Spending on clothing is linked to more happiness among males (less happiness among females); spending less on alcohol is linked to less happiness; less luxury has only a limited relationship with happiness

Happiness and Consumption: A Research Synthesis Using an Online Finding Archive. Ruut Veenhoven et al. SAGE Open, March 19, 2021. https://doi.org/10.1177/2158244020986239

Abstract: There is a considerable amount of research on the effect of income on happiness, but only a limited number of studies have considered how the spending of income works out on one’s happiness. In this article, we take stock of the scattered findings on the relation between consumption and happiness. We cover 379 research findings observed in 99 empirical studies. We use a new method of research synthesis, in which research findings are first described in a comparable format and then entered in an online “findings archive” (World Database of Happiness). This technique allows a condensed presentation of the many research findings, while providing readers access to the full results through hyperlinks from the text. Our systematic review reveals some unexpected findings, but does not provide a conclusive answer to the question of what patterns of consumption provide the most happiness for what type of people. Suggestions for further research are provided.

Keywords: life satisfaction, consumption, informed choice, research synthesis, findings archive

Discussion

In this article, we explored a new strand of consumer research, using a novel presentation method of “link-facilitated research synthesis.” The aim was to see what patterns of consumption produce the most happiness for what kind of people. What have we learned?

What We Know Now

Consumption is related to happiness, at least some kinds of consumption are. Although most of the correlations are small and insignificant, we did see several substantive links. When interpreted as denoting a causal effect, some findings suggest that a “Calvinist” or conservative consumption style tends to foster happiness. This appears in the findings on spending on durables and education. The observed correlation between house ownership and happiness can also be seen as a fruit of solid spending. Yet, we also found links between experience consumption and happiness.

Contrary to claims by critics of consumerism, we did not find much evidence of consumption reducing happiness. Owning a car does not seem to lower happiness. Some counter-intuitive findings reported in section “Daily Expenses and Happiness” are (a) spending on clothing is associated with greater happiness among males, but with less happiness among females; (b) high expenditure on communication is associated with less happiness; (c) the expected negative correlation between health expenditure and happiness persists when self-rated health is controlled; (d) spending less on alcohol is associated with lower happiness levels; (e) less luxury has only a limited relationship with happiness. An unexpected finding reported is section “House Ownership and Happiness” was that home ownership is most related to happiness among people with poor mental health. A suggestive finding reported in section “Car ownership and happiness” was that driving an expensive car does not go with greater happiness. All this requires further research.

What We Do Not Know Yet

The available studies on consumption and happiness do not show to what extent the correlations between consumption and happiness stem from a causal effect of consumption on happiness; only in the case of house ownership, there is some causal evidence.

We are still largely in the dark about the relationship between happiness and the use of goods and services purchased, such as in the above-mentioned case of car ownership and happiness. This aspect of consumption is intertwined with wider lifestyle and time-use issues. We can learn more about consumption’s effects on happiness using the methods of multiple moment assessments, such as the experience sampling method (ESM) or day reconstruction method (DRM; see, for example, Burger et al., 2020 on the relationship between lottery play and happiness for a study that uses multiple moment assessment).

This review focuses on what the relationship between consumption and happiness is, which is what consumers need to know to make informed decisions. This information will be more convincing if they also understand why particular kinds of consumption add or detract from happiness. Such effects are likely to differ across products, people, and situations; some will involve different psychological processes, such as need gratification, social comparison, as well as identification. For that purpose, we need studies that focus on particular products and particular consumers, as is common practice in marketing research.

Why So Many Blank Spaces?

The number of research findings on consumption and happiness is small, in particular when compared with the large body of research literature on consumer satisfaction with products and services. Another striking observation is that the few available studies are not very sophisticated: Most of the findings are cross-sectional, the columns for longitudinal and experimental studies in the tables are largely empty and the tables with specifications also show many blank spaces. Why is this the case?

We follow Stanca and Veenhoven (2015) who note that one of the reasons seems to be theoretical short-sightedness. Many mainstream economists still equate consumption with happiness in general and consumer satisfaction in particular. These economists are unaware of the above noted difference between expected and experienced utility and do not see the difference between needs and wants, nor do they know that happiness depends more on meeting the former than the latter. (Veenhoven, 2009)

Another reason is in commercial self-interest. Producers are interested in selling their products in the first place. They spend a lot of money on marketing research to get a better picture of what consumers expect will make them happy and on advertisements to influence these expectations and link to their products. Whether these products actually add to a consumer’s happiness is not the producer’s prime concern. Although there is a considerable body of research on consumer’s experienced satisfaction with products and services, there is little research on the effect of using products on satisfaction with life, not even in sectors where wider life satisfaction is evidently at stake, such as in the case of life insurances or residential care. This lack of research is part of a wider market failure. As there is limited dependable information on the long-term consequences of big consumer purchases on happiness, this could explain why there is no market competition on happiness effects and hence no product development in this direction.

The market is unlikely to solve this problem; governments and consumer unions are in a better position to press for more research on the effects of consumption on happiness. Scientists can also make a difference by informing the public about what kinds of consumption are conducive to happiness.

Lines for Further Research

How can we further expand our current body of knowledge? We have learned that more cross-sectional studies will not provide much more information. Thus, the focus should be on longitudinal studies that allow a view on changes in happiness following changes in consumption. One way to obtain follow-up data is to insert questions on consumer choice in ongoing large-scale longitudinal studies in which happiness is measured, such as the Australian HILDA, the British “Understanding Society Survey” and the German Socio-Economic Panel (GSOEP).¹⁴ Another option is to add questions on happiness to ongoing follow-up studies on consumption. One can think here of longitudinal studies on broad consumer behavior or particular kinds of consumption, such as the U.S. National Consumer Panel¹⁵ or the Quebec Longitudinal Study on Nutrition and Aging.¹⁶

The most informative research will be experimental studies, in which consumption change is induced externally and subsequent effects on inner happiness are traced, such as in the above-mentioned examples of subsidized house ownership (Rohe & Stegman, 1994) and the natural experiment with compulsory health insurance (Keng & Wu, 2014).

Next to such descriptive studies on what effects consumption exerts on happiness; we need more research on how consumption affects happiness; in other words, we need to understand the causal mechanisms involved.