Why money doesn't buy happiness

• A. A workout routine that improves mood through exercise
• B. The tendency for people to return to a stable baseline level of happiness after positive or negative life changes ✓
• C. A method of tracking pleasure through daily journaling
• D. The decline in income satisfaction as people age

Why: The hedonic treadmill describes how people adapt to new circumstances, so gains in happiness from good events (like a raise or new possession) tend to fade, returning people to their usual baseline of well-being.

• A. Cognitive dissonance
• B. Hedonic adaptation ✓
• C. Social comparison
• D. Negativity bias

Why: Hedonic adaptation is the process by which repeated exposure to a pleasant stimulus reduces its emotional impact, which is the core mechanism behind the hedonic treadmill.

• A. Higher income always causes stress that cancels out the benefits
• B. Money has no effect on the brain's reward system
• C. People quickly adapt to the higher income and start expecting it as the new normal ✓
• D. Taxes on higher income reduce overall well-being permanently

Why: Once a higher income becomes the baseline, it stops feeling like a gain, and people's desires and expectations rise to match, so the added satisfaction fades.

• A. It has no connection to how people judge their own satisfaction
• B. It causes people to feel satisfied only when they earn less than others
• C. People judge their success relative to others, so rising peers can erase gains in personal satisfaction ✓
• D. It makes people permanently happier by encouraging generosity

Why: Because satisfaction is often relative, when those around us also improve their circumstances, our own improvements can feel smaller, keeping us running to stay in the same place.

• A. Constantly purchasing new possessions to maintain excitement
• B. Focusing on experiences, relationships, and gratitude, which adapt to more slowly ✓
• C. Avoiding all pleasurable activities to prevent adaptation
• D. Comparing yourself frequently to people with higher incomes

Why: Research suggests people adapt more slowly to experiences, social connections, and gratitude practices than to material possessions, making them more reliable sources of lasting well-being.

• A. The absolute amount of money they earn
• B. How their income compares to the incomes of people around them ✓
• C. The price of goods in their country
• D. How much money they inherited as children

Why: Relative income theory holds that satisfaction depends largely on comparisons with others, such as peers, neighbors, or coworkers, rather than on the absolute level of income alone.

• A. Hedonic adaptation
• B. Social comparison
• C. Loss aversion
• D. Confirmation bias

• A. Because raises always reduce overall happiness
• B. Because their own gain is judged against what others gained, not in isolation
• C. Because the raise was taxed at a higher rate
• D. Because they forgot how much they earned before

• A. Rich countries are always happier than poor countries
• B. Average happiness in a country can stay flat over time even as average incomes rise substantially
• C. People become less happy the more they save money
• D. Income has no measurable effect on happiness at any level

• A. Feeling pleased after finding a twenty-dollar bill on the street
• B. Feeling poorer after a friend buys a much bigger house, even though your own income has not changed
• C. Feeling tired after a long day of work
• D. Feeling hungry before dinner

• A. Each additional dollar of income produces the same increase in happiness indefinitely.
• B. Gains in life satisfaction from additional income tend to shrink as income rises beyond a certain level. ✓
• C. Happiness decreases steadily as income increases past a poverty line.
• D. Income has no measurable relationship with well-being at any level.

Why: The diminishing returns concept holds that the boost to well-being from each extra unit of income gets smaller as overall income grows, so money matters most when it meets basic needs.

• A. Owning a second luxury car
• B. Having enough money to afford food, shelter, and healthcare ✓
• C. Buying the newest smartphone every year
• D. Upgrading from a four-star to a five-star hotel

Why: Meeting basic needs such as food, shelter, and healthcare produces substantial improvements in well-being, which is why the largest happiness gains from income typically occur at lower income levels.

• A. The tendency to become less materialistic as people age
• B. The process by which people quickly return to a baseline level of happiness after a positive change, such as a raise or purchase ✓
• C. The government policy of redistributing wealth to increase happiness
• D. A measure of how much money a person spends on pleasure activities

Why: Hedonic adaptation means people get used to improvements in their circumstances, so the happiness boost from a new purchase or raise fades over time and they need more to feel the same satisfaction.

• A. Wealthy people are unable to feel emotions as intensely.
• B. Once basic needs and comfort are secured, additional income adds less to everyday emotional experiences like enjoyment and stress relief. ✓
• C. Money has no effect on any aspect of life at any income level.
• D. Wealthy people always spend more time working, which reduces happiness.

Why: Beyond a comfortable threshold, extra income tends to add less to daily experiences, so the gap in everyday happiness between high earners and moderately high earners is often modest.

• A. Spending mainly on expensive material possessions that quickly lose their novelty
• B. Spending on experiences, time-saving services, and gifts for others ✓
• C. Keeping all money in savings without any spending at all
• D. Spending as much as possible on status symbols to impress others

Why: Research suggests experiences and prosocial spending, along with purchases that save time, tend to provide more lasting satisfaction than material goods, which are more susceptible to hedonic adaptation.

• A. People always become happier because they can buy more experiences
• B. People often feel rushed and stressed, which can reduce the happiness money might otherwise provide
• C. People stop caring about money entirely
• D. People experience no change in their daily mood or stress levels

• A. Having an income below the national average
• B. Feeling a persistent lack of available free time due to work and obligations, regardless of income
• C. Being unable to find a job that pays well
• D. Spending too much money on time-saving services

• A. It makes household tasks more enjoyable
• B. It frees up time that can be spent on relationships, rest, or meaningful activities
• C. It eliminates the need for any personal effort
• D. It always increases the amount of money a person saves

• A. Spending money on time-saving purchases has no connection to life satisfaction
• B. Spending money to buy time, such as paying for convenience, often leads to greater life satisfaction than spending on material goods
• C. Material possessions always produce more happiness than experiences
• D. Having more free time always makes people unhappy

• A. Because time and money are identical resources
• B. Because money can reduce time pressures, so its value for happiness often depends on how it affects a person's available time
• C. Because time has no value in modern economies
• D. Because happiness is entirely determined by genetics

• A. Material possessions such as electronics and clothing
• B. Experiences such as travel and concerts ✓
• C. Luxury cars and designer goods
• D. Home upgrades and furniture

Why: Studies by Gilovich and others found that experiential purchases generally bring more enduring happiness than material purchases, partly because experiences are harder to compare with others and become part of our identity and stories.

• A. They are always cheaper than physical goods
• B. People adapt quickly to material goods, while experiences are more open to positive reflection and social connection ✓
• C. Experiences are always shared with strangers
• D. Possessions cannot be remembered at all

Why: Hedonic adaptation causes people to quickly take material goods for granted, while experiences are more often recalled, anticipated, and discussed with others, which keeps their positive effects alive.

• A. The process of saving money for future purchases
• B. The tendency to return to a baseline level of happiness after acquiring something new ✓
• C. A strategy for buying luxury items at discount prices
• D. The decline in prices of goods over time

Why: Hedonic adaptation refers to how people quickly get used to new possessions or improvements in circumstances, so the initial boost in happiness fades and they return to their previous baseline.

• A. Buying the most expensive version of every product
• B. Prioritizing experiences, such as trips or classes, over accumulating more things ✓
• C. Spending only on necessities and saving everything else
• D. Avoiding all spending to maximize savings

Why: Research suggests that shifting spending toward experiences, along with social connection and meaningful activities, tends to produce greater well-being than accumulating material goods, while extreme frugality is not necessary for happiness.

• A. Anticipation makes people forget the cost of the experience
• B. Looking forward to events creates pleasure before they happen and extends the total enjoyment of the experience ✓
• C. Anticipation guarantees the experience will be better than expected
• D. Anticipation only matters for material purchases

Why: Research shows that the anticipation of experiences produces positive feelings in advance, and this extended period of enjoyment adds to the overall value gained from the experience.

• A. They reported lower happiness because giving reduces personal resources
• B. They reported greater happiness, even though the amount of money was the same ✓
• C. They reported no difference in happiness
• D. They reported greater happiness only if the recipients were family members

Why: In Dunn, Aknin, and Norton's 2008 study, participants who were given money and asked to spend it on others reported higher happiness than those who spent it on themselves, showing that how money is spent matters more than how much one has.

• A. Spending money on luxury items to impress others
• B. Spending money on others tends to increase personal well-being ✓
• C. Saving money for retirement to avoid future financial stress
• D. Lending money to others with the expectation of repayment

Why: Prosocial spending refers to using money to benefit others, and research consistently links it to increased happiness for the giver.

• A. Because it always results in public recognition
• B. Because it can satisfy needs for connection, competence, and a sense of meaning ✓
• C. Because it guarantees that we will receive something in return
• D. Because it reduces our taxes

Why: Giving can fulfill basic psychological needs such as social connection, feeling capable of making a difference, and a sense of purpose, all of which contribute to well-being.

• A. Money has no effect on happiness at any level of income
• B. Income increases happiness without limit
• C. Once basic needs are met, how money is used often matters more for happiness than the amount itself ✓
• D. Wealthy people are always happier than people with modest incomes

Why: Research suggests that beyond meeting basic needs, the way money is spent, such as on experiences, relationships, and giving, has a larger impact on happiness than additional income alone.

• A. A tendency to give more generously over time
• B. A tendency to return to a baseline level of happiness after positive or negative changes ✓
• C. A tendency to compare one's income with that of neighbors
• D. A tendency to save money during economic downturns

Why: Hedonic adaptation is the process by which people quickly adjust to new circumstances, so gains like a raise or a new purchase often produce only temporary boosts in happiness.

• A. Each additional dollar produces the same large jump in happiness
• B. Gains in life satisfaction tend to level off or grow much more slowly
• C. Happiness drops sharply as income rises above a middle level
• D. Income has no measurable relationship with any aspect of well-being

• A. Owning the newest technology
• B. Strong social relationships and close connections
• C. Living in the most expensive neighborhood
• D. Having the highest possible credit score

• A. The tendency to save more money during economic downturns
• B. Getting used to new possessions so that their initial happiness boost fades
• C. The body's ability to adjust to higher altitudes when traveling
• D. Lowering your standards for relationships after financial loss

• A. Buying material goods that signal status to others
• B. Spending on experiences such as travel, learning, or shared activities
• C. Purchasing the cheapest items available in every category
• D. Spending all income immediately to avoid thinking about money

• A. Because it eliminates all sources of stress and worry permanently
• B. Because it reduces anxiety about emergencies and basic needs, protecting against distress
• C. Because wealthy people never experience negative emotions
• D. Because money automatically creates purpose and meaning in life