Spending on others brings happiness

Posted: 3/26/2008 9:22:34 AM

Money can buy happiness when it is spent on other people, scientists have discovered.

Research in Canada and the US suggests happiness is not greatly affected by higher incomes or financial windfalls, it is significantly influenced by the amount people give away.

The more money people donate to charity or the more they buy gifts for loved ones or friends, the more likely they are to feel better about themselves, a team led by Elizabeth Dunn, of the University of British Columbia in Vancouver, has found.

The results applied when the sums were large or small.

Even when people were given amounts as low as $US5, they became measurably happier when they gave away some of it.

"Regardless of how much income each person made, those who spent money on others reported greater happiness," Dr Dunn says.

"These findings suggest very minor alterations in spending allocations, as little as $US5, may be enough to produce real gains in happiness on a given day."

While incomes in real terms have risen rapidly in Western countries over recent decades, research has repeatedly indicated that this has only a weak effect on overall levels of happiness.

Money seems to have a strong effect only until basic needs are met.

In the study, which is published in the journal Science, researchers sent questionnaires to a sample of 632 men and women in the US.

All participants in the survey were asked to rate their general happiness, to provide details of their annual income and to give a breakdown of their monthly spending.

Higher incomes were associated with small overall improvements in happiness, but higher levels of personal spending were not.

But higher levels of "pro-social" spending, on gifts and charities, were linked to happier demeanours.

"This study provides initial evidence that how people spend their money may be as important for their happiness as how much money they earn," the researchers say. "It also indicates that spending money on other people might represent a more effective route to happiness than spending it on oneself."

To investigate this further, Dr Dunn joined Michael Norton, of the Harvard Business School, to look at the happiness of 16 staff members of a Boston company before and after they received bonuses of between $US3000 ($3320) and $US8000.

Again, the size of the bonus received was not linked to happiness at all: what appeared to make a difference was how it was spent.

Those who bought gifts or gave some of the money to charity reported increased happiness levels. But the participants who had saved the money or spent it on themselves felt no better than they had before receiving the bonus.

In a third experiment, the scientists gave 46 participants either a $US5 or a $US20 banknote, which they were asked to spend by 5pm on the same day.

Half were told to spend it on themselves and the other half were to spend it on other people.

When happiness questionnaires were filled in after the test, those who had spent their money on others scored better than before.

Source: Times