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It’s Official: Money Does Not Make Us Happy

You don’t have to rely upon little old me anymore when I say that the negotiation is never solely about the money.  It’s official.

wealth increases human happiness [only] when it lifts people out of abject poverty and into the middle class . . . [I]t does little to increase happiness thereafter.

The full online Newsweek article, Why Money Doesn’t Buy Happiness is here.

“If money doesn’t buy you happiness,” asks the Newsweek article, “what does?”

Grandma was right when she told you to value health and friends, not money and stuff. Or as Diener and Seligman put it, once your basic needs are met “differences in well-being are less frequently due to income, and are more frequently due to factors such as social relationships and enjoyment at work.” Other researchers add fulfillment, a sense that life has meaning, belonging to civic and other groups, and living in a democracy that respects individual rights and the rule of law. If a nation wants to increase its population’s sense of well-being, says Veenhoven, it should make “less investment in economic growth and more in policies that promote good governance, liberties, democracy, trust and public safety.”

So, how do we translate this insight into a negotiation strategy or tactic?

Before heading off to the mediation, settlement conference or business negotiation, talk to your client about what result would make them happiest and follow it up with questions about why the particular sums of money they’re seeking will produce that result.

When I mediate “pure” money cases, I almost always ask the Plaintiffs whether they have any plans for spending the money they’ll “earn” from the lawsuit.  If they haven’t given the matter any thought, I ask them to.  This has the effect of transforming the [“jackpot”] money back into what it actually is — a means of achieving a goal, purchasing material objects or insuring against an uncertain future.

Although money in litigation will almost always represent “justice,” i.e., fairness, to some degree, to acquire any real meaning to your clients, they need to think about what they’d do with the money if they had it, not simply how much they want.

Let Your Clients Give Meaning to the Money

One million dollars or two; a thousand pounds or fiftten thousand yen are meaningless figures on a sheet of paper until people translate those sums into something they want or need.

You will often find that your clients have quite specific ideas in mind when refusing to compromise a certain dollar demand.  It makes it far easier for me as a mediator to learn what those money ideas are because the defendants — who almost always feel as if the Plaintiffs are trying to pick their pockets — begin to see the logic, if not necessarily the fairness, of the Plaintiffs’ demands.

She’s driving her kids to school in a Kia, which keeps breaking down.  She wants to buy a new car with the money.  She won’t be able to do that unless she gets $X in settlement.

Does the lawsuit have anything whatsoever to do with a new car?  Not to to the Judge or jury.  But you’re not trying the case to a judge or jury right now.  You’re trying to settle it.  And once both sides understand what it is that the Plaintiff is really after they also begin to understand why they’re at impasse.

More importantly, they begin to think of the settlement negotiation in terms of human needs and desires.  This tends to normalize their negative view of the other.  It explains what has theretofore been inexplicable.  When our opponent is acting inexplicably, we make up reasons for their behavior and those reasons are never good.  (see yesterday’s IP ADR post on Fundamental Atttribution Error here and my earlier posts on the benefits of reason giving here and here).

Once we understand what our opponent is really after or why they’ve been litigating so contentiously or why they acted the way they did in the first place, empathy and fellow-feeling kicks in and hardened positions begin to soften.

For examples of ways in which reason-giving and money-explaining helps parties resolve litigation, see the reason-giving posts highlighted above.  And in your next negotiation, try urging your mediator to ask your opponent why she’s got her heart set on netting $100,000 from the deal.  See how it works for you.  And let me know the results!


Victoria Pynchon

Attorney-mediator Victoria Pynchon is a panelist with ADR Services, Inc. Ms. Pynchon was awarded her LL.M Degree in Dispute Resolution from the Straus Institute in May of 2006, after 25 years of complex commercial litigation practice, with sub-specialties in intellectual property, securities fraud, antitrust, insurance coverage, consumer class actions and all… MORE >

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