If you think that buying a luxurious car or having more money will structurally increase your happiness, please reconsider. Economist Dick Easterlin has shown that this will probably not happen. His research has shown that 1) after some time people will not say that they have become happier (you get used to your possession and it no longer brings you extra satisfaction), 2) often, however, they will keep on thinking that the next desired object (a boat?) will succeed in making them happy. But it won't, because the same thing will happen: they will get used to that, too. Will a higher income lead to more happiness? Not necessarily. One reason for this, as research by Easterlin has shown, is that the positive effect of having more money is 'deflated' by the fact that peoples perceived needs have increased correspondingly. The reverse thing can happen too. People can adapt to many tragic life events too and gradually get back to their earlier level of happiness. (This adaptation is not always complete, by the way; maybe more about that later). Robert Frank (previously mentioned here) is another economist who has written much about adaptation and well-being. Frank explains that the main reason we buy luxury goods is to demonstrate to others that we can afford to, thereby trying to distinguish ourselves from them. In doing so we try to achieve happiness by improving our relative status. The irony is, however, this doesn't work. The satisfaction we get from luxury spending, which Frank calls conspicuous spending, depends largely on context. The satisfaction we get from luxury spending lasts only shortly. Two examples: 1) If we buy an expensive car, this distinguishes us from our neighbor and we feel happy. If, however, next month our neighbor buys an even fancier one, our satisfaction will be largely gone. You can see how this leads to an escalation, an arms race, with no winners. 2) The satisfaction we get from luxury goods tends to decline steeply over time. We tend to get used quickly to what we have and the favourable features of the luxury good tend to fade into the background rapidly: we no longer notice the fancy features of our expensive car and our satisfaction diminishes. Bottom line: this increasing conspicuous spending does more harm than good.