Saturday, February 10, 2007

Small Houses, Social Relationships, and Happiness

In the first few months of this blog, I wrote alot about happiness and how to make choices that will make you happy. I also wrote about my preference for small houses. Today, in a Washington Post interview, Chicago economist Luis Rayo combines the two while discussing joint research with Gary Becker:

The choices that make people happy are all over the map, but when you examine the data carefully, similar patterns emerge, Rayo said. In that respect, buying a new house is not so different from buying a car or choosing a restaurant.

When you start to think about buying a new and bigger house, your initial comparison and reference point is size, Rayo said. When you start to look at the big, new houses that are for sale, however, you discover that size is only one of many comparisons. Size, price, location and floor plans soon loom large and become new reference points. Rayo characterized them as "moving targets, which constantly change."

Eventually, you pick a builder and a model, build and move in. The change is dramatic. Nonetheless, you quickly become accustomed to your new surroundings. These become your new benchmark against which you now make new comparisons, such as how your house stacks up against the others in your neighborhood or what you could have done with the money instead.


Meanwhile, you discover several unpleasant aspects to your new place. A house that's twice as big requires twice as long to clean, and the commuting time to your office is now two hours a day instead of 30 minutes. Though it's easy to become accustomed to a positive change and move on, you never get used to activities that are painful and irritating such as a long commute, Rayo said.


How does this square with choosing a house that will make us happy? Rayo suggests a house with enough space to meet your needs while accommodating a practical, relaxing lifestyle. Everyone's situation is different, but as you make the decision, he said, be honest about your motivation.

Will the added square feet in the big, new house make you more comfortable?

If the goal is to impress your peers and friends, "You'll lose the race of winning and you'll be stressed," he said. Is your kitchen a place to hang out and be comfortable or will it be, as Rayo put it, a "slick intimidation statement about my wealth?" Will the $50,000 array of solar panels on your new roof that will generate all your household electricity needs "bring a sense of personal satisfaction or give you bragging rights?"

The latter are "not a sustainable source of happiness," Rayo said. "When consumption extends beyond your needs and the goal is to impress others, you should be suspicious; it will not lead to happiness."

And in another large theme of this blog, Reyo suggests that investments in social relationships produce large happiness returns:

More important, he went on to say, the psychology literature and surveys clearly show that not all happiness is ephemeral and geared to endlessly moving targets. With nonmaterial things, the target does not move.

"Exercise will absolutely make you feel better. Your social network, family and friends can bring permanent happiness. Longtime relationships can bring long-term satisfaction."

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