A national study links leisure spending to a sense of well-being.
How much cash do you need to be content? The answer may not be based on how you count it, but rather on how you spend it.
Thomas DeLeire, an associate professor of public affairs and population health sciences, decided to sidestep the somewhat abstract controversy over how much income it takes to be happy. “We wanted to drill down a bit and learn what people do with their money that leads to greater happiness,” he says.
His opportunity came with the release of the latest Health and Retirement Study by the National Institute on Aging, which paints a portrait of the United States’s population over fifty. Recently, the study added questions about psychological well-being, making it the first national survey to track data on both happiness and consumption.
The study breaks household budgets into nine categories, including vehicles, housing, personal care, and durable goods, but the only category that bumped up happiness was leisure spending — for example, on vacations, entertainment, or sports. Digging deeper, DeLeire and Ariel Kalil ’91 of the University of Chicago determined that leisure spending heightens happiness by fostering social connections.
To get a sense of how big a lift leisure spending offers, they compared it to another well-documented mood booster — marital bliss. DeLeire found that $20,000 of annual leisure spending generated very similar reports of happiness to being married.
His analysis, published earlier this year in the International Review of Economics, is based on people whose average age is sixty-six. The Consumer Expenditure Survey of the Bureau of Labor Statistics is the only other large data set in the country — and it doesn’t collect information on happiness.
“Different kinds of spending could bring happiness at different stages of life,” DeLeire concedes. “A thirty-year-old may not be able to look at this study and say, ‘More vacation spending could make me happier.’ ” Nonetheless, he feels the retirement study is a good place to start researching the connection between happiness and consumption, because people a little past retirement age are in an excellent position to take a long view of their lives and assess how things have turned out.