Bad news for the luxury goods market: Spending money on tchochkes doesn't make you happier, but giving money away just might.
That conclusion, in a study published Thursday in the journal Science, flies in the face of what most people--and, certainly, advertisers--typically believe.
It's far easier to measure income than happiness. Even so, researchers around the world have reported that even though real income has surged around the globe, reported "happiness" levels have stayed relatively flat. That spurred Elizabeth W. Dunn, an assistant professor of psychology at the University of British Columbia in Vancouver to explore the ways that more money might lead to more happiness.
Working with graduate student Lara B. Aknin and Harvard Business School assistant professor Michael I. Norton, Dunn began by asking 632 Americans from across the U.S. to rate their general level of happiness, as well as to report their income, how much they spent on themselves and how much they donated to charity.
As researchers sifted through the numbers, they found that happiness didn't correlate with personal spending but, rather, with how much they gave away.
Not that anyone was giving very much away. Personal spending--for pleasure and out of necessity--topped donations by a factor of 10. The typical income of participants in the study was modest, roughly ranging from $20,000 to $50,000.
The researchers figured it was worth trying to test the hypothesis a bit further. They found a group of 16 people in the Boston area who were due to receive a profit-sharing bonus at work. A month before getting the bonus, the researchers asked them to rate their happiness. Then, six to eight weeks after the workers received their $3,000 to $8,000 bonuses, the researchers asked what they did with the money and how they felt.
Once again, giving away money seemed to nudge many people up the happiness scale, increasing the number of people who said that they were happy "most of the time" rather than just "some of the time," Dunn reports.
Then the researchers put their results to a test: On the Vancouver campus, they handed out sealed envelopes containing $5 or $20 to 46 people. They instructed half the people to spend the money on themselves--either on necessities or indulgences--and then told the other half to give the money away, all by 5 p.m.
Once again, those who gave the money away were happier by the end of the day--and just as happy whether they gave away $5 or $20.
Dunn said it was hard to speculate whether the results would have been different had she handed out thousands of dollars instead of $5 or $20.
So why don't people dig into their pockets a bit more? Dunn said most people figure they will be happier spending money on themselves.
Dunn's team asked a group of 100 university students what they thought would make them happier: spending or giving. No surprise here. Most figured they'd be happier spending the money on themselves--and that the more they'd spend, the cheerier they'd be. That's a double wrong in Dunn's book.
Dunn has been checking on the status of people's happiness for a number of years. She earned her doctorate in psychology in 2004 for an award-winning study that suggested when people are charming and pleasant--even if they're just putting on appearances--they genuinely feel better later.
She eventually refined that idea, documenting that a quick way long-time couples can bring the spark back into their romance is to pretend that they're strangers.
So next time you want to brighten your day, trying giving away that fiver instead of buying a latte--and do it with a smile.
Elizabeth Corcoran
That conclusion, in a study published Thursday in the journal Science, flies in the face of what most people--and, certainly, advertisers--typically believe.
It's far easier to measure income than happiness. Even so, researchers around the world have reported that even though real income has surged around the globe, reported "happiness" levels have stayed relatively flat. That spurred Elizabeth W. Dunn, an assistant professor of psychology at the University of British Columbia in Vancouver to explore the ways that more money might lead to more happiness.
Working with graduate student Lara B. Aknin and Harvard Business School assistant professor Michael I. Norton, Dunn began by asking 632 Americans from across the U.S. to rate their general level of happiness, as well as to report their income, how much they spent on themselves and how much they donated to charity.
As researchers sifted through the numbers, they found that happiness didn't correlate with personal spending but, rather, with how much they gave away.
Not that anyone was giving very much away. Personal spending--for pleasure and out of necessity--topped donations by a factor of 10. The typical income of participants in the study was modest, roughly ranging from $20,000 to $50,000.
The researchers figured it was worth trying to test the hypothesis a bit further. They found a group of 16 people in the Boston area who were due to receive a profit-sharing bonus at work. A month before getting the bonus, the researchers asked them to rate their happiness. Then, six to eight weeks after the workers received their $3,000 to $8,000 bonuses, the researchers asked what they did with the money and how they felt.
Once again, giving away money seemed to nudge many people up the happiness scale, increasing the number of people who said that they were happy "most of the time" rather than just "some of the time," Dunn reports.
Then the researchers put their results to a test: On the Vancouver campus, they handed out sealed envelopes containing $5 or $20 to 46 people. They instructed half the people to spend the money on themselves--either on necessities or indulgences--and then told the other half to give the money away, all by 5 p.m.
Once again, those who gave the money away were happier by the end of the day--and just as happy whether they gave away $5 or $20.
Dunn said it was hard to speculate whether the results would have been different had she handed out thousands of dollars instead of $5 or $20.
So why don't people dig into their pockets a bit more? Dunn said most people figure they will be happier spending money on themselves.
Dunn's team asked a group of 100 university students what they thought would make them happier: spending or giving. No surprise here. Most figured they'd be happier spending the money on themselves--and that the more they'd spend, the cheerier they'd be. That's a double wrong in Dunn's book.
Dunn has been checking on the status of people's happiness for a number of years. She earned her doctorate in psychology in 2004 for an award-winning study that suggested when people are charming and pleasant--even if they're just putting on appearances--they genuinely feel better later.
She eventually refined that idea, documenting that a quick way long-time couples can bring the spark back into their romance is to pretend that they're strangers.
So next time you want to brighten your day, trying giving away that fiver instead of buying a latte--and do it with a smile.
Elizabeth Corcoran
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