Across the world, home ownership is viewed as a valuable rite of passage. Research from the University of Basel suggests that it’s not a guaranteed path to happiness, however.
The researchers examined the impact buying a home has on our life satisfaction, and the results show that while it does indeed provide a boost to our happiness, this boost is pretty short-lived.
Investing in happiness
It’s perhaps logical that we desire to move house precisely because we think doing so will make us happy, whether because of a different location, more space, access to green spaces, and so on. The researchers quizzed over 800 future homeowners in Germany to understand if this was really the case.
The questions were asked between three months before people moved and up to a year afterward to ensure that they gained a good understanding of whether their expectations would be met or not.
The analysis uncovered the expected and actual life satisfaction of each participant on a scale of 0 to 10. The results clearly show that buying a home doesn’t change people’s happiness quite as much as they imagine it will. The timing of the questions is important, as it ensured people would have a good idea of what their new homes would be like but wouldn’t have experienced the adaptation effect yet.
“Adaptation has a relativizing effect on life satisfaction. People generally anticipate it, but they underestimate it,” the researchers explain. “When predicting future life satisfaction after moving into their own homes, on the other hand, people seem to disregard adaptation entirely.”
Over-estimating happiness
As a result of this phenomenon, the participants would consistently over-estimate the medium-term boost to their happiness coming from the purchase of their new home. There did, however, appear to be some divergence between individual participants.
“It turned out that status-oriented people in particular, for whom money and success were especially important, overestimated the increase in life satisfaction that purchasing a home would provide,” the researchers continue. “Intrinsically-oriented people, on the other hand, for whom family and friends are comparatively more important, did not.”
The researchers believe this shows that we’re often not very good at adhering to our own preferences when we make decisions, but instead we follow our beliefs about our preferences. These beliefs can be heavily distorted by external factors. They hope that the more we understand these influences, the more we can strive to make ourselves somewhat immune to them when making our decisions.
The findings provide further confirmation that the rational mind that underpins traditional economic thought doesn’t really exist, and that we often have a very misguided understanding of what will, and what will not, make us happy. As such, the authors urge us to examine our own values before making significant decisions.
“Material values tend to be overestimated and often lead to incorrect prognoses,” they conclude. “Intrinsic values therefore seem to be a better compass on the search for happiness in life than extrinsic values.”
