Behavioral Money Deep Dive: You Can Buy Happiness

You Can Buy Happiness (If You’re Doing It Right)

Introduction

“Money doesn’t make you happy.”
A saying we all know — but is it actually true? Money can contribute to happiness – just not always in the way we expect. Once basic needs are met, it’s no longer the absolute amount we earn that determines our wellbeing, but how we spend that money.

Imagine Anna and Sara.

Anna buys the newest iPhone 17 with her bonus. She feels incredibly happy with her phone and proudly shows it to everyone. But soon she gets used to it, and the phone becomes part of her daily routine.

Sara uses the same amount for a weekend getaway with her family. Months later, she still looks back fondly on the shared moments.

This example shows that some purchases can generate recurring happiness or beautiful memories, while others stop adding value to your happiness after a while — and sometimes even raise your expectations (your “standard”) permanently.

Why is that? And how can we better direct our spending toward lasting satisfaction and wellbeing?

In this article, we explore the key mechanisms from scientific research: experiences versus material goods, buying time, prosocial spending, variety against habituation, and identity-based consumption.
We also connect these insights to the earlier themes from this series: loss aversion (article1), mental accounting (article 2), planners versus doers (article 3), and stress & identity (article 4).

Does Money Make You Happy?

The Power of Experiences

Research consistently shows that experiences yield more happiness than possessions.
Where a new coat or phone quickly becomes “normal,” experiences remain vividly present in our memory. Moreover, we often share experiences with others, which strengthens our social relationships — and social connectedness is one of the strongest predictors of wellbeing.

Memories stay alive: we can relive a vacation or concert again and again.
Less comparison: possessions invite comparison (“who has the biggest car?”), while experiences are less measurable and more personal.
Connection: shared experiences forge bonds that last longer than ownership. In our friend group, we regularly share old photos from moments we experienced together.

📄 Studies:

Nicolao, Irwin & Goodman (2009) showed that experiences generate more happiness than material purchases — provided the experience was positive.
Stenlund et al. (2024) confirmed that even everyday spending on experiences and education contributes above average to positive emotions.

Link with Previous Weeks

Loss Aversion (Week 1): many people hesitate to “lose” money on experiences because possessions remain tangible while experiences are “gone” afterward. Yet research shows that precisely those “fleeting” experiences yield more lasting happiness.

Mental Accounting (Week 2): we often reserve separate mental budgets for possessions (“investment”) versus experiences (“luxury”). But it’s more rational to place experiences in the “investment in happiness” category.

Buying Time

Why Time Is More Valuable Than Things

In a world where time pressure is one of the biggest stress factors, buying time turns out to be one of the most effective ways to increase wellbeing.
By outsourcing household tasks or shortening commuting time, we gain space for the things that truly matter: rest, relationships, personal growth.

This is something we ourselves still need to learn. Rationally, we know that working one day less could give us more peace at this stage of life, but we don’t dare take that step because it would mean reaching our long-term goals later — or might negatively affect our careers.

How do you look at this yourself? Let us know in the comments.

📄 Studies:

Whillans et al. (2017) showed that people who spend money on time-saving services are happier than those who buy material goods.
In a longitudinal study, Whillans, Macchia & Dunn (2019) found that graduates who valued time over money were significantly happier one year later.

Link with Previous Weeks

Planners vs. Doers (Week 3): planners often invest in the future (e.g., saving), but sometimes forget time in the present. Buying time is a way to balance the planner and the doer.

Stress & Identity (Week 4): time pressure undermines our sense of control and identity. Using money to reclaim time is therefore not only practical but also psychologically restorative.

Prosocial Spending

The Power of Giving

One of the most consistent findings in psychology: giving makes you happy.
The effect is often stronger and more lasting than spending money on ourselves.
The Netherlands is one of the most generous countries — about three-quarters of people donate to charity.

Why does this work?

Social connectedness: giving creates gratitude and strengthens relationships.
Meaning: prosocial behavior aligns with our values and sense of purpose.
Positive emotions: the joy of others is contagious.
Identity and self-worth: by giving or donating, you enhance your self-esteem.

For readers familiar with Dave Ramsey: giving is a major part of his method. He literally believes (his method is based on Christian principles) that giving is a key element of your own success. Like many believers, he claims to donate 10% of his income to his church.

We ourselves are not that generous yet. Of course, we help family members where we can and regularly donate to charities, like many Dutch people. However, it’s not yet a fixed part of our (financial) life. Perhaps it’s time to free up money or time to add more value to our community. (Something to think about.)

📄 Studies:

Aknin, Dunn & Norton (2020) confirmed that prosocial spending systematically leads to greater happiness.
Mogilner & Norton (2016) showed that the social dimension (giving together or seeing the effect) is crucial.

Link with Previous Weeks

Mental Accounting (Week 2): by creating a separate “giving budget,” we prevent prosocial behavior from disappearing under pressure.

Variety Against Habituation

The Problem of Habituation

Imagine buying a beautiful new car.
In the first few weeks, you enjoy the smell of the leather, the powerful engine, and the compliments from friends. But after a few months, the car just feels like… your car. The shine has worn off.

Psychologists call this hedonic adaptation: the tendency of people to get used to new circumstances, whether positive or negative.

The term goes back to the classic observation that people often return to a “baseline level of happiness,” even after major events. A big purchase or promotion can bring temporary euphoria, but over time it becomes the new normal. As economist Richard Easterlin once said:
“More money does not necessarily mean more happiness—because expectations and comparisons keep rising.”

Strategy: Variety

How do you break that pattern? The answer: variety.

When we repeatedly buy or experience the same things, the effect quickly diminishes. A weekly dinner at exactly the same restaurant can become routine, while trying new cuisines or surprising dishes keeps the experience fresh. Variety restores the “novelty” that stimulates our brains and prevents happiness from fading.

Practical examples:

Instead of going to the same vacation spot every year, alternate between a city trip, a nature holiday, or a cultural experience.
Switch up your daily coffee-to-go: sometimes with a friend, sometimes at a new café, sometimes with a fancy pastry.
Plan small surprises for yourself or your family: an unfamiliar hiking route, a spontaneous movie night, or cooking a new dish.

It’s not about spending more, but about spending differently. Variety can even be cheaper, because it’s about change, not price.

📄 Studies:

Gladstone et al. (2024) developed the so-called Hedonic Adaptation Prevention Model. Their research shows that people who introduce variety into their pleasure spending experience more lasting positive emotions.
Not the amount spent, but the degree of variation determines how strong and how long happiness lasts.

Their conclusion aligns with what many people intuitively know: even small variations – a different route to work, a new book genre, a spontaneous social activity – bring fresh energy and increase the chance of lasting happiness.

Link with Previous Weeks

Planners vs. Doers (Week 3): planners tend to save and deny themselves, while doers often fall into repetition by spending in the same ways. Variety offers a middle ground: planners can make smaller, varied purchases without guilt, while doers maximize happiness through more diversity.

Loss Aversion (Week 1): by embracing variety, it becomes easier to see money not as a loss but as an investment in new experiences.

Mental Accounting (Week 2): variety can be encouraged by creating a “fun fund” in your mental bookkeeping — a budget dedicated to new activities.

“Happiness is not about doing more of the same, but about doing the same things differently.”

Identity-Based Consumption

Self-Expression Through Consumption

According to self-congruity theory (Sirgy, 1982), people seek purchases that match their actual or ideal self-image. Consumption is therefore not only functional but also symbolic.

Positive Effects

Authenticity: purchases that align with intrinsic values enhance wellbeing.
Meaning: they contribute to a sense of purpose.
Social connectedness: shared identity (e.g., sustainable living, sports clubs) strengthens community.

Imagine you and a group of friends decide to run a marathon and, in preparation, you buy new running shoes. Those shoes will undoubtedly contribute to your happiness — especially compared to the pizza you order on a Saturday night after deciding not to train because it was raining.

📄 Studies

Sprott, Czellar & Spangenberg (2009) showed that brands congruent with one’s identity lead to greater satisfaction.

Negative Effects

Materialism: when consumption revolves around status or image, wellbeing decreases. Kasser & Ryan (1996) found that materialistic values correlate with lower life satisfaction.
Mismatch & regret: aspirational purchases that don’t truly fit your identity cause dissonance.
Adaptation: even identity-related purchases lose their glow if they aren’t continuously integrated into your daily life.

This also explains why many people don’t experience lasting happiness from buying an expensive car. Much consumption is not linked to passion, meaning, or identity. Part of the purchase is motivated by status or image — which is why lasting happiness is often absent.

Link with Previous Weeks

Stress & Identity (Week 4): spending that aligns with your identity reduces stress; status-driven spending increases stress and pressure.
Loss Aversion (Week 1): status goods are vulnerable to comparison and feelings of loss (“I’m falling behind”), leading to dissatisfaction rather than happiness.

Practical Lessons

Do a spending audit: which purchases really contribute to your happiness, and which don’t?
Invest in experiences: redirect more of your budget toward activities and education.
Buy back time: spend money to gain time for things that enhance your identity and wellbeing.
Give consciously: make prosocial spending a habit – big or small. Help others.
Check identity: ask yourself, “Am I buying this out of authenticity or to impress others?”

Sources (with DOIs)

Nicolao, L., Irwin, J. R., & Goodman, J. K. (2009). Journal of Consumer Research. DOI: 10.1086/597049
Stenlund, S., et al. (2024). Communications Psychology. DOI: 10.1038/s44271-024-00166-6
Whillans, A. V., et al. (2017). PNAS. DOI: 10.1073/pnas.1706541114
Whillans, A. V., Macchia, L., & Dunn, E. W. (2019). Science Advances. DOI: 10.1126/sciadv.aax2615
Aknin, L. B., Dunn, E. W., & Norton, M. I. (2020). Journal of Personality and Social Psychology. DOI: 10.1037/pspa0000191
Mogilner, C., & Norton, M. I. (2016). Current Opinion in Psychology. DOI: 10.1016/j.copsyc.2015.10.018
Gladstone, J. J., et al. (2024). BMC Psychology. DOI: 10.1186/s40359-024-01599-8
Sprott, D. E., Czellar, S., & Spangenberg, E. R. (2009). Journal of Marketing Research. DOI: 10.1509/jmkr.46.4.552
Kasser, T., & Ryan, R. M. (1996). Journal of Personality and Social Psychology. DOI: 10.1037/0022-3514.79.5.878