Excerpt: "Satisfaction: The Science of Finding True Fulfillment"

To find an original response to the question "Why isn't life more satisfying?" psychiatrist and neuroscientist Gregory Berns has searched inside labs, nightclubs, kitchens and bedrooms to figure out where pleasure begins and ends: inside the brain.

In his book, "Satisfaction: The Science of Finding True Fulfillment," Berns explores a new way of understanding human motivation, and explains why we often crave the kind of challenge and adversity that seems the opposite of pleasure and satisfaction.

You can read an excerpt from the book below.

From Chapter 2: For the Love of Money

Part of the problem with money, at least in terms of satisfaction, is that, by itself, it can't do anything. A $10 bill, after all, is just a piece of paper backed by the promise of the U.S. government to make good on its debts. But $10 will get you a pancake breakfast like the one I ate with Read, or a first-run movie (as long as you don't see it in Manhattan, or buy popcorn), or a used book. Depending upon your point of view, $10 can yield thirty minutes of at the breakfast table, two hours of escapism at a movie, or twenty hours of bliss with a good book. Conventional economic wisdom would suggest that money is only as good as what you can turn it into. But I think there is more to it than that, and it has to do with the brain's need for novelty.

The brain wants novelty, and although money is not the only means of satisfying this desire, money makes it easier to get. Many of the experiences people seek most avidly cost money -- like an exotic vacation or a meal at a five-star restaurant -- and there may even be an added value to money that goes beyond its ability to deliver raw transactional value. I call this "fantasy value," and it is a big factor in why people play the lottery. By serving as a sort of placeholder for potential purchases, money becomes an intermediary step on the road to satisfying experiences. Show me a $10 bill, and I see pancakes, movies, and novels all at once, and there is a certain amount of pleasure in dwelling in this state of possibility. This is perfectly fine as long as you don't lose sight of the goal, a satisfying experience. But experience being nebulous and money concrete, money becomes the easier target at which to aim. What you can count, you know you've hit.

Consider what you can buy for five cents: a piece of bubble-gum -- if that. Now consider what you can buy with $5: a cheap lunch, an expensive coffee, some socks, a couple of gallons of gas. And for $500, you can make the $5 purchases a hundred times over; you can also become the owner of a computer, a television, some nice clothes for your children, a one-way plane flight to almost anywhere in the world -- the list goes on. While each of these monetary values differs by a factor of one hundred, the possibilities of what you can do with each grow exponentially. Five hundred dollars will buy a thousand, if not a million, more things than $5 – much more than a hundred-fold increase. The buying of possibilities, and not the actual goods purchased, is what accounts for the allure of money. When you increase the number of options available to you, risk actually decreases. Financial managers call this diversification, and our brains seem to have a built-in bias to it. People prefer more choices.

The options that money gives you are really options for acquiring more information about the world. As I have said before, novelty is what the brain really wants, and money is the most efficient means to that end. Even if you don't spend it. Just having money represents the possibility of experiencing things you wouldn't otherwise have, which in turn allows you to consider your options. I was about to learn, however, that although money buys possibilities, it is not the only way to achieve this type of freedom.

I picked the dollar amounts in the previous example for a simple reason. Most of the things that a person can buy cost less than $500. Think of all the things (including nonmaterial uses of money -- what economists call services) that cost less than $500. Now think of all the things that cost more. The first list is bigger. If we carry this to the extreme, we'd find that the list of the things that cost more than $100 million is exceedingly small.

The utility of money is rooted in the number of its possible uses, but increasing the amount of money is a fool's game. Since most of the purchases you would want to make are relatively modest in price, increasing your supply of money is good only to a point. If you can afford a computer or a television, both of which can be had for about $500, then you have already achieved the peak of purchasing power.

Bernoulli knew that money had diminishing utility, but he never explained why. In the 1970's, Daniel Kahneman and Amos Tversky, both psychologists, showed that Bernoulli had missed a crucial aspect of how people think about money. You view money not in terms of absolute wealth, they argued, but as gains and losses from your status quo. Moreover, people view the pain of losing money as worse than the pleasure of an equivalent gain. Kahneman and Tversky called this idea prospect theory, and it was based largely on observations of the kinds of lotteries people are willing to play.

Why should losses loom larger than gains? The reason, I think, comes from the way in which the prices of all the goods and services in the world are distributed. Once you have enough money to buy, potentially, anything under $500, then increasing that amount also increases the number of possibilities -- but at a diminishing rate. Conversely, if you lose the same amount of money, then you close off a greater number of possibilities than you would have acquired had you gained the equivalent amount. Imagine how it feels to lose $500 -- say the cost of a minor auto accident or an unexpected tax bill. You'll probably think about all the things you can no longer buy with that money (like a new TV or computer). Such thoughts explain why people are more averse to risk the wealthier they become. The wealthy live with greater possibilities of loss than of gain.

Economists hate this idea. Standard economic theory depends on the ability of the consumer to establish preferences in terms of their expected utility and not, as I just explained, by simply counting what they might buy with their money. But I can't be the only person who has a hard time gauging how much utility I will get from a high-definition television compared to a plane ticket to Hawaii, (which cost about the same).

Contrary to what most economists think, there is some evidence that people do, indeed, value having options. In an ingenious study, George Loewenstein, a psychologist at Carnegie Mellon University of Pittsburgh, examined the choices of Halloween trick-or-treaters. On Halloween, 1993, kids coming to his house in Pittsburgh were offered a pile of candy bars and told they could pick two. All the kids picked two different candy bars. Now, everyone has a favorite candy -- be it Snickers, Milky Way, or Three Musketeers -- so if people wanted to maximize the expected utility of their future consumption, they would pick two of the favorite bars. This behavior is not limited to children, either; college students acted the same way.

If it is the accrual of possibilities, and not just goods, that explains why people apparently wish to have more money, the notion also explains why spending money is not as satisfying as you might hope. The act of buying something closes off any number of other possibilities. You lose potential information during the act of a purchase, which psychologists call regret. You make decisions with one eye toward the desired outcome and the other on possible outcomes (often referred to as "counterfactuals.") Thus the choices you make come, in part, from the desire to avoid regret. Buyer's remorse -- the sinking feeling that you shouldn't have made a major purchase -- occurs because you also consider the other things you could have bought with that money.

The logic of this argument leads to a rather surprising conclusion. First, if you have enough money for basic needs, with some cash left over for modest discretionary purchases, then acquiring more money will lead to fewer, not more, new possibilities on a per dollar basis. Second, once you earn enough to have discretionary money, you shouldn't spend it. Having options is a good thing, and therefore losing options -- when you spend money -- is a bad thing.

If economists hate the suggestion that people don't, in fact, compute expected utility , but rather count potential purchases, then what I have just suggested will strike them as completely daft. Economists will point to the fact that people struggle to increase their income so that they can spend their earnings on bigger and fancier items. The question on my mind, though, is not what most people do with money but why money doesn't lead to lasting improvements in well-being for most people. The answer lies in what you do to get the money.

Excerpt published with permission. Copyright © 2005 Gregory Berns.