Chicago economist Luis Rayo teams with Nobel Prize winner Gary Becker to produce 'the secret.' What is it? Stop trying to keep up with the Joneses, and focus on what you want:
How does this square with choosing a house that will make us happy? Rayo suggests a house with enough space to meet your needs while accommodating a practical, relaxing lifestyle. Everyone's situation is different, but as you make the decision, he said, be honest about your motivation.
Will the added square feet in the big, new house make you more comfortable?
If the goal is to impress your peers and friends, "You'll lose the race of winning and you'll be stressed," he said. Is your kitchen a place to hang out and be comfortable or will it be, as Rayo put it, a "slick intimidation statement about my wealth?" Will the $50,000 array of solar panels on your new roof that will generate all your household electricity needs "bring a sense of personal satisfaction or give you bragging rights?"
The latter are "not a sustainable source of happiness," Rayo said. "When consumption extends beyond your needs and the goal is to impress others, you should be suspicious; it will not lead to happiness."
But make sure to get the biggest HD TV you can find.
Hat Tip: Greg Mankiw