How To Buy Happiness

Bad news for the luxury goods market: Spending money on tchochkes doesn't make you happier, but giving money away just might.

That conclusion, in a study published Thursday in the journal Science, flies in the face of what most people--and, certainly, advertisers--typically believe.

It's far easier to measure income than happiness. Even so, researchers around the world have reported that even though real income has surged around the globe, reported "happiness" levels have stayed relatively flat. That spurred Elizabeth W. Dunn, an assistant professor of psychology at the University of British Columbia in Vancouver to explore the ways that more money might lead to more happiness.

Working with graduate student Lara B. Aknin and Harvard Business School assistant professor Michael I. Norton, Dunn began by asking 632 Americans from across the U.S. to rate their general level of happiness, as well as to report their income, how much they spent on themselves and how much they donated to charity.

As researchers sifted through the numbers, they found that happiness didn't correlate with personal spending but, rather, with how much they gave away.

Not that anyone was giving very much away. Personal spending--for pleasure and out of necessity--topped donations by a factor of 10. The typical income of participants in the study was modest, roughly ranging from $20,000 to $50,000.

The researchers figured it was worth trying to test the hypothesis a bit further. They found a group of 16 people in the Boston area who were due to receive a profit-sharing bonus at work. A month before getting the bonus, the researchers asked them to rate their happiness. Then, six to eight weeks after the workers received their $3,000 to $8,000 bonuses, the researchers asked what they did with the money and how they felt.

Once again, giving away money seemed to nudge many people up the happiness scale, increasing the number of people who said that they were happy "most of the time" rather than just "some of the time," Dunn reports.

Then the researchers put their results to a test: On the Vancouver campus, they handed out sealed envelopes containing $5 or $20 to 46 people. They instructed half the people to spend the money on themselves--either on necessities or indulgences--and then told the other half to give the money away, all by 5 p.m.

Once again, those who gave the money away were happier by the end of the day--and just as happy whether they gave away $5 or $20.

Dunn said it was hard to speculate whether the results would have been different had she handed out thousands of dollars instead of $5 or $20.

So why don't people dig into their pockets a bit more? Dunn said most people figure they will be happier spending money on themselves.

Dunn's team asked a group of 100 university students what they thought would make them happier: spending or giving. No surprise here. Most figured they'd be happier spending the money on themselves--and that the more they'd spend, the cheerier they'd be. That's a double wrong in Dunn's book.

Dunn has been checking on the status of people's happiness for a number of years. She earned her doctorate in psychology in 2004 for an award-winning study that suggested when people are charming and pleasant--even if they're just putting on appearances--they genuinely feel better later.

She eventually refined that idea, documenting that a quick way long-time couples can bring the spark back into their romance is to pretend that they're strangers.

So next time you want to brighten your day, trying giving away that fiver instead of buying a latte--and do it with a smile.

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How To Buy Happiness

From The Lab
How To Buy Happiness
Elizabeth Corcoran, 03.20.08, 7:00 PM ET

Bad news for the luxury goods market: Spending money on tchochkes doesn't make you happier, but giving money away just might.

That conclusion, in a study published Thursday in the journal Science, flies in the face of what most people--and, certainly, advertisers--typically believe.

It's far easier to measure income than happiness. Even so, researchers around the world have reported that even though real income has surged around the globe, reported "happiness" levels have stayed relatively flat. That spurred Elizabeth W. Dunn, an assistant professor of psychology at the University of British Columbia in Vancouver to explore the ways that more money might lead to more happiness.

Working with graduate student Lara B. Aknin and Harvard Business School assistant professor Michael I. Norton, Dunn began by asking 632 Americans from across the U.S. to rate their general level of happiness, as well as to report their income, how much they spent on themselves and how much they donated to charity.

As researchers sifted through the numbers, they found that happiness didn't correlate with personal spending but, rather, with how much they gave away.

Not that anyone was giving very much away. Personal spending--for pleasure and out of necessity--topped donations by a factor of 10. The typical income of participants in the study was modest, roughly ranging from $20,000 to $50,000.

The researchers figured it was worth trying to test the hypothesis a bit further. They found a group of 16 people in the Boston area who were due to receive a profit-sharing bonus at work. A month before getting the bonus, the researchers asked them to rate their happiness. Then, six to eight weeks after the workers received their $3,000 to $8,000 bonuses, the researchers asked what they did with the money and how they felt.

Once again, giving away money seemed to nudge many people up the happiness scale, increasing the number of people who said that they were happy "most of the time" rather than just "some of the time," Dunn reports.

Then the researchers put their results to a test: On the Vancouver campus, they handed out sealed envelopes containing $5 or $20 to 46 people. They instructed half the people to spend the money on themselves--either on necessities or indulgences--and then told the other half to give the money away, all by 5 p.m.

Once again, those who gave the money away were happier by the end of the day--and just as happy whether they gave away $5 or $20.

Dunn said it was hard to speculate whether the results would have been different had she handed out thousands of dollars instead of $5 or $20.

So why don't people dig into their pockets a bit more? Dunn said most people figure they will be happier spending money on themselves.

Dunn's team asked a group of 100 university students what they thought would make them happier: spending or giving. No surprise here. Most figured they'd be happier spending the money on themselves--and that the more they'd spend, the cheerier they'd be. That's a double wrong in Dunn's book.

Dunn has been checking on the status of people's happiness for a number of years. She earned her doctorate in psychology in 2004 for an award-winning study that suggested when people are charming and pleasant--even if they're just putting on appearances--they genuinely feel better later.

She eventually refined that idea, documenting that a quick way long-time couples can bring the spark back into their romance is to pretend that they're strangers.

So next time you want to brighten your day, trying giving away that fiver instead of buying a latte--and do it with a smile.

http://www.forbes.com/2008/03/20/money-buys-love-tech-science-cx_ec_0320love.html

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Turning Gold Dust Into Clean Air

BURLINGAME, CALIF. -At age 82, William Miller might be excused for kicking back, playing with grandkids or simply puttering around. He's doing none of those things. Instead, Miller is leading a start-up with two big ambitions: to clean up diesel emissions and to spread a new approach to designing a key ingredient in countless chemical reactions, namely catalysts.

"I like to be an explorer. This is an exploration," declares Miller.

And that approach--the exploration of both a new technology and of the opportunity for using that nascent tool--is at the core of genuine innovation.

Over the course of his 53-year career, Miller has been a computer scientist, chairman of a major software maker, an adviser to both venture capitalists and government leaders, and a teacher. These days, he is chairman and co-founder of Nanostellar, a four-year-old, 22-person start-up in Redwood City, Calif. Miller is too savvy to use the hyperbolic language common to most start-up founders. But he exudes quiet confidence that Nanostellar has a shot at making a genuine difference, both in reducing greenhouse gas emissions and in changing commercial chemistry.

Nanostellar is developing novel chemical catalysts that promise big improvements over existing ingredients. The company's first product: fine powders of precious metals--gold, platinum and palladium--that when used to coat a filter for a diesel truck or car can reduce its toxic emissions by as much as 40% over existing catalytic converters. At Nanostellar's heart is a computer program that predicts how different compounds will work under specified conditions. Think of it as a design tool for chemists: "We have CAD-CAM tools for mechanical engineers, computer-aided design for circuit makers," says Pankaj Dhingra, Nanostellar's chief executive. "The impact our tool could have on the world of chemicals is absolutely humongous."

How does a septuagenarian wind up starting a company at the very forefront of new technology? By never retiring in the first place.

Back in 2003, Miller was juggling a collection of assignments, including advising groups at Stanford University, where he served as Provost, and a few company boards. He had always been an overachiever: He was the last hire of Stanford's famed Fredrick Terman and one of the first five advisers to venture group the Mayfield Fund, when it started in 1969. Over the years, he also chaired Borland Software, worked as chief executive of SRI International and hobnobbed with China's leaders, including Zhang Zemin and Li Peng. Colleagues often turned to him for advice--as did fellow Stanford professor KJ Cho.

Cho and longtime collaborator Jonathan Woo had been brainstorming about how to take to market what seemed like a promising tool--a way to design chemical catalysts on computers. Other fields were already using similar tools, including biochemists who analyze protein structures via computer models. Early this decade, Cho and Woo realized that the convergence of more powerful computers, better design algorithms and rapid advances in materials science--particularly in the excruciatingly small realm of nanomaterials--was finally promising to open up catalytic chemistry to computer modeling.

Miller's advice: Build a product, not just a tool. He also tested their ambitions with a well-honed set of questions: "Does the technology work? Can it scale? Is it robust? And who wants it?"

That last question, Miller says, can be a killer. "If the answer is 'Everyone,' then my next question is: 'Name one.' "

Together with Miller, Cho and Woo scrutinized what fields could be significantly improved with better catalysts. Scrubbing the toxic emissions created by burning carbon-based fuels was high on their list. But gasoline auto makers have poured billions into refining the catalytic converters used in consumer vehicles; utility plants, swaddled in regulations, are cautious adopters of new technology.

The diesel trucking industry, however, still used an expensive approach to reducing its emission problems, namely catalytic converters that rely on the highly reactive--and highly expensive--material platinum. The computer model that Cho and Woo developed suggested intriguing alternatives, including catalysts made of nanosize particles of gold and alloys of gold, palladium and platinum.

Since then, Miller and Woo have continued to build Nanostellar into a full-fledged company. Miller took the business lead, helping raise $26 million in venture capital from investors that include 3i Technology Partners, Khosla Ventures, Monitor Ventures and others. He helped hire a chief executive for Nanostellar and other key managers. "It's more acceptable now to tell company founders they can't run a company," he says wryly. Woo is chief technology officer.

Nanostellar has developed three variants of catalysts using gold, platinum and palladium. Its work is winning technical accolades: Late last year, the start-up was picked as one of 39 "technology pioneers" for 2008 by the World Economic Forum--a honor that has in past years gone to the likes of Google and Napster.

Customers are emerging, too--even though Miller ruefully says that business has taken a bit longer to develop than he and his co-founders had originally hoped.

In conjunction with a manufacturing partner based in Pennsylvania, Nanostellar sells powders that are used to coat the honeycomb-like filters used in diesel vehicles. One European customer is using its powder to improve emissions in existing vehicles; a European car maker is planning to incorporate Nanostellar's powder in a new fleet of diesel-based cars.

"Technically, every class of engine that runs differently should have a different catalyst," Miller observes. A UPS truck engine, for instance, is different from the machine driving an 18-wheeler. How much time an engine runs "cold" changes its emissions, too, he adds.

Miller remains cheerfully upbeat about how Nanostellar's technology can improve the world. And with any luck, this won't be his last venture. "Wait until I tell you about my next idea for a start-up," he quips.

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Bear Stearns' Advice To Microsoft

BURLINGAME, CALIF. ---Uh oh! Guess who has been one of the senior advisers to Microsoft executives on its proposed takeover of Yahoo!, quietly counseling on how to do such a big deal?

That would be Bear Stearns Chief Executive Alan Schwartz.

As Silicon Valley wakes up on Monday and assesses the fallout from the Bear Stearns fiasco, no one will be thinking through the implications more carefully than executives in Redmond, Washington.

Bear Stearns will go down in history as a victim of its own aggressive borrowing. That legacy might well give pause to Microsoft's chief executive, Steve Ballmer. Yes, he wants to pummel Google and snatch some of the advertising dollars that he feels should flow to the north instead.

But, particularly in a fragile economy, the risks of undertaking a $44.6 billion (give or take) takeover could be staggering, even to a company with Microsoft's heft.

For all its aggressive sales tactics, Microsoft has a long history of fiscal caution. The Yahoo! deal marks the first time the software giant has planned to borrow cash to complete a deal. Co-founder Bill Gates can't be thrilled with watching Ballmer drain the company's cash. He didn't get so rich by buying at the top of the market.

Yahoo! will close its first quarter of 2008 on March 31--and will report the results in late April. Yahoo! might have inadvertently done Microsoft a favor recently by extending the date for nominating candidates to its board of directors until a time 10 days after Yahoo! announces the date of its next annual meeting. That gives Yahoo!--and now Microsoft--a bit more time to watch the markets before trying to close a deal.

It was, after all, Wall Street's reaction to the result from Yahoo!'s last quarter, announced January 29, that drove down the company shares to a 52-week intraday trading low of $18.58 on January 30. Microsoft took advantage of what looked like a bargain at the time and offered a $31 a share--or $44.6 billion--in a half-cash, half-stock deal for Yahoo!.

After briefly trading a bit above $30, Yahoo!'s stock has gone back to sagging. It closed on Friday at $26.71.

Other significant Bear Stearns investment banking clients in 2007 included General Motors and its GMAC financing group, the Walt Disney Co. and the Blackstone Group's Real Estate Opportunity Fund. It also advised Pfizer on the sale of its consumer health care business to Johnson & Johnson and advised Symbol Technologies on its acquisition by Motorola.

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