How does one spend money to maximize happiness? Buy a new coat? How about a tasty meal? While there is quite a large body of research that says people with more money are happier, a recent study conducted by the Harvard Business School has found that the way you spend money could be as important as how much of it you have. While a lifestyle of compassion leads to a greater rate of survival, practicing generosity leads to more happiness.
The study was conducted on a University campus where researchers gave participants either $5 or $20 to spend by the end of the day. Researchers then instructed ½ the participants to spend the money on themselves, referred to as personal spending, and the other ½ to spend the money on someone else, referred to as prosocial spending. At the end of the day after the money was spent researchers asked participants to gauge their happiness level.
Researchers found that those instructed to take part in prosocial spending were overwhelmingly happier than those instructed to spend the money on themselves. Furthermore, the amount of money spent, either personally or prosocially, had no impact in the participants level of happiness.
Those conducting the experiment then went back onto campus and described the experiment to other individuals, trying to see what situation people thought would yield a happier outcome. The result was people’s predictions were twice as wrong. Individuals guessed that spending more money on yourself would make anyone happier, while the reality is that spending any amount of money on someone else will make you happier than if you spend that money on yourself.
The experiment was initially conducted in North America where there is a higher standard of living than many parts of the world. Researchers thought that those in countries where basic needs are not always met might yield a lower correlation between giving and happiness. The study was expanded to include 136 countries and the money given to participants was adjusted for different variables and income levels.
Researchers discovered that in 120 of the 136 countries there was an overwhelming relationship between unselfish giving and one’s happiness. Finding this relationship between giving and happiness throughout the world could indicate that prosocial giving is an integral aspect of human nature.
So the next time you have an extra $20 maybe give it away to a charity, or someone in need instead of buying something for yourself. After all, it will make you happier and healthier.
For more info or to read the study visit hbs.edu
Need some help finding a charity to give to? Check out Charity Navigator.
Photo: Flickr/ epsos
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