Money can buy happiness, new research suggests, but only if you spend it on someone else.
Elizabeth Dunn, a psychology professor at the University of British Columbia, found that people who spent a windfall on friends or family, or gave it to charity, reported feeling happier than those who spent the money on themselves.
One of her experiments involved giving students either $5 or $20 to spend, but she also surveyed employees of a Boston company after they were given a bonus of between $3,000 and $8,000. In both cases, those who spent cash on others reported an increase in their level of happiness.
The findings, published today in the journal Science, add to the burgeoning happiness literature, which includes studies on how everything from comfort food to exercise to having braces can affect happiness.
Wealth is not a predictor of happiness, study after study has shown. Once people have enough money to meet their basic needs, getting more of it doesn't give them much of a boost.
On a scale of zero to 10, a 50-per-cent increase in household income is associated with an increase in life satisfaction of only one-fifth of a percentage point.
But a number of studies have suggested that performing acts of kindness can boost happiness. So Dr. Dunn wondered whether spending money on other people might yield happiness dividends.
"I kept seeing the conclusion being drawn that money can't buy happiness, and that was based on research showing that the correlation between income and happiness is pretty low," she said.
"To me, there was a logical error there. Just because money doesn't seem to buy happiness for most people, doesn't necessarily mean that it can't."
To explore that idea, she and her collaborators at Harvard University conducted a survey of 632 Americans, and asked them to rate their general happiness. They also asked them to report their annual income, and how much they spend in a typical month on bills and other expenses, gifts for themselves, gifts for others and donations to charity.
Personal spending was not related to general happiness. But those who spent more on charities or on other people reported being happier.
Next, Dr. Dunn and her colleagues surveyed 16 employees of a Boston company before and after they received profit-sharing bonuses that ranged from $3,000 to $8,000.
Those who bought something for another person or donated some of the money to charity reported a greater increase in happiness six to eight weeks after getting the extra cash. The size of the bonus didn't have much effect on how they felt.
In a third experiment, the researchers asked 46 students to rate their level of happiness, and then handed them an envelope containing either $5 or $20.
Half were told to spend it on themselves; the other half were told they had to buy a gift for someone else or give the money to charity. When they were surveyed again that evening, the students who had bought food or drink for their friends, a toy for a sibling or had made a donation to the homeless were happier than those who had treated themselves.
The amount of cash the students had been given made no difference.
This suggests that spending even $5 on someone else can brighten your day, Dr. Dunn said. Yet most people don't expect that to be the case.
In a separate study, she asked 109 students to predict whether it would make them happier to spend $5 or $20 on themselves or on others. The majority - 69 students - thought that spending it on themselves would boost their happiness.