Design your life to include more money, health and happiness with less stuff, space and energy.

Design your life to include more money, health and happiness with less stuff, space and energy.

Get Happy Spending Money…Just Not on Yourself or Buying Stuff

Face it, consciously or not, many of us think that more money and stuff will make us happy. We want more money so we can get that iPhone5 or the Kindle Paperwhite or super cool off-grid tiny house or whatever.

Our logic is “As soon as I have enough money, I’ll get_____ and I will be able to _____ and then I will be happy.” So we work extra hard, make more dough (or go into hock) so we can set up our tents outside the Apple Store or go onto Amazon or call the Realtor and fix that iPhone5/Kindle Paperwhite/tiny house deficit. We get that thing and it’s like instant nirvana. Problems solved. Bliss for this lifetime and countless others.

Not exactly. A Harvard/University of British Columbia study shows that spending money on ourselves (antisocial spending) is a far less direct route to nirvana than spending money on others (prosocial).

In one of the study’s experiments, they gave Canadian university students $5 and $20  (US $100/400) to either spend on themselves or others. The students who spent money on themselves reported no increase in their happiness, whereas the prosocial spenders reported an increase. Of note, they found that the amount–i.e. $5 or $20–was less important than the act of giving.

They replicated the experiment in Uganda to make sure that this was not a phenomena limited to affluent Canadian students. It wasn’t. The Ugandans validated the previous findings.

Two of the authors of the study, Elizabeth Dunn and Michael Norton, wrote an editorial in the NY Times saying this:

…typical spending tendencies — buying more, and buying for ourselves — are ineffective at turning money into happiness. A decade of research has demonstrated that if you insist on spending money on yourself, you should shift from buying stuff (TVs and cars) to experiences (trips and special evenings out). Our own recent research shows that in addition to buying more experiences, you’re better served in many cases by simply buying less — and buying for others.

Keep in mind that a positive correlation between money and happiness has been found. But that correlation primarily relates to basic levels of material security; once those levels are exceeded–generally regarded as about $75K/year per household in the US–the increase in happiness with income becomes negligible. Above this level, how the money is spent–pro or antisocially–becomes the main driver in money’s capacity to increase its spender’s happiness.

About Dunn and Norton’s latter point–experiences versus possessions–another study found this:

Experiential purchases tend to make people happier than material purchases…We found that participants were less satisfied with their material purchases because they were more likely to ruminate about unchosen options…that participants tended to maximize when selecting material goods and satisfice when selecting experiences…that participants examined unchosen material purchases more than unchosen experiential purchases…and that, relative to experiences, participants’ satisfaction with their material possessions was undermined more by comparisons to other available options …and to the purchases of other individuals.

In other words, camping outside the Apple store is more likely to make you happy than buying the phone inside it.

While it’s not not spelled out explicitly by either research team, one can surmise that buying experiences for others is a great way of making yourself–and the recipient–happy. It also avoids clogging your friends closets with unwanted gifts ;-).

Beyond giving stuff and experiences, Michael Norton in his TEDx talk (above), shows a strong correlation between happiness and those who give to charities. He suggests Donorschoose.org, which lists projects and needs of low-income schools and their teachers as a possible recipient of that charity. You can help build wells in Africa with Graham Hill’s Charity: Water campaign (it’s his birthday today!). The author gave money to Wikipedia this morning and is already feeling better about himself.

What is your experience with spending money antisocially versus prosocially? On stuff versus experiences? Where do you give? Give us your thoughts (prosocial behavior) in our comments section. It’ll make you happy!

  • Kathy McEnearney

    that’s a heck of an exchange rate for Canadian to US funds. I think there must be at typo there somewhere. The exchange rate is almost 1~1.

  • Liz

    I’m pretty sure that I read somewhere that these kinds of studies are validated only once the subjects have met some kind of minimal standard of living….

    • http://www.facebook.com/davidcfriedlander David Friedlander

      that’s what the paragraph about $75K in US refers to. in other words, once minimal standard of living is achieved, this type of behavior becomes operative.

      that said, the per capita income in uganda is $1300/year, so it’s safe to assume that the people surveyed in that country had a vastly lower standard of living than the candians and they still reported same phenomenon.

  • lazagna

    I keep trying to convince my family that we should spend money on a vacation every X-mas rather than getting together for gifts and other holiday b.s. I would rather have an experience to remember than be reminded, while purging, about the wutchamadoodle I got some X-mas ago.

  • http://www.facebook.com/people/Alexander-López/631013694 Alexander López

    Interesting how modern science validates antique spiritual knowledge.

    • http://www.lifeedited.com David Friedlander

      well said. not new information, but sometimes helps many people to have secular/scientific substantiation to implement a behavior.

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