The truth about home buying happiness…
September 4, 2023. Happy Labor Day! Revised 6/9/24
The real estate market is pretty insane right now.
There’s a teeming horde of humans who firmly believe that, in buying a house, they will have achieved a life-changing goal that will make them much more satisfied with their lives from that very point on…
However, new research from an emerging interdisciplinary approach called “Happiness Studies” suggests that humans vastly overestimate how much happiness they will feel closing the sale on a new home, condo, or apartment.
While humans do experience boosts to life satisfaction when buying a new home, they are often ephemeral, and will not last. After only a year or two in their new home, most humans return to the same basic level of life satisfaction they experienced in their prior dwelling.
This is quite different from what humans expect…
Humans are not “rational actors.” Humans often misunderstand and fail to predict what will make them happy.
Because humans can get used to anything… we adapt much more quickly to our new circumstances than we can possibly imagine.
Dr. Reto Odermatt, the study’s first author, said this about his research:
“Adaptation has a relativizing effect on life satisfaction. People generally anticipate it, but they underestimate it.
When predicting future life satisfaction after moving into their own homes, on the other hand, people seem to disregard adaptation entirely.”
Why are humans are so optimistic about how their lives will change because they bought a home?
One reason some people are so optimistic about how happy they will be after they have purchased a property is that their beliefs have been distorted.
Who warped their reality and promoted unrealistic expectations? Social media, parents, siblings, friends, advertisements, real estate agents… you name it.
The researchers demonstrated this using the concept of intrinsic versus extrinsic motivation.
When we engage in an activity for its own sake, because we like it, or because it fills some entrenched desire, this is called intrinsic motivation.
On the other hand, extrinsic motivation occurs when we do something because we receive some predictable or obvious reward, such as a boost in our social status or the regard and respect of other humans.
Humans who are more concerned about their social status tend to be extrinsically motivated, and the researchers discovered that these humans consistently overestimated the positive effect of buying a property on their happiness.
Dr Odermatt explained:
“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.
Intrinsically-oriented people, on the other hand, for whom family and friends are comparatively more important, did not.”
Economics research vs. Mental health research
There is a huge divergence between economists’ and psychologists' assumptions about human behavior. The psychology of classic economics is laughably unrealistic from the vantage point of social science.
Dr Odermatt explained:
“In economics we generally assume consumer sovereignty. In other words, that we know what’s good for us.”
Mental health practitioners and researchers however, know that our minds work quite differently.
Dr Odermatt summed it up:
“Material values tend to be overestimated, and often lead to incorrect prognoses. Intrinsic values therefore seem to be a better compass on the search for happiness in life than extrinsic values.”
Are extrinsic values more correlated with neuroticism? I’ll leave in the hands of two of America’s greatest writers.
Kurt Vonnegut wrote this obituary/poem for The New Yorker in May of 2005 :
Joe Heller
True story, Word of Honor:
Joseph Heller, an important and funny writer
now dead,
and I were at a party given by a billionaire
on Shelter Island.
I said, “Joe, how does it make you feel
to know that our host only yesterday
may have made more money
than your novel ‘Catch-22’
has earned in its entire history?”
And Joe said, “I’ve got something he can never have.”
And I said, “What on earth could that be, Joe?”
And Joe said, “The knowledge that I’ve got enough.”
Not bad! Rest in peace!”
— Kurt Vonnegut
The New Yorker, May 16th, 2005
How can I improve on that?
Be well, and Godspeed.
RESEARCH:
Odermatt, R., Stutzer, A. Does the Dream of Home Ownership Rest Upon Biased Beliefs? A Test Based on Predicted and Realized Life Satisfaction. J Happiness Stud 23, 3731–3763 (2022). https://doi.org/10.1007/s10902-022-00571
