Thinking on the Margin: Monks, Not McMansions Hold Key to Happiness

Economist Luis Rayo on the key to happiness:

University of Chicago economists Luis Rayo and Gary Becker, a Nobel laureate, have carried this approach one step further and used economics tools to predict which choices make people happy. Their research is based in part on study of recent developments in psychology, biology, evolution and neuroscience, including brain scans.
Rayo began our conversation on a philosophical note. "What is happiness, exactly? Much of what we call 'happiness' is relative and based on comparison," he said. "We are always comparing what we have to something else. But, we're not anticipating that no matter what we have we will always be comparing it to something else. In fact, we're not even aware that we are doing this."
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."
"Exercise will absolutely make you feel better. Your social network, family and friends can bring permanent happiness. Longtime relationships can bring long-term satisfaction."
One reason for this, Rayo said, is that our relationships with friends and families do not have a lot of "status differentiation." Though you may think that this sounds ridiculous, Rayo said that brain scans and hormone fluctuations in our bloodstream show that our brains are designed to know where we fit into the pecking order, and we're uncomfortable when we're not among equals. Our brains are also very sensitive to material success and who has more or less than we do.
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.
Does Rayo follow his own advice? He lives in a condo in downtown Chicago that is a 10-minute train commute from his office. He doesn't have a car. His condo is a modestly sized, two-bedroom unit. He spends a lot of time with his wife, he exercises, but he confessed, "I'm not immune to status seeking. I spend a lot of time working."
What is the scientific proof that a modest lifestyle is the path to happiness? Rayo said one example is Buddhist monks. They eat the same food and wear the same clothes every day. With years of meditation they lose interest in the "next new thing and the moving target," he said. "And their brain scans show that they are happier than most people in a scientifically measurable way."

Read Rayo's research with Gary Becker (PDF) and read this Newsweek article about The McMansion Next Door.

See my previous posts about living in small spaces here and here.

Some of My Previous Posts on Happiness:

(HT Greg Mankiw)