I always knew credit card companies were sneaky, but now the airlines seem to be copying their “best” practices. This is my conclusion after a weird encounter with Continental today.  I use a Continental mileage-reward credit card because I fly out a Newark, a hub for the airline. In the mail today I received two gift certificates for $20 off a flight in the U.S. that said “Here is your free gift. Thanks for using your credit/debit card.” Very handy, as I was just booking a flight to Chicago for August.

Now I had priced this trip a week ago, and it came up at $178 round-trip, but I didn’t book it because my plans weren’t confirmed. When I logged into Continental. com, and submitted my gift certificate promo code, it priced at $258. So I logged out and did a quick check on continental.com again, without using the promotion certificate. Price? $198.

So as you make your summer travel plans, beware of credit cards and airlines bearing gifts. This one was apparently a $60 Trojan Horse fare hike — or make that $40, as I would have “saved” $20 by using the gift certificate. It’s kind of like a corporate membership program I had with a rental car company years ago. You would price the deal, and then price it again with your membership number — and it always came out to a higher rate.

Have you run into sneaky practices by the airlines that empty your wallet? Comment here or email me at laura at laurarowley.com.

University of Southern California professor Richard Easterlin, the father of research on well-being, began studying happiness in the late 1960s, when happiness wasn’t cool. I’ve interviewed him a number of times over the years.

Early in his career, Easterlin examined data on economic growth and reported happiness in a range of countries, and discovered that big jumps in growth in nations such as the United States and Japan were accompanied by declines, or only marginal increases, in reported happiness. This became known as the “Easterlin Paradox.”

National economic growth and happiness is one thing, personal wealth and happiness is something else entirely. So amid this debate, I think it’s worth re-examining what studies say about money and individual well-being. Here are my conclusions:

The problem is the more we have the more we want. In a separate study, Easterlin analyzed the results of a survey that asked adults about their material aspirations and achievements. People were presented with a list of items — a lot of money, a home, a swimming pool, a vacation home, cars, travel abroad, etc. — and asked which things fit their definition of “the good life.” Then, researchers asked them to go down the list and name all the things they had. The study was conducted twice — once in 1978 and again in 1994.

Because the two surveys were conducted 16 years apart, Easterlin was able to analyze whether people’s aspirations shift as they age and their circumstances change. He found that as consumers moved through each stage of the life cycle — early, midlife, and older years — they generally acquired more of the goods on the list. But as they accumulated more, their aspirations for material goods also rose in proportion to the amount of things they owned.

In other words, the study offered scientific proof of the old saying “the more you have the more you want.” Researchers call it the “hedonic treadmill.” It means — we quickly adapt to the improvement in our circumstances, and then seek more.

In 2002, Daniel Kahneman of Princeton won the Nobel Prize in economics for his work in this area. A fundamental rule of economics says that people are motivated by self-interest: They know what they want, can predict the most desirable outcome, and choose the best course of action to maximize their welfare. But Kahneman and a burgeoning group of behavioral economists have found that’s not always true: We don’t always act rationally.

One reason is the way our brains recall experience. Kahneman had people record how they were feeling about an event in real time, and then interviewed them after the fact. He discovered their accounts didn’t match. Our brains pay attention to the peak and the end of an experience, and tend to forget what happens in between.

If we only remember the peak and end of an experience, we can make poor decisions. For instance, a salesperson will remember the rush of closing a big deal, but might not remember what it cost in time away from family, lost sleep, high stress, or poor health — so he’ll repeat the behavior. A shopper will remember the thrill of buying a Louis Vuitton suitcase, but she might not remember how long or hard she had to work to pay for it (or worse, pay for the bag and the finance charges on a credit card) — and dig herself ever-deeper in the hole. If we aren’t consciously in touch with what we really value, we can make career and money decisions that make us unhappy.

I recently interviewed Sonja Lyubomirsky, a psychologist at the University of California, Riverside, and author of “The How of Happiness.” Her book examines research suggesting that 40 percent of our happiness is inherited, and 10 to 15 percent is based on life circumstances like money, health, where you live, whether you’re married or have kids, and so on.

But the rest of well-being — a good 45 to 50 percent — comes from your choices: Should I work extra hours for more money, or spend that time with my friends? Should I watch television, or go running or biking? Should I go to the mall, or spend time volunteering? Should I browse through the catalogs in my mailbox, or spend that half-hour meditating on what I’m grateful for?

As you can probably guess, researchers have found it’s the latter choice in each pair that promotes happiness. Everyday decisions have a huge impact on your happiness, and many of those happiness-inducing choices — socializing, volunteering, exercising, meditating — don’t have to cost anything at all.

We tend to place a lot of symbolic meaning on money. We think money is security, power, freedom, happiness, or love. Money can certainly buy us a measure of freedom or security, but money itself is none of those things. If we think money is security, we’ll never amass enough to feel secure. If we think it’s freedom, we’ll never earn enough to be free. The problem is, instead of consciously setting and pursuing goals to create a life in which we feel free or secure, we shortcut to money as a proxy.

Tim Kasser, associate psychology professor at Knox College, and Richard Ryan of the University of Rochester have found that people who make the pursuit of money a significant goal score lower for mental health. They suffer a greater risk of depression; have more anxiety and lower self-esteem; experience more physical, behavioral, and relationship problems; and score lower on indicators testing for self-actualization and vitality (or feeling alive and vigorous). The findings were similar across different countries, income levels, and age groups.

Once we remove the emotional baggage, we can acknowledge that money is just one component to achieve our goals instead of an all-encompassing solution. If freedom is a value, we have to ask which people, qualities, and experiences have made us feel most free in the past: Where do I need to live to be around those people? What should I do for my work, and how should I spend my leisure time? How much money do I need to help me create a life with those qualities and experiences? Being as specific as possible about how to manifest these qualities in our lives will keep us from running on the hedonic treadmill.

Finally, there’s the issue of what people mean when they tell a pollster they’re “happy.”

In one of my favorite studies, researchers had subjects go into a phone booth to make a call. The researchers put a quarter in the coin return of the telephone; some people find it, others don’t. Immediately afterward, the researchers asked them to rate their overall satisfaction — and it’s the people who found the quarter who rate life the best.

The study underscores the importance of separating temporary euphoria from genuine happiness. I subscribe to Aristotle’s notion of eudaimonia — which is translated from the Greek as “happiness,” but is probably closer to the word “flourishing.” And long-term flourishing requires discipline, persistence, hard work, faith, and, most important, pursuing goals that are close to your heart and based on your personal gifts.

This isn’t the smiley-face, instant-gratification kind of “happiness” that popular culture promotes. As Thomas Carlyle once said, “There is something higher than happiness, and that is blessedness.”

We had a lovely holiday. Family mass on Christmas Eve (I sing in a church choir and love the season’s traditional songs). This was followed by a traditional family dinner at a favorite Italian restaurant, and a morning of gift-opening where everyone seemed to have gotten what they want. We spent the afternoon and evening at my sister-in-law’s. She and her husband are incredibly gracious hosts, and served a gourmet feast for 30 people.

Like us, they got a Nintendo Wii for their kids. The big difference is their kids play on what must have been a 42-inch high-def screen in their gorgeous new family room expansion, while mine play on a 20-inch, 12-year-old screen at home in our unfinished basement. Such comparisons are difficult to resist, and inevitably inspire some envy.  

Another example: Last week a friend told me about asking her (very wealthy) sister-in-law what her nieces and nephews would like for Christmas, only to be told (in an apparently snobby manner) that “they really have everything they need.” The implication was my friend couldn’t possibly come up with anything these well-to-do children didn’t already have in their toy box or closet.    

For anyone with similar experiences around the holidays, I recommend the book “Status Anxiety” by Alain de Botton. It combines history, philosophy and psychology with sly and hilarious commentary, explaining why we engage in materialism and indulge in destructive comparisons (we’re not really seeking bling, but love).  

Plato, David Hume, St. Augustine, Adam Smith and Alexis de Tocqueville are just a few of the figures who appear in Botton’s tome, which looks at art, politics and religion, among other issues. He examines medieval times, when status anxiety was prevented by widespread religious belief, which “reinforced the concept that every member of society had been assigned an unalterable role, a scheme that made it no less ludicrous for a peasant to wish to take up residence in a manor house and have a say in his own governance than for a toe to aspire to be an eye.”  

Botton amusingly contrasts this with the more egalitarian thinking that followed and gave rise to the self-improvement movement – from Benjamin Franklin (“there are no gains without pains”) to Anthony Robbins (“we all have the capability to carry out our dreams”) — concluding that “the price we have paid for expecting to be so much more than our ancestors is a perpetual anxiety that we are far from being all we might be.” 

An entertaining journey through the history of envy, it’s a fine distraction from the envy that can dampen your high holiday spirits.

Parents are spending with abandon to provide the right education, material goods and character-building experiences. In her book, “Buy, Buy Baby,” author Susan Gregory Thomas says Generation X (those born between 1965 and 1976) “overstimulate, overschedule, overshop for, and overobsess about their own children.” Read my interview with her in the previous post.

I try to fight the tide of overscheduling, but my three kids are the ones calling the shots. I don’t enroll them in anything unless they ask. And of course, they ask: The oldest for piano and voice lessons, theater classes, math enrichment and Girl Scouts; the middle one for soccer, basketball, guitar, math enrichment and Brownies; the youngest (age 4), for ballet and tap. (Okay, the older two didn’t ask for math enrichment. That was my idea, a consequence of my inability to explain the concept of elapsed time.

When I grew up in the 1970s, the extracurricular options were after-school sports and the occasional class (including disco dancing lessons taught for $1 by my eighth grade homeroom teacher), or the dozen or so classes offered by the town’s rec center. My mother jokes that she raised my ten siblings and me with “benign neglect.” In the summers we took off on our Banana-seat Schwinn bikes in the morning and came home when the streetlights went on. We never did worksheets to keep our academic skills fresh (I don’t make my kids do them either).

Today there is no end to the possibilities for the middle-class parent to enrich their children. We buy in, schedule, chauffeur, and think (or at least I do) that there’s so much more we could be doing with the time spent in traffic. (I cart my laptop everywhere.) Why, both practically and philosophically, are parents doing these things to and for their kids? What are they striving for? A few possible theories:

It’s all about self-actualization. Many of today’s parents were raised with the message of empowerment, Maslow’s Hierarchy of Needs, Anthony Robbins urging people to pursue their passion, the U.S. Army recruiting jingle “Be all that you can be.” We want our kids to find themselves, express their gifts, be happy, be a blessing to other people. And there’s no denying the real benefits of certain activities: Playing piano is positively correlated with math skills; participation in sports with higher self-confidence, team-building skills, and a lower likelihood of experimenting with drugs.

It’s all about economic survival. We are anxious about our children’s futures in a world where domestic and global competition is an economic reality. How many parents joke, half seriously, that they wouldn’t have been qualified for admission to their college alma maters today? How many of us in our late 30s and 40s see colleagues who have been out of work two years or more, as their jobs went overseas?  In an op-ed piece in the Wall Street Journal in July (subscription required), Brink Lindsey of the Libertarian Cato Institute noted that the wage premium associated with a college degree has jumped to 70 percent in recent years from about 30 percent in 1980; and the graduate degree premium has soared to more than 100 percent from 50 percent. “Meanwhile, dropping out of high school now all but guarantees socioeconomic failure,” Lindsey says. (Lindsey’s piece, which looks at the income gap, places the responsibility for financial success squarely on the individual, his parents and cultural values; see this link – subscription required — for rebuttals from WSJ readers.)

We are anxious about our kids’ future in a world where employer loyalty, generous retirement benefits and affordable health care are disappearing. How many of us have reinvented ourselves (often happily) as entrepreneurs, because our employers were more concerned about satisfying Wall Street’s quarterly earnings expectations (and rewarding millions to the people at the very top) than building a strong future through committed employees? How many of us know colleagues in their 50s who have worked for the same company for years, and received pink slips just months shy of becoming eligible for retirement benefits?

It’s all about keeping up with the Joneses. When you see all of your neighbors investing the time and money in enrichment classes, you worry about denying your child a leg-up. For instance, Lindsay cites the work of sociologist Annette Lareau, who suggests working-class parents still follow the traditional, laissez-faire child-rearing approach that she calls “the accomplishment of natural growth.” But at the upper end of the socioeconomic scale, Lindsey writes, “parents now engage in what (Lareau) refers to as ‘concerted cultivation’  — intensely overseeing kids’ schoolwork and stuffing their afternoon hours and weekends with organized enrichment activities.

“This new kind of family life is hectic and stressful, but it inculcates in children the intellectual, organizational and networking skills needed to thrive in today’s knowledge-based economy. In other words, it makes unprecedented, heavy investments in developing children’s human capital.”

So what’s the problem? Overstimulation can backfire. Researchers say enrolling kids in too many programmed activities can actually hinder their creativity and lead to stress disorders. The kids don’t have the downtime to dream; they don’t get the time or space to figure things out for themselves; they may develop an enormous sense of entitlement which will hurt them later in the workforce; and the time constraints divide families, making it nearly impossible to just enjoy each other. Meanwhile, parents spend to their own detriment – living way beyond their means, leaving themselves unprepared for retirement. They ultimately risk becoming a burden on the children they wanted so badly to launch to a life of freedom and opportunities.

Have you found yourself going to extremes to cultivate your children, or got fed up and decided to opt out of the enrichment-industrial complex? How do you balance “developing human capital” with both time and financial constraints? Are these choices really enriching our kids or just diminishing our family budgets? I’d love to hear your stories. Comment here or email me at laura at laura rowley dot com.

Can you imagine having $10 million in net worth and still not feeling wealthy? That’s the story of a group of folks from Silicon Valley who were interviewed in a New York Times article from August 5. They have a net worth that puts them in the top half of the top one percent of Americans, but are surrounded by people who earn tens or hundreds of millions. As Gary Kremen, the founder of Match.com said, “You’re nobody here with $10 million.”So these so-called working-class millionaires continue to toil at their high-tech companies, working 60 to 80 hours a week, caught up in chasing the players whose net worth is in the top one-tenth of the top one percent.

An extensive body of research has found people cannot seem to help comparing themselves to their peers. This is true whether it’s millionaires in Silicon Valley or the poorest of the poor in countries like Peru and Russia. It’s one thing if you’re passionate about your work, and your work is located in Silicon Valley. Work is the primary value, and you manage your other priorities, and the negatives like a high cost of living, around that primary motivation. But sometimes we just get caught up in a culture, a mind-set and a routine, and we think other alternatives don’t exist.

The path to financial well-being begins with identifying what you value most in life. You want your work and your money to serve your values. That’s not easy, with the siren call of advertising bombarding us from every angle, and our tendency to compare and compete with peers.

So how do you figure out what you value? Start with your passion. Recall the last time you felt excited by work, fulfilled, competent, so deeply engaged in activity that time melted away.

-What were you doing?

-Think about the environment: Were you in an office? In the field? Working alone with ideas or things? Working with other people on a team? -Did you do this activity with the structure of a 9-to-5 day, or did you organize your own schedule?

-What skills and qualities did you call upon to accomplish the job? Creativity? Specific knowledge? Leadership?

-What part of the process did you enjoy most?

-What outcomes did you feel most excited about?

-What rewards motivated you? Money? Beating a competitor? Serving others? Learning something new? Creating something new?

Another way to identify your values is to look at how you actually spend your time, and ask why you spend it that way. For more on this exercise, see this story.

At a conference over the summer of 2005 I met a delightful designer and author named Pamela Scurry. Her many activities include offering recipes and tips as a contributing editor for Campbell’s Soup. Essentially, she helps make family meals and holiday gatherings simpler and less stressful. Her goal, she told me, is to empower women — to give them permission to make their own choices.

To illustrate, she related the story of a young mother who threw a birthday party for her toddler in Manhattan. The woman got so caught up in the pressure of planning the perfect event that she spent upwards of $5,000 — much more than she expected.

This caused no small amount of tension with her spouse. Wrapped up in the social expectations of her New York peers, Scurry explained, the woman needed to be empowered to break free of convention.

In case you’re wondering, the last party I threw for a toddler in Manhattan cost $100 — and that included chicken and cake for 20 people. We met on the Great Lawn in Central Park, and it was B.Y.O.B. (bring your own blanket). The kids chased kites and lobbed Frisbees. It had never occurred to me that I needed to be empowered to throw a cheap, fun party. And, frankly, I could summon little empathy for a wealthy person who felt bad about her frivolous spending.

Once upon a time, status was derived by birth into a specific social class. Today, people compete for rank through money and material goods. Immersed in a consumer culture of astonishing choice, we define ourselves by style and aesthetics.

“Identity is the meaning of surface,” Virginia Postrel explains in her book, “The Substance of Style.” “Before we say anything with words, we declare ourselves through look and feel: Here I am. I’m like this. I’m not like that … . Aesthetic identity is both personal and social, an expression both of who we are and with whom we want, or expect, to be grouped … .”

The quest for status through aesthetics starts early. In August, standing in a long line to buy my kids’ school uniforms, I chatted with a mom from a neighboring town known for its quaint Main Street and million-dollar historic homes. She said she appreciated the school uniform because it leveled the social playing field. In her child’s preschool, some of the four-year-olds declared they wouldn’t play with another child because she wasn’t wearing “Lily” — as in Oilily, the colorful Dutch fashion line for kids. Its T-shirts sell for $50 or more; its shoes, $150.

According to Oilily’s web site, its fashions are geared toward women “who believe that creative freedom, particularly within the shared space of a family, is a fundamental part of nurturing a lifetime’s capacity for joy.”

I can just imagine my joy as my kids dribble maple syrup down the front of a $75 sweatshirt.

While impractical in my book, Oilily makes a beautiful aesthetic statement. But I would be mortified if my child made this the benchmark for her social grouping.

The pursuit of self-definition through aesthetics is not limited to the wealthy. In their book, “Trading Up: The New American Luxury,” consultants Michael J. Silverstein and Neil Fiske discuss a shipping clerk earning $25,000 a year who springs for Victoria’s Secret silk pajamas, and a coal miner who works overtime to buy “the best for me.”

Like Postrel, Silverstein and Fiske argue, new luxury goods “have become a language, a non-verbal method of self-expression and dialogue. The language enables consumers to say, ‘I’m intelligent and discerning,’ in many different and individual ways.”

Advertising reinforces this quest for self-definition. Consider a Starbucks ad that fell out of my newspaper: “The old saying is, ‘You are what you eat.’ But at Starbucks, we think what you drink reveals more about who you are. We’ve noticed for example, that triple, grande, decaf latte people aren’t the same as tall, iced caramel macchiato drinkers.”

Even a cheapskate like myself can appreciate the aesthetic pleasure of a $3 cup of coffee from time to time. But if I drink it to express how much more sophisticated I am than the folks who drink instant Nescafe, I’ve got a problem.

Dr. Shaun Saunders, a researcher at the University of Newcastle in England, studied more than 1,000 people and found materialistic folks who try to keep up with the Joneses are more likely to be angry, depressed, frustrated, and anxious.

This theme arose in a recent conversation with a successful friend who works for a major investment bank. She is a practical gal, and over the years she and her husband have always saved one of their salaries, living on the other.

She told me about a colleague in his late 40s who expressed some anxiety and frustration over the fact that, after so many years working on Wall Street, he had so little to show for it in the bank. She was able to identify three reasons pretty quickly: Manhattan apartment, country home, and children in the city’s private schools (some of which rival Harvard in annual tuition costs). He saw these costs as necessities, standard among his peers.

Maybe I’ve never made enough money to worry about status, or I took my cue from parents who never defined themselves by what they bought. But it seems to me that the pursuit of identity and status through material goods can be costly — and not only to our bank accounts. When we compete this way, we alienate ourselves from others and base our self-worth on something extrinsic. What this telegraphs is that without my designer coffee, country home, birthday affair to remember, and what have you, I’m worthless.

Pam Scurry is right. When it comes to breaking out of the status game, it seems both rich and poor could use a little empowerment.

I teach a course on contemporary moral values at Seton Hall University in New Jersey. We recently studied Aristotle’s notion that all things have a “telos,” a noble end or goal to which they must give expression. The seed’s highest telos is to develop into a tree; the lyre player’s is to become an accomplished harpist.

With this in mind, I asked my students to write a paper on their talents and how they plan to share them with others after they graduate.

These papers always inspire me to reflect on whether I’m using my own gifts to serve others — or if I’m just milking them for the bucks. Saddled with a mortgage, a ‘95 minivan beginning its death spiral, and the prospect of a $900 heating bill in January, even the most ardent idealist can get distracted.

And there are other diversions, including the perennial suburban pastime of “keeping up with the Joneses.” A recent tour of my neighbor’s finished basement sparked a deep yearning for sheetrock, wall-to-wall Berber carpet, and louvered bi-fold doors. I had not anticipated such desires when I entered the working world, eager to give expression to my telos.

So I was delighted to receive a nugget of wisdom from one of my students. He wrote that his greatest gift was the ability to be grateful for what he has been given. He reminded me what many researchers have confirmed: If you want to increase your happiness — including your financial well-being — find concrete ways to express your gratitude.

“Gratitude seems to be incompatible with some negative emotions. It’s hard to feel envious or greedy or bitter when you’re grateful,” says Sonja Lyubomirsky, a psychology professor at the University of California, Riverside.

She conducted an experiment in which students were instructed to write down five things for which they were grateful. One group wrote once a week, another three times a week, and a control group did not write at all. Those who counted their blessings once a week showed a measurable rise in happiness.

Interestingly, students who wrote more frequently apparently got bored with the routine and showed no change in well-being. Researchers suggest that if you practice gratitude, choose a timetable that keeps it meaningful, and change the domain in which you contemplate your good fortune every week — from, say, health to career to relationships to simple pleasures. That may help sustain the rise in happiness created by the exercise.

Can’t think of anything to be grateful about? Try this technique from Vietnamese Buddhist monk Thich Nhat Hanh. “When I have a toothache, I discover that not having a toothache is a wonderful thing,” he writes in “The Heart of the Buddha’s Teaching.”

“I had to have a toothache in order to be enlightened, to know that not having one is wonderful. My nontoothache is peace, is joy. But when I do not have a toothache, I do not seem to be happy. Therefore, I look deeply in the present moment and see that I have a nontoothache, that can make me very happy already.”

Consider applying this technique to your finances. Celebrate your steady paycheck, lack of credit card debt, paid-off car loan, balanced checkbook, employer’s 401(k) match, or low-cost health insurance. After all, these things are far from universal.

If making lists of the things you appreciate isn’t your bag, consider another method of boosting happiness: Intentional acts of kindness and generosity.

Lyubomirsky and two other researchers had students perform five acts of altruism a week over six weeks. The acts had to benefit others or make them happy, at some cost to the participant — donating blood, helping a friend with a paper, visiting an elderly relative, etc. Those who practiced five systematic acts of kindness in a single day each week showed a significant rise in well-being.

If you want to banish envy, never measure your financial achievements against anything except your own goals. Contemplate the deeper values you aspire to in your own life — your telos, if you will — and organize your financial house to help you realize your highest priorities.

As Aristotle wrote, “The life of money-making is one undertaken under compulsion, and wealth is evidently not the good we are seeking; for it is merely useful and for the sake of something else.”