The Magic of Hedonic Adaptation

If you’re wondering what on earth hedonic adaptation is, keep reading. It’s a fancy term for something that’s actually pretty straightforward.

The other day, I happened to find myself at a Whole Foods.

Now, I don’t have anything whatsoever against Whole Foods. I think they sell a ton of good products there. Having said that, most of the products at Whole Foods are rather expensive variations on things you can get at discount grocers or fall into the category of a specialty food. You can get everything you need to feed yourself at your local discount grocery store for half the price or less than a similar quantity of food from Whole Foods, though the stuff from Whole Foods might be more varied and so on.

In short, Whole Foods sells more expensive versions of things that you need.

As I walked through the aisles there, I couldn’t help but realize that there were a lot of products in the store that I used to buy regularly. I drank a bottle of kombucha almost every day, for example. I used to buy sauerkraut regularly. There were a lot of cheeses and craft beers and organic veggies and chocolate bars and other things that I knew from the labels. I was a very regular customer of a food co-op that was near my old workplace and they carried many of the items that Whole Foods carries.

Back in the day, I used to buy all of that stuff as a matter of course. But I do a lot of things differently now.

I make my own sauerkraut, for one. It costs about $2 to buy enough cabbage to make four liters of sauerkraut. In the store, it’s often several dollars to buy one liter of it and even more if you buy a particular variety.

I make my own kombucha. It costs about the price of four teabags and a few spoonfuls of sugar to make half a gallon of kombucha – pennies, in other words. A bottle of kombucha in that store is about $4 and I can make enough to fill several bottles for maybe $0.50 – and I have far more control over the flavors and such.

I don’t drink craft beer very often any more. It used to be a daily occurrence; now it’s something I drink perhaps once every week or two. It moved from a regular daily staple to a treat and I appreciate it much more now. I don’t each much chocolate, either.

I mostly buy veggies from the farmers market nowadays, or grow them myself. I pay about half as much.

I don’t buy the nice soaps or the vitamins or any of that other stuff, either. I use a minimal amount of cheap soap each time I shower and I just eat a well-rounded diet so vitamins aren’t very useful, either.

(I still like good cheese, though, but I rarely buy it – it’s a treat.)

The thing is, ten years ago, I would have filled up my cart at Whole Foods and thought nothing of it. I would have gone home and used all of the stuff that I bought and thought of all of it as completely normal, as if it were the baseline for my life.

Today? I bought literally two items, and they were both blatant treats, something very special and out of the ordinary, and I spent less than $10.

(Yes, one of them was cheese.)

The reality is that we spend substantially less on food today as a family than we did ten years ago. Ten years ago, our family consisted of two adults and a toddler. Today, it consists of two adults, a preteen, and two elementary-aged children.

What changed? The big change was that we redefined the baseline of our life. The normal natural flow of our day-to-day life consists of extremely inexpensive staples.

For example, we often eat meals that cost far less than $1 per person for ingredients. The other night, we actually prepared a bean soup and homemade breadsticks that fed the five of us with leftovers for about $1 total in ingredients. It’s pretty much impossible to find even the smallest item at Whole Foods for just $1.

Let me be clear, I’m not picking on Whole Foods at all. They sell upscale versions of ordinary staples and there’s certainly a place for that.

However, the place for that isn’t as the baseline for food consumption in my life. It’s an “occasional treat” kind of thing, but the day-to-day groceries that I use in my life are bought at a discount grocer or a farmers market or come from our garden.

Here’s the thing: it was incredibly hard to make that adjustment. When Sarah and I made the decision to cut back to basics in our life, it was hard. I felt like I was giving up all kinds of things in my life that I had come to accept as normal.

I felt upset. I felt miserable. I often debated whether giving up all of these things in my life was “worth it.” I longed to just go to the food co-op and spend $200 on food products, or go to an electronics store and drop $500 on video games and electronics, or just do anything that involved spending money in the way that I used to.

One day, though, I woke up and I realized that those feelings had slowly drifted away.

My idea of “normal groceries” no longer involved shopping at the food co-op, it was shopping at Fareway.

My idea of “normal hobby time” no longer involved going to the bookstore and dropping $50, it involved curling up and reading a book I already had or stopping at the library.

My idea of a “date night” no longer involved an expensive dinner and some sort of expensive entertainment. It now involved going to a local open air market and listening to the free music, or packing a picnic and going to the top of a hill at Ledges to enjoy it with a breathtaking view.

Given enough time, you eventually adjust to the things you do regularly. If you’re constantly frugal and careful with the choices in your life, you eventually start to view the frugal choices as “normal” and the expensive choices you used to make as the abnormal way of doing things. When that happens, it becomes quite easy to live an inexpensive life.

When you adjust upward, to more expensive options, the adjustment can feel pretty easy, especially if you have enough income to have flexibility in your spending. You don’t particularly notice that you’re saving less and less, so you don’t really feel the negative impact of your choices. You just gradually settle into a life with a more expensive “default” setting. You enjoy nicer dinners and shinier cars and better clothes and nicer entertainment and so on and so forth.

It seems wonderful at first, but then the wonder fades and it just seems normal. The only difference is that normal is now more expensive than before. That has consequences: you’re saving less (if you’re saving anything at all), for starters.

However, even with all of the extra perks, your life is still basically the same. You’re going to the same job. You’re living in the same place. You’re hanging out with the same people. You’re engaged with the same hobbies. It’s just a more expensive version of the same old life.

In short, you’re not going to be any happier than you were before. In fact, the opposite is true; by spending more of your income, you’re now saving less. You’re suddenly more prone to financial disasters. You’re making less progress toward your long term goals.

I know this from experience. Over a five year period, I slowly ratcheted my spending upward. I bought higher quality foods. I bought nicer clothes. I went out on nicer dates. I bought lots of things I could have easily borrowed, from books to video games. I “invested” in expensive collections.

Yet, after all of that, I was still married to the same woman. I still had the same job. I still had the same social circle. I still had the same hobbies, more or less. I still lived in the same apartment.

We just had far less money in the bank than we would have otherwise had, which meant that I was more stressed out, less prepared to handle emergencies, more afraid to check the mail, and far less prepared for things like retirement than I could have been.

The transition from spending less to spending more was as easy as could be, though. I honestly barely noticed the changes. Though I did marvel at the new perks at first, they quickly just became the “norm.” It just became my same old life with slightly higher quality versions of the same old things and with a lot less money in the bank and a lot more credit card debt.

During the handful of years after that upward adjustment in spending, I did the opposite. I adjusted downward. I started shopping at discount grocery stores. I ate out far less. I bought a lot of store brand items. Sarah and I moved to a lot of low-cost and free dates. I moved to mostly borrowing books and trading games with friends. I stopped collecting expensive stuff and started collecting experiences.

It was a rough change. I liked my multitude of perks and I didn’t want to let them go. During my weaker moments, I would sometimes relapse a bit.

Yet, after all of those changes, I was still married to the same woman. I still had the same job (at least at first). I still had the same social circle, for the most part. I still had the same hobbies, more or less. I still lived in the same apartment, only changing living quarters when forced to by the arrival of children in our lives.

We just had more money in the bank than we would have otherwise had, which meant that I felt a lot less stress, more prepared to handle emergencies, less afraid to check the mail, and far more prepared for things like retirement than I had been.

The transition wasn’t easy, as I mentioned above, but there came a point after several months when my new routines simply became the “norm.” It was the same old life that I’d had for years with slightly lower quality versions of the same old things – often the difference in quality was completely unnoticeable and even when it was, it was often regarding something that I didn’t really care about all that much. The biggest difference? The money in the bank was piling up.

Those adjustments are both called hedonic adaptation. In a nutshell, as long as your basic needs are met, you’ll eventually adjust to view whatever level of spending you take on as a normal level of spending. If you ratchet it upwards, it’ll be fun riding the elevator upwards, but eventually you won’t notice the joy of it any more because it’s become normal. If you ratchet your spending downwards, it’ll be painful watching minor perks go away, but eventually you won’t feel any pain any more because the new way of doing things is now normal.

You’re going to eventually revert back to the same level of happiness with most of the things in your life. With one big exception, of course: if you spend less, you’re going to be building financial security quite rapidly, and that adds a certain amount of personal peace to the equation.

In other words, you adjust to the things you do regularly. Sometimes it’s difficult to adjust, especially if you take away a luxury or a perk. Once you’ve adjusted, you don’t notice it and you wonder why on earth you considered it a normal thing.

There are a few things worth noting here.

There is a “floor” to this kind of adaptation. When you start crossing the line into cutting things you truly need, it’ll become very difficult. Having plenty of foods that provide basic nutrition is one. Having plenty of clean water is another. Having a roof over your head and a place to store some of your stuff is yet another. Having a way to easily transport yourself to work and to places to acquire food is another. Having a few interests and hobbies is yet another. Having the ability to occasionally treat yourself is yet another. Once you start eliminating those things, you start altering the things that form your basic level of happiness.

That default level of happiness stays more or less the same no matter how big your house is, but you need to have a place to live or else you’re chopping into that default level of happiness. That default level of happiness stays more or less the same whether you’re eating caviar or cabbage, but you need to have your nutrition basics covered or else you’re chopping into that default level of happiness. That default level of happiness stays more or less the same no matter how you get to the store or get to work, but you need to have transportation capability or else you’re chopping into that default level of happiness. You get the idea – your needs have to be covered.

If you’re unhappy now, you’re going to be unhappy spending less, but you’ll also eventually be unhappy spending more. Your happiness level is far more about brain chemistry and daily routines than it is about the relative affluence of the things you buy and own. If you’re seeking happiness by spending more, you won’t find it. You need to seek other ways to find happiness in your life, whether it’s through a job change or a lifestyle change or simply finding a daily routine that works better for you.

For me personally, five things have really helped with personal happiness in the last few years. First, I started blocking off blocks of time in my schedule for my personal hobbies and interests. Second, I have blocks of time with people I care about where I utterly disconnect from my cell phone and social media and concentrate on the people I’m with and the things I’m doing. Third, I pray/meditate daily (I consider the practices to be extremely similar). Fourth, I put conscious effort into building and maintaining strong personal relationships with family and with my key friends, and that means doing things like actually listening to them and offering genuine help where I can without intruding. Finally, I get out and move around as much as possible, ideally in the great outdoors; I walk a lot of local and state park trails. Those things help far more with my personal happiness than virtually any realistic amount of spending.

The transition down is hard, and many people give up. When you’re transitioning downward with your spending, the transition is difficult. When you actually make it and adopt the new lower level of spending as “normal,” things are fine, but until you get there, it can feel miserable at times. You notice the absence of expensive daily routines and you might miss them. You might feel a bit of a reduction in your options while shopping (even though everything you need is still easily available). You might shift away from routines that involve regularly buying stuff into routines of regularly doing stuff and you miss that little burst of pleasure that comes from acquisition.

Those shifts are harder than they might seem at first. At first, you’re often in a “honeymoon” where you’re enjoying the change for change’s sake, but after a while, you will go through a rocky period where you feel at least somewhat deprived. That can bring about a lot of short-term negative feelings and, for a lot of people, they relapse into old spending habits. Many people are unwilling to push through that period of negative feelings about change.

The thing is, once you do push through it, things become normal again. You adapt to your new routines. Your happiness returns to essentially the previous level – or perhaps even a bit higher, since you’ve eliminated some financial stress from your life.

I know that, for me personally, I am far happier now spending less than I was back then when I was spending more. Not only do I have financial stability, I also have figured out a lot of techniques to improve my personal happiness along the way.

So what’s the take home message in all of this?

The message is that if you make spending cuts in your life that don’t fall into cutting needs, you will eventually adapt to those changes and return to your previous level of life happiness. In fact, you may actually find more happiness because the changes will come with less stress.

Why doesn’t everyone do this? There are three reasons, in my view.

First, escalating your spending feels good as you’re doing it because you’re enjoying those perks for the first time. The glow of temporary increased happiness is undoubtedly pleasant, though it eventually fades back to your normal level of happiness.

Second, our popular culture practically revolves advertising and marketing of an expensive affluent lifestyle, so all of our cultural cues point toward spending more money for more and nicer versions of the same stuff.

Third, reducing your spending feels difficult as you’re doing it because you feel those perks leaving, and even though you eventually return to your base level of happiness (or higher), it’s difficult to get there.

Those three things together hold people at their current spending level and gradually push them toward spending more and more and more, even though that path doesn’t lead to lasting happiness and creates long term financial difficulties.

My advice to you? Break through the challenge and reduce your spending. It might be difficult in the short run, but over the long run as you adapt to the changes you’ll find greater happiness and increased financial security.

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