Can Money Buy You Happiness?

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Sep 02, 2014 by Smart Blog

The old adage that 'money can't buy happiness' seems to be almost universally accepted and there is scientific research that appears to bear it out. A study of lottery winners, carried out for American broadcaster CNN, found that winning the lottery actually led, on average, to a reduced quality of life for the winner.

This was often because the sudden abundance of money caused the lottery winner to abandon prudent spending habits and ultimately get into debt, and also because they were hounded by family and friends who repeatedly asked them for money, meaning that their social relationships suffered too.


Life Experiences

On the other hand, a number of studies have suggested that money can buy happiness, if it is used to buy life-enhancing experiences, rather than mere objects. According to this logic, £500 spent purely on chocolate may not ultimately make a chocolate-loving lottery winner any happier than they were before they ate all the Crunchie bars (their local sweet shop owner, on the other hand, will presumably be feeling rather chipper), whereas the same £500 spent on a confectionery-making course will leave them with a warm glow of achievement.

The good news is that a considerable body of research seems to support the idea that this is true - but only for two-thirds of people. Now, research from San Francisco State University suggests that one in three people are left no happier by purchasing experiences than they are by purchasing objects, because these people are unable to select experiences that chime with or extend their own innate preferences.

So, for example, if our chocolate-loving lottery winner from the paragraph above falls within this one third and spends his £500 on a trip to an art gallery rather than a cookery course, he may be left feeling frustrated - i.e. worse than he did before he had the money to spend. In other words, not all spending on experiences will generate happiness.


Pro-social Spending

More research, this time from the University of British Columbia, suggests that there is an alternative. This research team concluded that money can buy happiness - if the spender spends it on other people, or for a greater social good. This is generally referred to as pro-social spending. Experiments show that pro-social spending tends to increase happiness in individuals, and in group settings such as work or sports teams.

In other words, individuals who spend their money on others show higher levels of post-spending happiness than do individuals who spend the equivalent money on themselves (these latter individuals are generally no happier nor less happy than they were prior to the spending). In group settings, collective pro-social spending - for example the pooling of funds to spend on a shared social experience - is associated with higher levels of post-spending performance. In other words, the pro-social spending seems to pay off in terms of better results for the team, afterwards.

So it seems that ultimately, whether or not money makes an individual happy is largely down to the tendencies of and choices made by that individual. For those looking to 'buy' happiness, however, perhaps pro-social spending is the safest route to take.