Several months ago, we devoted an entry in this series to the relationship between money and happiness. More specifically, we highlighted research findings suggesting the sometimes unquestioned assumption that more money will make us happier does not stand up to close scrutiny. What that research – conducted by Daniel Kahneman and Angus Deaton – found was that more money will usually only have a direct bearing on happiness when we are struggling financially, i.e., if a wage increase is going to make the difference between meeting your monthly outgoings or not, then yes, more money can lead to increased happiness, but if people have achieved a certain level of financial comfort, then the correlation trails off, and at that point if an individual has an expectation that more money will continue to produce a happiness dividend, they will most likely be left disappointed.
However, there is another way to look at this area. If merely accumulating more money beyond the point of being able to pay your bills and having the leeway to be ‘nice’ to yourself isn’t going to make us happier, we might then take the conversation in a different direction and ask whether the spending choices that we make can offer us the happiness boost that merely knowing our bank account is in a healthy state tends not to. In essence, the question then becomes one less focused on how much money you have and more about what you do with the financial resources at your disposal.
In 2008 (published in Science magazine), United States-based researchers Elizabeth Dunn, Lara Aknin, and Michael Norton focused on the distinction between how much money people earn, how they spend it, and how that affects individual happiness. The title of their paper – Spending Money on Others Promotes Happiness – somewhat gives the game away, but the process by which they came to that conclusion is of at least as much interest as the headline.
Their research saw them ask more than 600 participants to rate general happiness, report annual income, and estimate how much they spend in a normal month on bills, expenses, and gifts for themselves (personal spending), and gifts for others and charitable donations (prosocial spending).
Statistical analyses showed no relation between happiness scores and personal spending, whereas higher prosocial spending was linked with significantly greater levels of self-reported happiness. Plugging income into the analysis did not alter this pattern.
Taking this as evidence that how you spend money may be as important for happiness as how much you have, and that spending on others can do more for our happiness than spending on ourselves, they then suggest this means that in the event of receiving a financial windfall, people are more likely to become happier if they spend a substantial amount of that on others.
Testing this prediction, they assessed the happiness of a group of 16 employees before and after they received a profit-sharing bonus. Again, participants also gave information on personal and prosocial spending. They reported a similar pattern as in the earlier analysis, i.e., those who allocated more of their bonus to prosocial spending reported greater post-bonus happiness, and how they spent the bonus mattered more for happiness than the size of the bonus itself.
Aknin, Dunn, and Norton have continued to conduct research in this area, and in 2013, along with Ashley Whillans and Adam Grant, had an article published in the Journal of Economic Behaviour and Organisation that further explored the mechanisms through which prosocial spending can boost individual happiness.
In this paper, they reported that it is simplistic to merely say that, for example, giving money to charity will make us feel better than spending it on ourselves. That may well be so, but the conversation should not end there, as there may be more to it. Specifically, they reported that the greatest boosts to happiness come when people not only give to a charitable cause, but then form a specific awareness of how their donation will impact positively on others. They discovered this distinction based on differences in self-reported happiness among participants who gave to UNICEF (who emphasised the range of their initiatives) and Spread the Net (who drew attention to the direct and specific benefit of purchasing one bed net for a child in Africa).
One caveat associated with findings such as those highlighted above is that research participants in these studies were drawn either from the United States or elsewhere in the western world. That does not delegitimise the findings, but we can’t simply assume that findings reported in one setting are applicable to all cultures.
Seeking to address those concerns, researchers working in this area have moved beyond western society, with a view towards seeing if the relationship between prosocial spending and well-being can also be detected in other cultures.
Aknin, Dunn, and Norton were among 10 credited authors of a study that appeared in the Journal of Personality and Social Psychology in 2013 that analysed data gathered from participants in 136 countries. They found that prosocial spending was associated with increased happiness across the board, whether participants were from rich or poor countries. Arising from their analysis, they concluded that “the reward experienced from helping others may be deeply ingrained in human nature”, transcending the varying cultural and economic contexts in which individuals may find themselves.
There is more that can said about how money and happiness overlap and intersect, and we will attempt to deal with that next time.
Dr. Mark Barry
Mark Barry was awarded a PhD by University College Cork in 2015 for his research into adolescent well-being. He has lectured psychology at UCC since 2013, and is also a freelance writer.