Can money buy happiness? Much research has been done that shows that income has a reliable, but weak, relationship with being happy. While incomes have surged in recent decades, happiness levels have remained static, showing no sign of people being happier as a result of their increased income.
A University of British Columbia study (”Spending Money on Others Promotes Happiness”, 2008) looked into identifying whether and how disposable income might be used to increase happiness.
Their study showed that spending money on others, “prosocial” spending (buying something for someone else, donating to charity), generated greater happiness. Their study provides evidence that how people spend their money may be as important for their happiness as how much money they earn – and that spending money on others might represent a more effective route to happiness than spending money on themselves.
A number of studies have determined that life circumstances (gender, income, religious affiliation) may not be good predictors of happiness because people adapt to the stable circumstances of their lives. Theses circumstantial factors tend to have a limited long-term effect on happiness levels.
Intentional activities, practices in which people actively choose to engage, may represent a more promising route to happiness. The University of British Columbia study showed that how people choose to spend their money is at least as important as how much money they make.
The authors of the study suggest that our social policy interventions should promote prosocial spending. The study revealed that people are wrong about the impact of spending money on their own happiness, as the study’s participants were more likely to believe that personal spending would make them happier than prosocial spending.
