Harvard Mental Health Letter

In Brief: Money can buy happiness - if you give it away

In Brief

Money can buy happiness — if you give it away

Here's a finding that may be surprising: Spending money on others makes people happier than spending it on themselves. That was the conclusion of researchers at the University of British Columbia and Harvard Business School who conducted three studies to determine the relationship between spending habits and reported happiness.

They started off by surveying a nationally representative sample of 632 Americans. Participants were asked to rate their general happiness and provide information about how much money they made each year, how much they spent during a typical month on bills and gifts for themselves (categorized as "personal spending"), and how much they spent on gifts for other people or on charitable donations ("prosocial spending"). Both high income and greater levels of prosocial spending were associated with higher levels of reported happiness (in fact, they were about equal in impact on the happiness quotient). Personal spending levels, however, did not correlate with reported happiness.

In a second study, the researchers measured how happy 16 employees reported feeling one month before and six to eight weeks after receiving their profit-sharing bonus, which ranged from $3,000 to $8,000. Employees who spent a greater proportion of their bonus on others or made charitable donations with it reported greater happiness than employees who spent more of the bonus on themselves — regardless of the actual size of the bonus.

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