Spending to be happy: Consumerism after the pandemic
Posted on Monday September 13, 2021
Spending to be happy: Consumerism after the pandemic
Household spending has begun inching up again as the public health crisis wanes. Indeed, it looks like going out to restaurants is now as popular as backyard landscaping and household renovations. The rise in the Consumer Price Index speaks volumes about the enthusiasm for some return to normalcy, but not everyone is spending in the same way, especially since the pandemic. How about you? Does money make you happy? And how should it be used to achieve maximum satisfaction?
The link between money and happiness
Money is necessary to satisfy basic needs; and everyone agrees that a minimum amount is required to survive. At the same time, we’ve known for over 10 years now that the happiness we feel on a daily basis ceases to be proportional to annual income and starts to stagnate at around $75,000. In fact, a study conducted in 2010 the United States by Angus Deaton and Daniel Kahneman found that happiness levels increased until this magic figure was reached, though we wouldn’t be surprised if it the number was a little higher today!
The phenomenon is global. Researchers Esteban Ortiz-Ospina and Max Roser have compiled data from the World Happiness Report and several national statistics institutes. Their conclusion is indisputable: people in richer and healthier countries are more satisfied with life. This is true at the individual as well as the national level: the richer a country is, the happier it is, and the richer a person is, the happier they are compared to a poor person in the same country.
Léger, a survey firm with a strong presence across Canada, produces the Leger Happiness Index based on a list of 25 criteria for determining happiness. These include money, of course, but also love, work, health, self-fulfillment, altruism, freedom and environmental awareness. During the pandemic, many Canadians saved more than in previous years. Now in the midst of an economic recovery, how can we spend this money to foster happiness?
Spend better to be happier
Elizabeth Dunn and Michael Norton are the co-authors of Happy Money: The Science of Happier Spending. What do they teach us? To consider a new way of spending. According to them, we should focus on experiences rather than material goods. This advice was put to the test during the pandemic, a time when it was difficult to share experiences with loved ones or to travel. Another of their ideas is to buy time for yourself. For example, buying prepared meals allows for more quality time with family. And more quality time can lead to feelings of freedom, love and fulfillment, all of which contribute to happiness! Giving to help others is another great way to spend money to be happy. For example, you can give to an organization that works to preserve the environment and feel good about helping to improve the situation for future generations.
New consumer spending habits
Economists agree that the savings accumulated during the pandemic will help anchor the economic recovery. BMO has estimated the total amount squirrelled away at $150 billion, and RBC at $160 billion. But as psychologists remind us, not everyone is coming out of isolation at the same rate.
While 91% of Canadian consumers say the pandemic has changed their behaviour, 53% want to maintain their new habits. Canadian consumer researcher Myriam Ertz explains that it’s reasonable to expect that some behaviours will continue. The more a consumer is forced to engage in a behaviour over an extended period of time, the more they become convinced that it’s appropriate. Examples? Reducing vehicle usage and cooking more at home. This kind of change can also be a way to achieve fulfillment and create some happiness in difficult circumstances.
The Léger survey firm segmented consumers into six different profiles describing their behaviour in the economic recovery: euphoric, comfortable, apprehensive, steadfast, self-starter and shattered.
The euphoric represent just 9% of the Canadian population, but they’re the ones likely to be partying without respecting the public health measures we see on the news. Their goal is to live life to the fullest and make up for lost time. Freedom is essential to their happiness and here’s an opportunity to spend freely! They’ll be racking up experiences, which will certainly please Dr. Dunn! But they’re also likely to make some thoughtless spending choices they will later regret.
The comfortable, representing 21% of Canadians took the time to refocus during the pandemic,. It’s important for them to spend thoughtfully—by encouraging local businesses, for example—and to pursue new hobbies.
The self-starters optimized their spending during the crisis. Like 23% of Canadians, that didn’t stop them from supporting local industries and being environmentally conscious. They tested several recipes and honed their cooking skills during the months of lockdown. They’re willing to spend to lighten their mental load by buying themselves time. After putting all their energy into adapting to the crisis, they need a break.
The steadfast represent 13% of Canadians. During the pandemic, they didn’t really adopt any new consumer habits and they’re happy to pick up where they left off, with a little more face-to-face interaction.
The apprehensive account for 24% of Canadians and are still very afraid of virus transmission. They don't want to see their friends or even their family. Their health and the health of their loved ones is crucial to their happiness. Their savings will remain unspent for the time being.
Worried, depressed and tired, the shattered have been hit hard by the impact of the pandemic and are in no mood for frivolous spending. They need time to recover. For now, their health may be the main obstacle to their happiness.
And what about you? Did you rediscover some of your grandmother's old recipes during the pandemic? Are you looking forward to partying? Which happiness criteria does your daily spending help you achieve?