Editor's note: Think money can't buy happiness? Behavioral economists Elizabeth Dunn and Michael Norton beg to differ. It actually can, they say—but only if we spend it the right way.
In their book released this week, Happy Money: The Science of Smarter Spending, Dunn and Norton draw on years of quantitative and qualitative research to explain how we can turn cash into contentment. The key lies in changing our spending habits and adhering to five key principles: Buy Experiences (research shows that material purchases are less satisfying than vacations or concerts); Make it a Treat (limiting access to our favorite things will make us keep appreciating them); Buy Time (focusing on time over money yields wiser purchases); Pay Now, Consume Later (delayed consumption leads to increased enjoyment); and Invest in Others (spending money on other people makes us happier than spending it on ourselves).
Happy Money provides valuable information not only for pleasure-seeking consumers, but also for companies looking to increase the happiness of both employees and customers. The following excerpt describes how the power of limited access led to fanatical demand of such products as McDonald's "McRib" sandwich and KFC's "Double Down."
Make It A Treat
In June 2011, a chorus of tweets heralded the arrival of a culinary wonder:
@BJIT: #doubledown is coming back!!! God bless the colonel!
@kevinelop: OMG!! . . . The Double Down is back at KFC!!!
@iamToddyTickles: KFC's #doubledowns for Breakfast. Mmmmm. Mmmmmm. Yummmmmmy. I'm full.
Despite his precious Twitter handle, iamToddyTickles appears to be a fully grown man in his profile picture, yet his tweet echoes the slobbery exuberance of Scooby Doo. What could have prompted such an onslaught of emotion, ranging from unadulterated excitement to utter incoherence? KFC's Double Down features two slices of bacon, two kinds of cheese, and the Colonel's secret sauce, all sandwiched between two slabs of fried chicken. According to KFC, it's "so meaty, there's no room for a bun!"
This bunless "sandwich" was a hit in the United States, but in Canada, it was a sensation. The Double Down (translated for our French-Canadian friends as Coup Double, or "Double Punch") made KFC history, becoming the chain's best-selling new item in Canada ever. When the sandwich made its Canadian debut in the fall of 2010, KFC sold a million Double Downs in less than a month, enough "to stretch across 2,083 hockey rinks," according to the company's press release. (For readers unfamiliar with Canadian culture, all Canadian measurements are in hockey rink units, or HRUs.) Social media activity was intense, and consumers even organized Double Down "Bro Downs" where men competed to see who could guzzle the most Double Downs.
In response to the initial runaway success of its product, KFC pulled the sandwich off the menu across most of Canada. This move may seem strange in an industry where a pivotal goal—in the words of Coca-Cola's long-standing mantra—is to be "within an arm's reach of desire." According to KFC Canada's chief marketing officer, David Vivenes, KFC is about "making moments that are so good." But by removing the Double Down from the menu, KFC made the moment when it came back in 2011 not just "so good," but even better. Nor is KFC alone in adopting this approach. McDonald's has pursued a similar strategy with its McRib sandwich, a ground pork patty with barbecue sauce, onions, and pickles. Although pork supplies are steady, the McRib has been continually taken off the market and reintroduced—always for a limited time—over the past three decades. Ashlee Yingling, of McDonald's media relations department, explained that the company makes the McRib available in the fall, thereby creating nostalgia for summer barbecues.
The consumer response has been obsession. If you want to know when and where you might get your hands on a McRib, you can visit McRib fan Alan Klein's McRib Locator website, a United States map with a comprehensive list of confirmed, possible, and questionable McRib sightings. McDonald's kicked off its latest McRib launch with a "Legends of the McRib" event in New York City. The McRib was a key contributor to a 4.8 percent increase in company sales in November 2010.
Long before innovations like bunless sandwiches and boneless ribs, Disney began harnessing the power of limited availability by making its movies available for limited periods. The company locks away Dumbo, Cinderella, Peter Pan, and other hits in the "Disney vault," where they remain unavailable for years at a time. Like Cinderella herself, these movies rush out of the ball while the party's still going strong, before the magic wears off. Many other companies adopted similar strategies, and the psychologist Robert Cialdini devotes an entire chapter of his classic book Influence to the creative and downright crafty ways in which scarcity has been used to move product. Although Cialdini admits to a "grudging admiration for the practitioners who made this simple device work in a multitude of ways," he urges readers to resist the lure of scarcity marketing, coaching them on "how to say no." If we take Silverman's mantra and the science behind it seriously, however, scarcity marketing starts to look like a win-win. That is, people may savor everything from the Double Down to Dumbo more when they know these delights won't be available forever, increasing their own satisfaction even as companies ring up increased sales.
Applying this principle is straightforward when it comes to ephemeral delights such as movies and bunless sandwiches. But what about major purchases? Derek Lee is an aspiring actor and filmmaker who owns a beautiful, bright red Mini Cooper. If you owned a sporty little car, you might be tempted to drive it all the time, settling in to the comfy leather seats whenever you needed to get groceries or meet friends for dinner. But Derek lives in Vancouver, Canada, where public transit is excellent and car insurance is expensive. So, when Derek first got the Mini Cooper, he kept it in the garage and insured it only on the days when he really wanted to use it, rather than paying regular monthly car insurance and using the car every time he needed to run an errand. As his mildly traumatized former passengers can attest, Derek got the most out of those days, hugging turns and accelerating through straightaways like he was auditioning for a car commercial. Recently, he decided to insure his car full-time, but now, he says, driving is "just about contained road rage and not killing people." He looks back wistfully on the earlier years, when he "drove exuberantly."
Car-sharing companies like Zipcar provide customers with a similar opportunity for exuberance by turning driving back into a treat. Whereas traditional car rental companies choose standard cars in the dullest colors of the rainbow, the first Zipcar was a tricked-out lime-green Volkswagen Beetle. The founder and former CEO of Zipcar, Robin Chase, pointed to the key difference between driving your own car and driving a Zipcar: You use your own car for everything. Zipcars are for "outings." Higher-end companies, like the Classic Car Club, founded in London in 1995, take this approach to its logical extreme. For a hefty membership fee, the Classic Car Club gives members access to a "staggeringly stylish fleet of cars," including Ferraris and Maseratis. In Manhattan, club members pay almost $11,000 for thirteen days of driving the club's "high-end supercars." This doesn't sound like a bargain. But the cost of actually owning one of these cars is mind-boggling. And we're willing to bet that members' attention stays focused on the "supercars" during those magical thirteen days, making each of those eleven thousand dollars count.
Car-sharing is now a familiar concept, but creative companies are making it possible for their clients to share ownership and access to just about everything, from villas and handbags to dogs and French truffle trees. According to our favorite Portuguese saying, "You should never have a yacht; you should have a friend with a yacht." (To be honest, it's also the only Portuguese saying we know.) By joining SailTime, members can live the Portuguese dream by sharing a yacht with up to seven other people. In describing SailTime, a recent media story warned consumers that sharing the yacht means "there is no guarantee you will always be able to use it when you want." This apparent limitation is precisely what helps consumers make it a treat. Limiting your access to everything from the McRib to Maseratis helps to reset your cheerometer. That is, knowing you can't have access to something all the time may help you appreciate it more when you do.