Oset Babur in Harvard Magazine:
Anyone who’s indulged in retail therapy can affirm that money can’t buy happiness—but according to new research from Harvard Business School, money can make people happier when they spend it to buy time. Assistant professor of business administration Ashley Whillans has found that, in developed countries, people across the socioeconomic spectrum who trade money for time—by choosing to live closer to work, or to hire a housecleaner, for example—are happier. “People have been trying to find ways to use their discretionary income to maximize their quality of life for a long time,” Whillans says, citing extensive research that confirms the positive emotional effects of taking vacations and going out to the movies. “We were really interested in seeing if buying ourselves out of negative experiences might be another pathway to happiness that had been relatively unexplored.”
According to the researchers, two key components of happiness make up people’s subjective sense of well-being: how they describe their life on the whole; and how satisfied they feel in the moment, which the researchers measured by checking in with participants on the day of a given experience. Feelings of “time stress”—more common among the wealthiest individuals—also affect happiness. Higher-earners feel that every hour of their time is more financially valuable, and when something is perceived as valuable (like water in a desert, Whillans says), it is also perceived as more scarce. That scarcity translates into time stress, which can easily contribute to unhappiness.