NCPA - National Center for Policy Analysis


March 25, 2008

Spending as little as $5 a day on someone else could significantly boost happiness, says a team of researchers from the University of British Columbia and Harvard University Business School.

Their experiments on more than 630 Americans showed they were measurably happier when they spent money on others -- even if they thought spending the money on themselves would make them happier:

  • They asked their 600 volunteers first to rate their general happiness, report their annual income and detail their monthly spending including bills, gifts for themselves, gifts for others and donations to charity.
  • Regardless of how much income each person made, those who spent money on others reported greater happiness, while those who spent more on themselves did not, says Elizabeth Dunn, a psychologist at the University of British Columbia.

Dunn's team also surveyed 16 employees at a company in Boston before and after they received an annual profit-sharing bonus of between $3,000 and $8,000.  Employees who devoted more of their bonus to pro-social spending experienced greater happiness after receiving the bonus, and the manner in which they spent that bonus was a more important predictor of their happiness than the size of the bonus itself, they report.

Finally, participants who were randomly assigned to spend money on others experienced greater happiness than those assigned to spend money on themselves:

  • They gave their volunteers $5 or $20 and half got clear instructions on how to spend it.
  • Those who spent the money on someone or something else reported feeling happier about it.

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, says Dunn.  This could also explain why people are no happier even though U.S. society is richer.

Source: Maggie Fox, "Money Buys Happiness -- If You Spend On Someone Else," Reuters, March 20, 2008

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