Lite of the mind (a light-hearted look at all things Chicago)
Economics of happiness
By Jake Grubman, ’11
With the economy in constant flux, we can all use some pointers on how to stretch good news as far as it will go. Christopher K. Hsee, the Theodore O. Yntema professor of behavioral science and marketing at Chicago Booth, shares his guidelines: "Hsee's Happiness Heuristics." Compiling research from psychologists and economists (including colleague Richard Thaler), Hsee provides tips on how to make the people around you—employees, significant others, friends, relatives—happy.
Separate gains. Combine losses.
It’s been a great day, and you’ve got two
pieces of good news for your spouse: you
got a promotion, and you won a free trip
to Hawaii. Tell your spouse the two pieces
of news on separate days, so that one
great day turns into two. If the news is
bad, however—you’ve crashed your car
and lost money in the stock market—tell
your spouse both downers at the same
time. Hsee’s caveat is that the bad news
can only be so bad: “Everybody has a
breaking point.”
Announce good news early. Announce bad news late.
You have an important client, and, knowing
she loves eating out, you invite her
to dinner at the fanciest restaurant in
Chicago. Do it months in advance, Hsee
says. “A lot of happiness comes not just
from the thing or the contact per se, but
from anticipation.” An early invite prolongs
the client’s happiness. If the news is
bad, don’t allow much time to dwell on
it. Nobody enjoys a trip to the dentist, so
don’t tell your child about his visit weeks
in advance. Just put him in the car, and the drilling is done before he knows it.
Unpredictable gains are better than stable gains. Stable losses are better than unpredictable losses.
You give an employee either a raise
or a bonus. Practicality says a raise is
better, but a bonus actually makes the
employee happier. The logic behind this
principle is adaptation, Hsee explains.
When you get a raise, “you feel happy,
but after a while you get used to it.” An
employee doesn’t adapt to a bonus—it’s unexpected and more exciting.
Conversely, make losses stable. Let’s say
you have a big apartment just blocks
from work, but the bad economy forces
you to relocate to a place that’s either
smaller or farther away. Sacrificing size
is better, Hsee says, because it’s easier to
adjust to a smaller living space than the
“painful” daily commute.
Choice is bad for good options, good for bad options.
Choice may seem like a perk, but if the
options are all positive, having to make
a decision may decrease happiness. If
you’re treating your parents to a trip
and you know they would enjoy the
beaches of Hawaii, then buy the tickets;
giving them a choice of vacation
spots could lead to second-guessing
and stress. If both options are negative,
though, choice helps: “Even if you can’t
give them a real choice, you can give
them an illusion of choice,” says Hsee.
At his hypothetical business school,
students might not be excited about a
mandatory business-ethics course, but
he has devised a new strategy: divide
the course into two sections and give
them two different names, like Business
Ethics and Corporate Morality. The syllabus
remains the same, but the students
are happier because they have a say in
the process.
Wanted is better than needed. Memorable is better than usable.
Cash may be the most economically
practical gift, but it doesn’t create the
most happiness. People are happiest
with something they want but have no
justification to buy. If a friend loves old
vinyl records but would never purchase
expensive ones for himself, then give him
a classic Hendrix album instead of cash.
A good gift, Hsee says, is one that the
recipient can’t eat up, use up, give away,
or throw away, at least for a while. Best
to give a personalized, lasting gift.