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Money might buy happiness—when you spend on others

March 20, 2008
Courtesy University of British Columbia
and World Science staff

Per­haps you can buy hap­pi­ness af­ter all: by spend­ing mon­ey on oth­ers, re­search­ers say.

In a se­ries of stud­ies, Eliz­a­beth Dunn of the the Uni­ver­s­ity of Brit­ish Co­lum­bia, Can­a­da, and col­leagues found that peo­ple re­port sig­nif­i­cantly great­er hap­pi­ness if they spend mon­ey on gifts or char­ity. The find­ings are to ap­pear in the March 21 edi­tion of the re­search jour­nal Sci­ence.

“We wanted to test our the­o­ry that how peo­ple spend their mon­ey is at least as im­por­tant as how much mon­ey they earn,” said Dunn, a psy­chol­o­gist. 

The re­search­ers ex­am­ined what they said was a rep­re­sent­a­tive sam­ple of more than 630 Amer­i­cans, of whom 55 per cent were fe­male. They asked par­ti­ci­pants to: rate their gen­er­al hap­pi­ness; re­port their an­nu­al in­come; and pro­vide a break­down of their monthly spend­ing, in­clud­ing bills, gifts for them­selves, gifts for oth­ers and dona­t­ions to char­ity.

“Re­gard­less of how much in­come each per­son made,” said Dunn, “those who spent mon­ey on oth­ers re­ported great­er hap­pi­ness, while those who spent more on them­selves did not.”

The study al­so meas­ured the hap­pi­ness lev­els of em­ploy­ees at a firm in Bos­ton be­fore and af­ter they re­ceived a prof­it-shar­ing bo­nus, which ranged be­tween $3,000 and $8,000. What af­fect­ed the em­ploy­ees’ hap­pi­ness, said Dunn, was not so much the size of the bo­nus but how they spent it. The em­ploy­ees who de­vot­ed more of their bo­nus to gifts for oth­ers or to­ward char­ity con­sist­ently re­ported great­er ben­e­fits than em­ploy­ees who simply spent mon­ey on their own needs.

In an­oth­er expe­ri­ment, the re­search­ers gave par­ti­ci­pants a $5 or $20 bill, ask­ing them to spend the mon­ey by 5 p.m. that day. Half the par­ti­ci­pants were in­structed to spend the mon­ey on them­selves, and half were as­signed to spend the mon­ey on oth­ers. Par­ti­ci­pants who spent the wind­fall on oth­ers re­ported feel­ing hap­pi­er at the end of the day than those who spent the mon­ey on them­selves.

“These find­ings sug­gest that very mi­nor al­tera­t­ions in spend­ing al­loca­t­ion­s—as lit­tle as $5—may be enough to pro­duce real gains in hap­pi­ness on a giv­en day,” said Dunn.

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Perhaps you can buy happiness after all: by spending money on others, researchers say. In a series of studies, Elizabeth Dunn of the the University of British Columbia, Canada, and colleagues found that people report significantly greater happiness if they spend money on gifts or charity. The findings are to appear in the March 21 edition of the research journal Science. “We wanted to test our theory that how people spend their money is at least as important as how much money they earn,” said Dunn, a psychologist. The researchers examined what they said was a nationally representative sample of more than 630 Americans, of whom 55 per cent were female. They asked participants to: rate their general happiness; report their annual income; and provide a breakdown of their monthly spending, including bills, gifts for themselves, gifts for others and donations to charity. “Regardless of how much income each person made,” said Dunn, “those who spent money on others reported greater happiness, while those who spent more on themselves did not.” The study also measured the happiness levels of employees at a firm in Boston before and after they received their profit-sharing bonus, which ranged between $3,000 and $8,000. What affected the employees’ happiness, said Dunn, was not so much the size of the bonus but how they spent it. The employees who devoted more of their bonus to gifts for others or toward charity consistently reported greater benefits than employees who simply spent money on their own needs. In another experiment, the researchers gave participants a $5 or $20 bill, asking them to spend the money by 5 p.m. that day. Half the participants were instructed to spend the money on themselves, and half were assigned to spend the money on others. Participants who spent the windfall on others reported feeling happier at the end of the day than those who spent the money on themselves. “These findings suggest that very minor alterations in spending allocations—as little as $5—may be enough to produce real gains in happiness on a given day,” said Dunn.