Published online 20 March 2008 | Nature | doi:10.1038/news.2008.684

News

Money buys happiness

Especially if you give it away.

Give it away: you'll feel better.Punchstock

Here's a riddle: You're miserable without it, but once you get it, you'll be happier if you give it away. What is it?

The answer, according to a study in this week's Science1, is money. The more cash people dole out to charity and to friends, the happier they tend to be.

“We’ve understood that happiness and money go together,” says Robert Biswas-Diener, a psychologist at the Center for Applied Positive Psychology in Coventry, who was not involved in the research. It is known, for example, that the more people make, the happier on average they are (although this effect is actually remarkably small, particularly among people who have enough money to meet their basic needs). “The next level is to ask: how much happiness does it buy? How might it buy happiness?”

To tackle these lofty questions, Elizabeth Dunn, a psychologist at the University of British Columbia in Vancouver, and two colleagues asked people how much money they made, how they spent their money and how happy they were.

In their sample of 632 Americans, the researchers found that an average of nearly 10% of the monthly budget was spent on what Dunn terms “prosocial spending” — that is, gifts for others and donations to charity. Overall spending levels were not related to happiness, but prosocial spending was. The effect of spending a dollar on other people was similar in magnitude to earning an extra dollar in income.

Bonus

The researchers then compared the happiness of 16 employees before and after receiving a salary bonus from their companies, and again, those who spent a larger fraction of their bonuses on other people were happier.

These two studies left open the question as to whether spending money on your friends really makes you happy, or if happy people spend more money on their friends. So one morning, the researchers gave 46 college students an envelope with $5 or $20, and assigned them to either spend money on themselves or on friends. At the end of the day, students who had given away their money were happier than students who spent it on themselves. The amount of money they received and spent had no effect on their happiness.

"We're not talking about Bill Gates donating millions of dollars to charity; we’re talking about relatively modest amounts of money," says Dunn, "Everyone could stand to give away a little more than they do."

The sad irony about money, Dunn notes, is that when people come to view it as a route to happiness, they are less likely to give it away.

For richer or poorer

“I think it’s exciting news and a fascinating line of enquiry,” says Biswas- Diener. He points out, however,that Dunn’s study design cannot tease apart how much more money people need to spend to optimize their happiness. “Does this work for poor people as well as for rich people?” he asks.

A study released in December by the Center on Philanthropy at Indiana University reports that poor people contribute a greater percentage of their annual income to charity than wealthy individuals do, but how happy this makes them is as yet unknown.

National surveys suggest that voluntary donations of money are unlikely to be the largest determinant of happiness: Americans top the world list when it comes to per capita charitable donations, but they lag behind stingier countries such as the Netherlands and the UK when it comes to happiness. 

  • References

    1. Dunn, E. W., Aknin, L. B. & Norton, M. I. Science 319, 1687-1688 (2008). | Article | PubMed | ChemPort |
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