Business, Economics and Jobs

The economics of happiness

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Has the down economy changed your spending habits? According to the Commerce Department, many Americans are starting to save more and spend less. The savings rate was at a high of six percent this May, and while that may not sound like a lot, in 2005, the rate was around zero percent.

Daniel Barbezat is an economics professor at Amherst College who is trying to raise awareness about how spending and saving affects our well-being. He teaches a class called "Consumption and the Pursuit of Happiness."

"The goal of the class is to have students realize that their own consumption is contextual," said Barbezat. "That what they consume and how they consume are very important to what kind of well-being they derive from that consumption."

Barbezat starts each class with a contemplative exercise. In one exercise, he asks students to close their eyes and picture themselves happy, and then picture themselves satisfied.

There is a difference between the two, says Barbezat. "My own sense is that happiness is a temporary thing, more localized, I'll say. And satisfaction seems a broader sort of contentment. But that's my own view. Each individual's framing of that -- those differences really make a large difference because all of the economics data is based on these kinds of survey questions. And so, the manner in which individuals interpret those questions is essential to understanding the outcomes of those studies."

In another exercise Barbezat asked students to imagine that they want to buy a smartphone. Some had to work to get the phone, while others are given the phone by their moms. After a month, Barbezat had the students reflect on which of the two appreciated the phone more. Overwhelmingly, the students said the person who worked to get the phone.

"This is interesting for two reasons. One, in economic models, work is seen as a negative: You work to get income to buy stuff that you want. So immediately, students say 'wait a second, work -- my input, what I've done -- actually has a positive outcome.  I feel good about my agency, I feel strong, independent.' So they begin to see 'work itself might have a benefit to me.'

"The second aspect is to realize that here are two people, both who want a smartphone, both who are using the smartphone, consuming the smartphone. But the context in which they consume it gives them a different sense of well-being.

"This exercise has them see that the nature of consumption is not a mechanical relationship to well-being. It's the framing. So it's not should you consume more, or should you consume less; it's about an awareness of how or what you're consuming."

While Barbezat's class is an economics course, he says utilizing a contemplative process to deal with what is usually a very analytical subject can be effective. "Students become very frustrated when they read very difficult, dense material that they don't see how it fits into the world. And to do that analytic work, and yet have them get glimmers of how 'wow, this actually impacts my own life,' I think really has students bear down a little harder on that difficult work, and they become more interested and more curious."

"What's beautiful about this class is that it's not prescriptive; it's about being more mindful and clear about what is actually happening," he added.

The Center for Contemplative Mind and Society helped Barbezat design his course. They are also working with other professors in other fields to bring a contemplative approach to education.

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