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In 2000, fresh out of college, Cristian Hinojosa took a juicy job as an investment banker, getting paid big bucks.

"You're making six figures at 21 years old," he said. "You have a car service at your disposal. You're flying all over the world."

But was he happy? "I was miserable. I remember having the thought, 'All I'm doing is trying to make money for my clients, my bosses, and myself.' And I said, 'I don't know if I can do this anymore.'"

He stuck it out for five wretched years, then decided to chuck it, and applied for a different job ... a VERY different job.

"While I was actively employed as an investment banker, I submitted an application to the Dallas Fire Department, and a few months later got in!" Hinojosa said.

"You went way out on a limb?" asked Spencer.

"Way out!" he laughed.

Thirteen years later, Captain Cristian Hinojosa lives modestly in a two-bedroom rental making, well, let's just say a lot less than the seven-figure salary he would have been making.

Yes, he left a ton of money on the table, but he said, "My quality of life went through the roof doing what I do."

Amherst College psychology Professor Catherine Sanderson was Cristian's undergraduate advisor. She says his decision was especially tough in our money-grubbing culture. "There is this assumption always that, if I just had a little bit more, I just had a little bit more, then I will reach this happiness," she said.

Spencer asked her, "Do you feel proud of him for having made this decision?"

"I do. I love it," Sanderson laughed.

But to that ultimate question: Can money buy happiness? Sanderson's emphatic answer is "No." The key to contentment, she says, is not how much you earn, but how you feel about earning it.

"When you talk to people who love their jobs, overwhelmingly what they say is not, 'I love my paycheck,'" Sanderson laughed. "What they say is, 'I find the job meaningful.'"

It's something she is trying to teach her own college-aged son: "I remember being at a brunch with some of his friends' parents. And I said, 'I think my son, Andrew, would make a wonderful high school teacher.' And another parent at the table said, 'Oh, he's very bright. He could do so much better than that!'"

"Because, of course, he would want to do something that makes more money?" Spencer asked.

"Of course."

Research shows that once you are above the poverty line, making more money won't necessarily bring more joy, especially if you spend it on more stuff.

The reason is what psychologists call the "Hedonic Treadmill." Like hamsters on a wheel, we keep running after new stuff, never satisfied with the stuff we just got.

Sanderson said, "There's a cartoon that I show when I give a talk on this. It's somebody lying on their deathbed, and the person says, 'I should have bought more crap.' That's ridiculous, right? Because no one, at the end of their life, is thinking, 'My biggest regret is I wish I had a nicer car!'"

So if spending money on stuff won't make you happy, how should you spend it?

Harvard Business School professor Ashley Whillans and her colleagues handed out cash to two groups of people, telling one to go buy themselves something, and the other to pay someone to do a hated chore, like laundry. Guess who was happier?

"Even spending as little as $40 to buy ourselves out of a negative experience like cooking or cleaning can have significant benefits for people's happiness," Whillans said. "Participants who bought themselves time reported more joy, and less negative emotions."

"So, money in fact can buy happiness if you spend it in the right way!" said Spencer.

Just don't tell that to Cristian Hinojosa. When Spencer asked him if money can buy happiness, Hinojosa replied, "I don't believe it does."

For more info:

Story produced by Amiel Weisfogel.

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In 2000, fresh out of college, Cristian Hinojosa took a juicy job as an investment banker, getting paid big bucks. "You're making six figures at 21 years old," he said. "You have a car service at your disposal. You're flying all over the world." But was he happy? "I was miserable.

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For a lot of people, 2017 meant trying times. And divisiveness. We fought with politicians, neighbors, family, friends, the media, men and strangers we've never even met, thanks to social media. It's been enough to make one want to try their luck on a desert island - anywhere without WiFi.

Our hope for 2018? Perhaps it's remembering that as much as the people around us can drive us up the wall, no man is an island. It takes all types to make the world go 'round. And people are meant to be around other people ( even those we don't always agree with).

"Human beings are an ultra-social species - and our nervous systems expect to have others around us," Emiliana Simon-Thomas, PhD, Science Director of the Greater Good Science Center at The University of California, Berkeley, tells NBC News BETTER. In short, according to biology, neuroscience, psychology, and more, our bodies actually tend to work better when we're around not alone.

Being lonely has been linked to worse physical and emotional health outcomes and poorer wellbeing. Plus, a lack of social support can directly affects our potential for experiencing happiness, explains Simon-Thomas, who studies the biology of our emotions and thinking. "We're built to really seek social companionship and understanding."

Here are all the reasons why:

1. Being around other people makes us healthier.

Physiologically, not having a social support system is actually a source of chronic stress for our bodies, Simon-Thomas explains. Studies show that when people feel lonelier they have higher levels of the stress hormone cortisol. And that type of chronic stress raises risk of cardiovascular disease and other challenges to health and wellness, Simon-Thomas adds. Conversely relationships can encourage behaviors that are good for us, too (like eating right and exercising).

So it makes sense that studies show having fewer social ties is associated with more heart disease, cancer, and impaired immune function, as well as with worse recovery when it comes to those health problems.

Research dating back to the 1970s suggests people with weaker social networks actually die younger (due to any cause) than people who have more extensive social networks. A more recent review of 148 studies concluded that on average having stronger social ties increased likelihood of an individual's overall survival by as much as 50 percent.

2. Our brains seem to work better when we work together.

There's a growing body of evidence that suggest our brains actually function better when we're interacting with others and experiencing togetherness. That's according to a 2015 review article published by a group of Finnish neuroscientists in the journal Neuron."Social interaction is among the most complex functions humans (and their brains) perform. Yet, the interaction typically appears surprisingly easy," the coauthors write in the paper.

Research shows, for example, that listening and participating in a two-person conversation is actually less mentally taxing for the brain than giving or listening to a monologue, even though what we understand about how we process language would suggest otherwise. Other studies show children learn better by interacting with other rather than observing.

3. Psychologically, we prefer to go through life not alone.

Psychology says that part of human nature's default mode is to be social. One theory: people have an innate (and very powerful) need to belong. Some key arguments (published in the journal Psychological Bulletin in 1995) is evidence that shows most people make social ties under most conditions - and most people try to avoid breaking those ties if they can.

Another way to think about it is the social baseline theory, which suggests the human brain expects access to social relationships. That's because those connections help lower potential risks one might face (think "safety in numbers") and lessen the amount of effort needed when it comes to a variety of scenarios (if the objective is to build a shelter, there is literally less work for each individual if two people do it).

Experiments have shown that simply holding someone else's hand lessens an individual's emotional response in the brain to a perceived threat. (The effect was even greater if the person's hand you were holding was a spouse.) Another oft-cited experiment found that individuals actually perceived a hill to be steeper if they were standing at the bottom alone compared with when they stood at the bottom with a friend, Simon-Thomas notes. "Just having another person there and present, who you trust and feel safe around makes the world look like a less challenging place," Simon-Thomas.

4. When we're around people who drive us crazy, we grow.

So what about the coworker who cannot stop preaching his political views? Or your friend's best friend who you just cannot stand to be around? It's good when relationships challenge us, says Simon-Thomas.

They can help us extend our status quo and how we see the world, she explains. "These 'being driven crazy' moments are truly well thought of as opportunities for growth and transformation, which can ultimately be a more poignant source of sustained happiness."

That's because having a diverse variety of emotional experiences - including feeling sad, angry, anxious, or irritated - expands our capacity to feel good, too, she explains. And it's totally normal for our closest family and friends to be the ones who do that.

The exception is when a relationship's negatives outshine its benefits. Be wary if a relationship encourages bad habits or causes distress, says Debra Umberson, PhD, Professor of Sociology and Director of the Population Research Center at the University of Texas at Austin. "A bad relationship is worse than no relationship when it comes to health."

DO IT BETTER: Being grateful for the people around us helps

Simon-Thomas' advice for reaping the benefits of your social ties: Be grateful for your relationships (including those that challenge you).

Research shows people who are more grateful tend to be happier, tend to be more satisfied in their relationships, tend to be less vulnerable to various physical discomforts, tend to be more resilient when it comes to stress and trauma, and are more well-like by others compared with people who are less grateful, she says. "Make a point of noticing who around you is contributing to the goodness in your life and actually express it by saying thank you."

And remember, it's okay to have some "you" time when you need it. We all need time to ourselves to rest, decompress and reflect on whatever's going on in our lives, Simon-Thomas says. It recharges us for when it is time to face (and embrace) the rest of the world again.

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Why we need other people to be happy, according to science

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Even people we like the most can drive us crazy, but at the end of the day, there's no truer adage than "can't live with 'em, can't live without 'em."

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It's the topic of a thousand dinner party conversations. Is it better to have a job which pays very well or a job that is genuinely interesting? Do you want people to say, "Wow, that's cool" when you tell them what your chosen vocation is? Or do you want to go on holiday in the Maldives and drive a Range Rover Sport?

The conventional thinking on money and job satisfaction comes from a theory developed by the psychologist Frederick Herzberg. He proposed that there were two sets of factors in the workplace. One group, known as motivators, cause satisfaction. These are things like achievement, advancement and interest in work. The other group, called hygiene factors, cause dissatisfaction if they are absent - and salary is part of this group. So, if you don't earn enough you will be dissatisfied. But once you earn enough, extra money counts for very little.

In fact, says Cary Cooper, professor of organisational psychology at Lancaster University, a higher salary may actually make you less happy. "You'll be giving up things like time with your family and friends in order to earn the extra money." The answer might seem obvious, then. Find a job that is interesting and where you earn enough, but don't worry about about earning a vast salary because the Range Rover won't make you happy if you never have time to see your girlfriend.

However, context is hugely important. If you live in an ultra-expensive city such as London or New York, "enough" may be well into six figures. So you may have considerably more latitude when it comes to an interesting job if you're based in Bristol or Leeds. Equally, if your friends are high-earning bankers and lawyers, you may experience far more salary-related dissatisfaction than you would if they were teachers. Time of life is important too. "If you're divorced and have no kids then you might be far happier working all hours to earn a huge salary," says Prof Cooper.

There are also gender differences. "We did some research which showed that 18 per cent of people were mainly motivated by money," says Ian Gooden, CEO of the HR consultancy Chiumento. "But men are twice as likely to be motivated by money than women and this is particularly true of men under 35." So, working in the City until your mid 30s and then going to do something interesting that pays less is actually a very smart idea, in terms of your happiness.

Money can cause satisfaction and dissatisfaction in other ways too. We tend to benchmark ourselves against our peers. So if you get a £1m bonus, you'll be pleased - unless Mike, who sits next to you, gets a £1.5m bonus. To anyone on a normal salary, this may sound ridiculous - but it's not actually about the money, it's about the recognition. The extra £500,000 says that Mike performed 50% better than you and that's what's making you unhappy.

Gooden warns that it's also very easy to get trapped in high-earning jobs. "You get the phenomenon of 'economic prisoners' where you wind up stuck in a job you hate because you need the salary to support your lifestyle." You can't turn round to your partner and explain that you're going to take the kids out of private school and move to a smaller house because you hate your career. "There is no acceptable way out," he says.

What about an interesting job, then? On the face of things, doing something that stimulates and interests you should be far more positive than going for the big bucks. However, while this is mostly true, there are downsides to cool jobs.

For starters, people often go into sectors because they're widely viewed as being interesting and not because they personally find the job in question interesting. Thus, you might get a job in the media, when actually you'd be much happier (and probably better paid) working in IT because what really motivates you is solving problems. So you need to think hard and honestly about what interests you.

Which would you rather have:

Bear in mind too that, when it comes to interest, all jobs to some extent revert to the norm. What you loved when you joined can easily become just work three years down the line, especially if you are the kind of person who sees work as a means to an end. Moreover, as you rise through the ranks, you often move away from what makes your job interesting and into general management, which is pretty similar whatever sector you're in.

You often see this with people who work in tech: they don't want to be promoted because they want to do the interesting stuff, not manage people. "Be very careful about letting go of what interests you for more money," says Gooden. In fact, he adds, while there is a common belief that we should all aim as high as possible at work, "Not many people are motivated by really demanding jobs."

So, is it more important to earn a lot of money or have an interesting job? The answer is that you need to step back and ask yourself what is important to you - while reminding yourself that your work does not exist in isolation. However, we can say that earning vastly in excess of what you need is not likely to make you happy - and if you have the choice between a job that interests you and pays enough and one that doesn't interest you and pays far more, you should go for the former.

Finally, it's worth remembering that one of the most significant contributors towards happiness at work is not related to how interesting your job is or how much it pays. "Relationships at work are so important," says Prof Cooper, "especially your relationship with your line manager." In fact, if you hate your boss, you'll probably still be miserable, even if your job is both fascinating and well-paid.

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Which is best: interesting job or well-paid job?

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It's the topic of a thousand dinner party conversations. Is it better to have a job which pays very well or a job that is genuinely interesting? Do you want people to say, "Wow, that's cool" when you tell them what your chosen vocation is?

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There is a Chinese saying that goes: "If you want happiness for an hour, take a nap. If you want happiness for a day, go fishing. If you want happiness for a year, inherit a fortune. If you want happiness for a lifetime, help somebody." For centuries, the greatest thinkers have suggested the same thing: Happiness is found in helping others.

For it is in giving that we receive - Saint Francis of Assisi

The sole meaning of life is to serve humanity - Leo Tolstoy

We make a living by what we get; we make a life by what we give - Winston Churchill

Making money is a happiness; making other people happy is a superhappiness - Nobel Peace Prize receipient Muhammad Yunus

Giving back is as good for you as it is for those you are helping, because giving gives you purpose. When you have a purpose-driven life, you're a happier person - Goldie Hawn

And so we learn early: It is better to give than to receive. The venerable aphorism is drummed into our heads from our first slice of a shared birthday cake. But is there a deeper truth behind the truism?

The resounding answer is yes. Scientific research provides compelling data to support the anecdotal evidence that giving is a powerful pathway to personal growth and lasting happiness. Through fMRI technology, we now know that giving activates the same parts of the brain that are stimulated by food and sex. Experiments show evidence that altruism is hardwired in the brain-and it's pleasurable. Helping others may just be the secret to living a life that is not only happier but also healthier, wealthier, more productive, and meaningful.

But it's important to remember that giving doesn't always f eel great. The opposite could very well be true: Giving can make us feel depleted and taken advantage of. Here are some tips to that will help you give not until it hurts, but until it feels great:
1. Find your passion
Our passion should be the foundation for our giving. It is not how much we give, but how much love we put into giving. It's only natural that we will care about this and not so much about that, and that's OK. It should not be simply a matter of choosing the right thing, but also a matter of choosing what is right for us.
2. Give your time
The gift of time is often more valuable to the receiver and more satisfying for the giver than the gift of money. We don't all have the same amount of money, but we all do have time on our hands, and can give some of this time to help others-whether that means we devote our lifetimes to service, or just give a few hours each day or a few days a year.
3. Give to organizations with transparent aims and results
According to Harvard scientist Michael Norton, "Giving to a cause that specifies what they're going to do with your money leads to more happiness than giving to an umbrella cause where you're not so sure where your money is going."
4. Find ways to integrate your interests and skills with the needs of others
"Selfless giving, in the absence of self-preservation instincts, easily becomes overwhelming," says Adam Grant, author of Give & Take. It is important to be "otherish," which he defines as being willing to give more than you receive, but still keeping your own interests in sight.
5. Be proactive, not reactive
We have all felt the dread that comes from being cajoled into giving, such as when friends ask us to donate to their fundraisers. In these cases, we are more likely to give to avoid humiliation rather than out of generosity and concern. This type of giving doesn't lead to a warm glow feeling; more likely it will lead to resentment. Instead we should set aside time, think about our options, and find the best charity for our values.
6. Don't be guilt-tripped into giving
I don't want to discourage people from giving to good causes just because that doesn't always cheer us up. If we gave only to get something back each time we gave, what a dreadful, opportunistic world this would be! Yet if we are feeling guilt-tripped into giving, chances are we will not be very committed over time to the cause.

The key is to find the approach that fits us. When we do, then the more we give, the more we stand to gain purpose, meaning and happiness-all of the things that we look for in life but are so hard to find.
Jenny Santi is a philanthropy advisor and author of The Giving Way to Happiness: Stories & Science Behind the Life-Changing Power of Giving

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The Secret to Happiness Is Helping Others

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There is a Chinese saying that goes: "If you want happiness for an hour, take a nap. If you want happiness for a day, go fishing. If you want happiness for a year, inherit a fortune. If you want happiness for a lifetime, help somebody."

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A good working memory could be the secret to a happy and successful life, new research has suggested.

Scientists at the University of Stirling have found people with a good working memory are more likely to be optimistic and self-assured.

Those whose working memory was poor were more likely to "brood" and scored higher in tests of pessimism.

Working memory is the ability to remember and process information at the same time.

'Happiness levels'

It is employed when a person is asked to count back two digits from a number and provide the answer without hesitation.

The research suggested that individuals with good working memories tend to have better jobs and relationships.

Dr Tracy Alloway, who led research at the University of Stirling, wanted to see if it also had a bearing on happiness.

She carried out a study of 1,200 people aged from their late teens to their sixties who were given a series of psychological tests and questionnaires.

She said: "We found that people who have a high working memory tend to be more optimistic, more hopeful about life, more confident that they can cope with problems and adjust to situations."

"People with a poor working memory tended to be more brooding and to spend more time fixated on problems when they arose in their life."

With working memory you're taking new information, integrating it with the facts you know, and then moving forward
Dr Tracy Alloway, University of Stirlng

She added that brooding was linked to depression.

Dr Alloway was speaking at the British Science Festival at Aston University in Birmingham.

She described working memory as the brain's "Post-it note".

She said: "With working memory you're taking new information, integrating it with the facts you know, and then moving forward."

The average adult can remember and work with five bits of information simultaneously, whereas a five-year-old can cope with only two.

The research showed that contrary to what might be expected, the working memory of people in their sixties was as good as that of teenagers.

Dr Alloway added that working memory allowed people to adapt to new situations more quickly.

She said: "I think the key issue is the idea of cognitive flexibility."

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A good working memory could be the secret to a happy and successful life, new research has suggested. Scientists at the University of Stirling have found people with a good working memory are more likely to be optimistic and self-assured. Those whose working memory was poor were more likely to "brood" and scored higher in tests of pessimism.

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I cover startups and tech. Opinions expressed by Forbes Contributors are their own.

We like buying things, at least we think we do. It's bred into us. Life in the 21st century is a fast paced, consumer oriented experience where media surrounds us at all times enforcing the idea that happiness is a matter of buying the perfect house, driving the best car, wearing the trendiest clothes and posting status updates on the latest high tech devices. Everywhere we look we are inundated with the same message: "BUY, BUY, BUY your way to happiness!" While buying a new gadget or the first drive in a new car may be satisfying or thrilling for a short while, the thrill always fades and we find ourselves back in the same place seeking the next purchase to keep the feeling going. If this sounds anything like your life then rest assured there is a better way to spend your money and keep that feeling alive: Stop buying stuff and start buying experiences!

Recent research from San Francisco State University found that people who spent money on experiences rather than material items were happier and felt the money was better spent. The thrill of purchasing things fades quickly but the joy and memories of experiences, from epic adventures to minute encounters, can last a lifetime. Next time you're feeling a bit down or lacking in some way, before you go out and buy things remember these five tips for evaluating your spending and decide to have experiences instead of just accumulating stuff.
1. It's The Little Things
Size doesn't matter . . . in happiness. Most people equate large purchases with large amounts of happiness, and while it's true that buying a Maserati may give you more of a thrill than dining out with your friends, the thrill of a fancy car will soon fade and with the money you spent you could dine out a couple times a week for years in the company of friends and family. Those less intense, but still enjoyable evenings out in the company of loved ones will provide a much longer lasting and more fulfilling happiness than the temporary thrill of a large purchase. Plus, people who have more frequent social interactions live longer, healthier lives and experience less stress, depression and feelings of isolation. Small expenditures of money involving social interactions such as dining out, getting a manicure with friends, going to a concert or meeting up for drinks are a great way to de-stress, have a great time and create lasting memories. Little bits of happiness add up and when spread out, last alot longer!
2. Giving Is Better Than Receiving
Few things provide a lasting sense of happiness and fulfillment like giving to others. There is very little you can do for yourself which will have the same effect as doing well by someone else. Keep this in mind next time you're wandering the mall, window shopping every store. Instead of seeking out things you may want to buy for yourself, go on a hunt to find the perfect item to surprise your best friend or significant other. Buy your mom a fresh bouquet of flowers or get your dad a new sleeve of golf balls. The experience of surprising a friend or loved one with an unexpected gift will not only make their day, but leave you feeling great about yourself, and that joy will last unlike your temporary excitement over a new watch.

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The Secret to Happiness? Spend Money on Experiences, Not Things

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We like buying things, at least we think we do. It's bred into us. Life in the 21st century is a fast paced, consumer oriented experience where media surrounds us at all times enforcing the idea that happiness is a matter of buying the perfect house, driving the best car, wearing [...]

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The following story is excerpted from TIME's special edition, The Science of Happiness, which is available at Amazon.

"Whoever said money can't buy happiness isn't spending it right." You may remember those Lexus ads from years back, which hijacked this bumper-sticker-ready twist on the conventional wisdom to sell a car so fancy that no one would ever dream of affixing a bumper sticker to it.

What made the ads so intriguing, but also so infuriating, was that they seemed to offer a simple-if rather expensive-solution to a common question: How can you transform the money you work so hard to earn into something approaching the good life? You know that there must be some connection between money and happiness. If there weren't, you'd be less likely to stay late at work (or even go in at all) or struggle to save money and invest it profitably. But then, why aren't your lucrative promotion, five-bedroom house and fat 401(k) cheering you up? The relationship between money and happiness, it would appear, is more complicated than you can possibly imagine.

Fortunately, you don't have to do the untangling yourself. Over the past quarter-century, economists and psychologists have banded together to sort out the hows, whys and why-nots of money and mood. Especially the why-nots. Why is it that the more money you have, the more you want? Why doesn't buying the car, condo or cellphone of your dreams bring you more than momentary joy?

In attempting to answer these seemingly depressing questions, the new scholars of happiness have arrived at some insights that are, well, downright cheery. Money can help you find more happiness, so long as you know just what you can and can't expect from it. And no, you don't have to buy a Lexus to be happy. Much of the research suggests that seeking the good life at a store is an expensive exercise in futility. Before you can pursue happiness the right way, you need to recognize what you've been doing wrong.

Money misery

The new science of happiness starts with a simple insight: we're never satisfied. "We always think if we just had a little bit more money, we'd be happier," says Catherine Sanderson, a psychology professor at Amherst College, "but when we get there, we're not." Indeed, the more you make, the more you want. The more you have, the less effective it is at bringing you joy, and that seeming paradox has long bedeviled economists. "Once you get basic human needs met, a lot more money doesn't make a lot more happiness," notes Dan Gilbert, a psychology professor at Harvard University and the author of Stumbling on Happiness. Some research shows that going from earning less than $20,000 a year to making more than $50,000 makes you twice as likely to be happy, yet the payoff for then surpassing $90,000 is slight. And while the rich are happier than the poor, the enormous rise in living standards over the past 50 years hasn't made Americans happier. Why? Three reasons:

You overestimate how much pleasure you'll get from having more. Humans are adaptable creatures, which has been a plus during assorted ice ages, plagues and wars. But that's also why you're never all that satisfied for long when good fortune comes your way. While earning more makes you happy in the short term, you quickly adjust to your new wealth-and everything it buys you. Yes, you get a thrill at first from shiny new cars and TV screens the size of Picasso's Guernica. But you soon get used to them, a state of running in place that economists call the "hedonic treadmill" or "hedonic adaptation."

Even though stuff seldom brings you the satisfaction you expect, you keep returning to the mall and the car dealership in search of more. "When you imagine how much you're going to enjoy a Porsche, what you're imagining is the day you get it," says Gilbert. When your new car loses its ability to make your heart go pitter-patter, he says, you tend to draw the wrong conclusions. Instead of questioning the notion that you can buy happiness on the car lot, you begin to question your choice of car. So you pin your hopes on a new BMW, only to be disappointed again.

More money can also lead to more stress. The big salary you pull in from your high-paying job may not buy you much in the way of happiness. But it can buy you a spacious house in the suburbs. Trouble is, that also means a long trip to and from work, and study after study confirms what you sense daily: even if you love your job, the little slice of everyday hell you call the commute can wear you down. You can adjust to most anything, but a stop-and-go drive or an overstuffed subway car will make you unhappy whether it's your first day on the job or your last.

You endlessly compare yourself with the family next door. H.L. Mencken once quipped that the happy man is one who earns $100 more than his wife's sister's husband. He was right. Happiness scholars have found that how you stand relative to others makes a much bigger difference in your sense of well-being than how much you make in an absolute sense.

You may feel a touch of envy when you read about the glamorous lives of the absurdly wealthy, but the group you likely compare yourself with are folks Dartmouth economist Erzo Luttmer calls "similar others"-the people you work with, people you grew up with, old friends and old classmates. "You have to think, 'I could have been that person,' " Luttmer says.

Matching census data on earnings with data on self-reported happiness from a national survey, Luttmer found that, sure enough, your happiness can depend a great deal on your neighbors' paychecks. "If you compare two people with the same income, with one living in a richer area than the other," Luttmer says, "the person in the richer area reports being less happy."

Your penchant for comparing yourself with the guy next door, like your tendency to grow bored with the things that you acquire, seems to be a deeply rooted human trait. An inability to stay satisfied is arguably one of the key reasons prehistoric man moved out of his drafty cave and began building the civilization you now inhabit. But you're not living in a cave, and you likely don't have to worry about mere survival. You can afford to step off the hedonic treadmill. The question is, how do you do it?

Money bliss

If you want to know how to use the money you have to become happier, you need to understand just what it is that brings you happiness in the first place. And that's where the newest happiness research comes in.

Friends and family are a mighty elixir. One secret of happiness? People. Innumerable studies suggest that having friends matters a great deal. Large-scale surveys by the University of Chicago's National Opinion Research Center (NORC), for example, have found that those with five or more close friends are 50% more likely to describe themselves as "very happy" than those with smaller social circles. Compared with the happiness-increasing powers of human connection, the power of money looks feeble indeed. So throw a party, set up regular lunch dates-whatever it takes to invest in your friendships.

Even more important to your happiness is your relationship with your aptly named "significant other." People in happy, stable, committed relationships tend to be far happier than those who aren't. Among those surveyed by NORC from the 1970s through the 1990s, some 40% of married couples said they were "very happy"; among the never-married, only about a quarter were quite so exuberant. But there is good reason to choose wisely. Divorce brings misery to everyone involved, though those who stick it out in a terrible marriage are the unhappiest of all.

While a healthy marriage is a clear happiness booster, the kids who tend to follow are more of a mixed blessing. Studies of kids and happiness have come up with little more than a mess of conflicting data. "When you take moment-by-moment readouts of how people feel when they're taking care of the kids, they actually aren't very happy," notes Cornell University psychologist Tom Gilovich. "But if you ask them, they say that having kids is one of the most enjoyable things they do with their lives."

Doing things can bring us more joy than having things. Our preoccupation with stuff obscures an important truth: the things that don't last create the most lasting happiness. That's what Gilovich and Leaf Van Boven of the University of Colorado found when they asked students to compare the pleasure they got from the most recent things they bought with the experiences (a night out, a vacation) they spent money on.

One reason may be that experiences tend to blossom as you recall them, not diminish. "In your memory, you're free to embellish and elaborate," says Gilovich. Your trip to Mexico may have been an endless parade of hassles punctuated by a few exquisite moments. But looking back on it, your brain can edit out the surly cabdrivers, remembering only the glorious sunsets. So next time you think that arranging a vacation is more trouble than it's worth-or a cost you'd rather not shoulder-factor in the delayed impact.

Of course, a lot of what you spend money on could be considered a thing, an experience or a bit of both. A book that sits unread on a bookshelf is a thing; a book you plunge into with gusto, savoring every plot twist, is an experience. Gilovich says that people define what is and isn't an experience differently. Maybe that's the key. He suspects that the people who are happiest are those who are best at wringing experiences out of everything they spend money on, whether it's dancing lessons or hiking boots.

Applying yourself to something hard makes you happy. We're addicted to challenges, and we're often far happier while working toward a goal than after we reach it. Challenges help you attain what psychologist Mihaly Csikszentmihalyi calls a state of "flow": total absorption in something that stretches you to the limits of your abilities, mental or physical. Buy the $1,000 golf clubs; pay for the $50-an-hour music lessons.

Flow takes work

After all, you have to learn to play scales on a guitar before you can lose yourself in a Van Halen-esque solo-but the satisfaction you get in the end is greater than what you can get out of more passive pursuits. When people are asked what makes them happy on a moment-to-moment basis, watching TV ranks pretty high. But people who watch a lot of TV tend to be less happy than those who don't. Settling down on the couch with the remote can help you recharge, but to be truly happy, you need more in your life than passive pleasures.

You need to find activities that help you get into the state of flow. You can find flow at work if you have a job that interests and challenges you and that gives you ample control over your daily assignments. Indeed, one study by two University of British Columbia researchers suggests that workers would be happy to forgo as much as a 20% raise if it meant having a job with more variety.

Not long ago, most researchers thought you had a happiness set point that you were largely stuck with for life. One famous paper said that "trying to be happier" may be "as futile as trying to be taller." The author of those words has since recanted, and experts are increasingly coming to view happiness as a talent, not an inborn trait. Exceptionally happy people seem to have a set of skills-ones that you too can learn.

Sonja Lyubomirsky, a psychology professor at the University of California, Riverside, has found that happy people don't waste time dwelling on unpleasant things. They tend to interpret ambiguous events in positive ways. And perhaps most tellingly, they aren't bothered by the successes of others. Lyubomirsky says that when she asked less-happy people whom they compared themselves with, "they went on and on." She adds, "The happy people didn't know what we were talking about." They dare not to compare, thus short-circuiting invidious social comparisons.

That's not the only way to get yourself to spend less and appreciate what you have more. Try counting your blessings. Literally. In a series of studies, psychologists Robert Emmons of the University of California, Davis, and Michael McCullough of the University of Miami found that those who did exercises to cultivate feelings of gratitude, such as keeping weekly journals, ended up feeling happier, healthier, more energetic and more optimistic than those who didn't.

And if you can't change how you think, you can at least learn to resist. The act of shopping unleashes primal hunter-gatherer urges. When you're in that hot state, you tend to be an extremely poor judge of what you'll think of a product when you cool down later. Before giving in to your lust, give yourself a time-out. Over the next month, keep track of how many times you tell yourself: I wish I had a camera! If in the course of your life you almost never find yourself wanting a camera, forget about it and move on, happily.

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Here's How Money Really Can Buy You Happiness

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The following story is excerpted from TIME's special edition, The Science of Happiness, which is available at Amazon. "Whoever said money can't buy happiness isn't spending it right." You may remember those Lexus ads from years back, which hijacked this bumper-sticker-ready twist on the conventional wisdom to sell a car so fancy that no one would ever dream of affixing a bumper sticker to it.