Ask Melanie | Ask Melanie: How to maximise pleasure without emptying your pockets

Mentioning the word "budget" takes all the fizz out of festivity, so let's not start there. Let's start instead with hedonism, or the pursuit of pleasure, which certainly sounds like more fun.

Early Greek and Indian philosophers identified ethical hedonism as a virtuous pursuit. They argued that conduct that increases pleasure and minimises pain, for ourselves and others, is the highest good. The debate has continued ever since.

Applying the concept of hedonism in the world of behavioural finance, Professor Shlomo Benartzi, at University of California, Los Angeles, has been a key contributor to developing the idea of "hedonic arbitrage". Basically, he says it's possible to increase your pleasure without raising your spending.

The concept relies on realising what brings us pleasure and on framing our spending decisions differently. This came to mind while I had a drink recently with a senior manager from a Swiss private bank. Based in Singapore, he spends a week each month in Hong Kong. When asked where he stays in Hong Kong, he told me the bank will pay for a five-star hotel, but he prefers a three-star that is part of an international chain. He earns loyalty points there, which he redeems against hotel rooms for his university-age sons when joining them for overseas holidays. He was pleased he and his boys could enjoy an extra night or two together while saving his, and the bank's, money.

He didn't miss the amenities, or status, of a five-star hotel at all. That's hedonic arbitrage at play.