From the article:

Suppose that you find yourself with an unexpected windfall of $25,000. You are neither rich nor poor. You are deciding among three options for using the money:

1) Buy a new car

2) Renovate your home

3) Have a dream vacation with your family

You might think that 1 would be best, especially if your current car is not exactly a joy, and if you anticipate that a new one would give you a daily burst of pleasure. Or maybe you are tempted by 2, especially if your house really needs an upgrade. After all, you spend much of your life in it, and it might as well be as nice as possible. You might be inclined to dismiss 3, on the ground that however wonderful, any vacation is likely to be pretty short, and a short vacation cannot possibly compete with a new car or a renovated home.

If that is what you are thinking, think again. If your goal is to use the windfall to promote your own happiness, there is a strong argument for 3, especially if you plan to have the vacation a few months from now. Experiences can have a much bigger impact on people’s happiness than things, and a big part of that happiness lies in looking forward to the experience that you are going to have.

Disciples of Eric Barker know to choose door #3.

Happiness not only resides in anticipating great experiences but also in reflecting on them in retrospect.

Okay, so what DOES correlate with happiness according to Dunn and Norton?

Dunn and Norton offer five general principles. Of these, the preference for experiences over commodities may be the most important. Strikingly, people who move to new homes do not show even small increases in overall happiness. Harvard students care a lot about getting into the most beautiful and well-located of Harvard’s houses, but the evidence suggests that the students’ happiness is utterly unaffected by where they end up. By contrast, trips, movies, and sporting events can have a real impact on people’s subjective experience.

Matt, the rest of that New Republic article by Cass R. Sunstein on Dunn and Norton's work is also quite good, so thank you for sharing it with us.

http://www.newrepublic.com/article/114031/money-happiness-and-new-science-smarter-spending

Owning neither a car nor a house, I chose #3. Aw yeah, doin' it right.

Leah, you have excellent instincts. That are the consequence of your excellent lifestyle.

I took excerpts from the book explaining it's five core ideas and posted them here:

http://www.bakadesuyo.com/2013/05/can-money-buy-happiness-2/

And my one-on-one interview at Harvard with author Mike Norton is here:

http://www.bakadesuyo.com/2013/05/harvard-michael-norton-happier/

He's a really nice (and happy) guy. :)

Your explanation of the five ideas is excellent, and your interview is also superb.

Thank you for the links!!

Michael Norton's TED Talk is excellent, too: