Money may not buy you love but it might buy you happiness if you spend it in the right way, US researchers say. In studies they found that the old adage "it's better to give than to receive" is correct: spending money on others or giving to charity puts a bigger smile on your face than buying things for yourself.
"Most people would think that if you make more money you are going to be a lot happier," said Michael Norton, a professor at Harvard Business School. "Our results, and a lot of other people's results, show that making more money makes you a little bit happier, but doesn't really have a huge impact on you. Our studies suggest maybe that little changes in how you spend it make a difference."
The researchers' work is published today in the journal Science. Norton and his colleagues questioned 632 Americans about how much they earned and how they spent their cash. They also asked them to rate their own happiness.
Regardless of income level, those people who spent money on others reported greater happiness, while those who spent more on themselves did not.
In a second study, the team questioned 16 employees in line for a company bonus of $3,000-$8,000. The team asked the subjects about their happiness before and six to eight weeks after the bonus, and how they spent the money.
The size of the bonus did not determine how much happiness grew. Instead, the amount spent on others or given to charity was correlated with how much individuals' happiness levels had risen.
The team also gave 46 volunteers either $5 (£2.50) or $20 to spend. They instructed the participants to spend the money on themselves or someone else. Again, the altruistic group reported feeling happier whatever the size of their gift.
Norton said: "So instead of buying yourself a coffee buy your friend a coffee and that might actually make you a happier person."
Professor Stephen Joseph, of the University of Nottingham - an expert in the psychology of happiness who was not involved in the study - said: "Most of the research in the past has said money isn't that important in terms of happiness. The things that are important are things to do with relationships, with other people, and things that help to promote meaning, the purpose in life. I think that's what this study speaks to."
Although the clear implication of the study is that altruistic spending will make you happier, Joseph said it would be wrong to use the research to formulate advice. "Being prescriptive about how people spend their money, even if it is for seemingly worthwhile causes, is a very dangerous path to go down. Research like this describes society - it doesn't tell us what society ought to be."
Professor Ruut Veenhoven, of Erasmus University in Rotterdam, said the study showed that the economic view of human motivation was incorrect. "This may come as a surprise for economists who have learned that humans are essentially egoists," he said. So why don't people give more money away to make themselves even happier? "Often people don't know what really makes them happy," he said. "Doing nice things to other people isn't so bad after all."
