The Hedonic Treadmill Costs You Money

The hedonic treadmill is a behavioral finance concept that predicts that people’s happiness spikes with spending, but then quickly reverts back to its original place.

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We discussed how the hedonic treadmill affects your money on The BIGG Success Show today. Here’s a summary of that discussion.

This show was inspired by an article on the Quicken Loans site by Jackie Lam. We talked about what the hedonic treadmill is, how it affects your money, and how to avoid getting stuck on it. This show is a reminder for us. We hope it helps you too.

What is the Hedonic treadmill?

The hedonic treadmill suggests that any happiness we gain from a new “thing” quickly reverts back to its original place (i.e. we’re running in place).

What is the result of the Hedonic treadmill?

Old things (i.e. the things we have) are seen as boring. New things are exciting.

So, our lifestyle costs creep up. Wants become needs.

We hate change, unless we cause it. Then we love it. But when it comes to spending, the love is lost quickly, as a general rule.

5 ways to avoid getting stuck on the Hedonic Treadmill

1) Find joy in small purchases. For example, during the week, we drink regular coffee. On the weekends, we drink freshly ground. The difference in costs is almost insignificant, but the message it sends us is highly significant. And it feels like a splurge.

2) Watch routines, ruts (e.g. country roads)

3) Don’t compare up (friends, neighbors, celebrities)

4) Invest in relationships (family & friends)

5) Do more good (give money and/or time, use your gifts as a gift)…BS!