The business section of the Sunday (July 7, 2012) New York Times had an interesting article entitled “Don’t Indulge. Be Happy.” by Elizabeth Dunn and Michael Norton. Ms. Dunn is an associate professor of psychology at the University of British Columbia while Mr. Norton is an associate professor of business administration at Harvard Business School.

Their article asks a simple question, “how much money do you need to be happy?” The answer is not as much as one thinks. While we have all heard the adage that “money cannot buy happiness”, these authors have discovered that there is a measurable connection between income and happiness…up to a point:

The catch is that additional income doesn’t buy us any additional happiness … once we reach that comfortable standard. The magic number that defines this “comfortable standard” varies …, but in the United States, it seems to fall around $75,000 … . [R]esearchers at Princeton found that higher household incomes were associated with better moods on a daily basis - but the beneficial effects of money tapered off entirely after the $75,000 mark. (Id.)

The authors found that one’s life satisfaction or happiness does not double with making double the money. Indeed, only 9 percent of those individuals surveyed were more satisfied making $55,000 than $25,000. They did not get the 100% return they were expecting with the doubled income. (Id.)

What these researchers did discover is that people gained greater satisfaction and thus more happiness by either using the increased income sparingly (i.e., underindulgence) or giving it all to charity. They found the latter - being generous - made people the most happy: those who spent it on others rather than themselves - were far happier than those who used it in the other two categories (Id.)

Reading this article got me thinking about mediations and settling disputes. Typically, disputes get settled by money passing from one party to the other. Usually, one party demands more money than the other one is willing to pay. The demanding party frequently believes that if her demand is met, she will be “happy.” But will she be, really? Money does not buy happiness, and these researchers demonstrate this! Wouldn’t our hypothetical plaintiff be happier by demanding only a minimal amount (or none at all) for herself and that our hypothetical defendant pay the amount to charity? Wouldn’t such an act of charity make both parties more satisfied with the settlement?

It is often said that a good settlement is one in which the plaintiff believes she received too little or not enough and the defendant believes she paid too much. Suppose, instead, most or all of it went to charity? According to this article, both sides would be far happier and more satisfied with the settlement. And just think how happy the receiving charity would be!

The article provokes interesting thoughts and a whole new approach to settling cases! Perhaps, I will suggest this approach at my next mediation and see what happens!

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by Phyllis G. Pollack

Phyllis G. Pollack is a full time neutral in Los Angeles where, as President of PGP Mediation, she focuses on business, real estate, contract and “lemon law” disputes. She may be reached at Phone: 213-630-8810 / phyllis@pgpmediation.com / Website: www.pgpmediation.com