “Is life easy or hard?” Of course Hobbes said life is “nasty, brutish and short.”
It turns out that a massive majority of people agree with him that life is short and hard, something usually 50, 60, 70% of people agree, life is short and hard. Only 5% think the opposite, long and easy. So, very, very few people, if we ask them, say, “Life is long and easy,” including people for whom life is long and easy.
If we ask, for example, MBAs, who are a group of people who have extraordinary life outcomes. In human history, very few classes of people in the world have better average outcomes than people getting their MBA, because they all end up doing something interesting and they have enough money and things like that. Even they say life is short and hard. So, it’s not about, really, your life experience. It’s about what you bring to the table, and people seem to mainly have this theory that life is going to be short and hard. What’s sad about it is that’s associated with being unhappy, with being not civically engaged, with not volunteering, that when you have this view of life as short and hard, you tend to sort of ogre down and be sad. And this little tiny group of people, the 5% to say “Life is long and easy,” are incredibly happy people, totally engaged, tons of friends. There are huge fascinating differences on the basis of whether you think life is short and hard or long and easy.
We talked earlier about the curse of counting things, which is fundamental, I think, to what we’re trying to say in the book, which is, “Knock it off. Knock off counting how much money you have and start thinking about what you’re doing with it. What you’re doing with your money and time is a lot more important than how much money and time you have,” and that has really changed my life.
“Knock it off, because it’s not good for your happiness and you’re probably focusing on the wrong dimensions for what will really make you happy.” It’s very hard to apply, but that’s something that I actually try to apply in my life, really, every day.
Which books do you recommend?
Dan Ariely’s Predictably Irrational
Danny Kahneman’s Thinking Fast and Slow
Adam Grant’s Give and Take
The books of Malcolm Gladwell
Don Campbell’s Unobtrusive Measures
Think about time
One of the chapters in Happy Money is all about buying time. So, everything you buy, think about how it’s going to affect your time. Not the product itself, but what you’re going to do with it later and that massively changes your decision-making. So, not to come back to TVs, but buying a TV, you think, “Oh. This is going to be great. I’m going to have friends over and we’re going to watch TV and the kids will be there. We’ll have family movie night.” It turns out, when you buy a TV, what you do is you watch it by yourself in a dark room. It’s not good for you. If you think about, “Wait. How am I actually going to use this TV? How will it actually change my time?” you might say, “Maybe I don’t want to get a TV.“
Those kinds of decisions, alone, are very important to think about, not your fantasy of what it’s going to do, but “How will this actually change the time I spend in the weeks going forward?” and a TV commits you to thousands of hours by yourself, and that is not good for our happiness. I use this in my own life.
Really think about everything you buy. If you want to buy a huge house, that’s great. If it’s adding a two-hour commute, that’s not great, and think about not just, “Oh. Commute’s fine. I can do a commute.“ Think about two hours every day for the rest of your life. Do you really want to add that to your time or do you want to stay in the house that you’re in? It’s really an important thing to think about.
“Make it a treat”
The idea is that the things that you really like a lot, stop. Stop it. So, if you love, every day, having the same coffee, don’t have it for a few days and, when you wait, and then you have it again, it’s going to be way more amazing than all of the ones that you would have had in the meantime.
The problem with that is, on any given day, it’s better to have a coffee than not, but if you wait three days and don’t have it, it’s going to be way better once you finally do. Interrupting our consumption is free. It actually saves you money and gets you more happiness out of the money spent. It’s like the best of all worlds, but we’re completely unable to do it, because we always want to watch the thing or eat the thing right now. It’s not “give it up forever.” It’s “give it up for short periods of time, and I promise you you’re going to love it even more when you come back to it.”
Dammit, Netflix, stop giving me the whole season in one drop. You’re reducing my happiness.
If you want the extended interview (where Mike discusses how to increase free time, as well as a simple trick that can boost the enjoyment you get from life’s little pleasures) I’ll be sending it out with my weekly newsletter on Sunday.
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