Happiness Finding Happiness Life Happiness Happiness Quotes Happiness Richard Layard Money Make You Happy Happiness Layard Can Buy Happiness Money Makes You Happy Money Happy

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Www Loveofmoneyisrootofallprosperity Fa 2007 Node 4 Happiness Finding Happiness Life Happiness Happiness Quotes Happiness Richard Layard Money Make You Happy Happiness Layard Can Buy Happiness Money Makes You Happy Money Happy

If this interpretation is correct, then people who receive an economic windfall should experience greater happiness after receiving the windfall if they spend it on others rather than themselves, even controlling for happiness before the windfall. We tested this prediction by examining the happiness of 16 employees before and after they received a profit-sharing bonus from their company (13). One month before receiving this bonus (M = $4918.64, SD = 1816.98), the employees reported their general happiness as well as their annual income. Approximately 6 to 8 weeks after receiving the bonus, participants again reported their general happiness and then reported what percentage of their bonus they had spent on (i) bills and expenses, (ii) rent or mortgage, (iii) buying something for themselves, (iv) buying something for someone else, (v) donating to charity, and (vi) other. The first three categories were summed to create an index of personal spending (M = 63.44, SD = 38.20), and the fourth and fifth categories were summed to create an index of prosocial spending (M = 12.19, SD = 18.35).

Entering Time 1 happiness and our two spending indices into a regression predicting Time 2 happiness revealed that prosocial spending was the only significant predictor of happiness at Time 2 (β = 0.81, P < 0.02). With income included as an additional predictor in this regression (β = –0.03, NS), the effect of prosocial spending remained significant (β = 0.96, P < 0.02). Similarly, the prosocial spending effect was significant (β = 0.81, P < 0.03) when controlling for bonus amount (β = 0.00, NS). Thus, employees who devoted more of their bonus to prosocial spending experienced greater happiness after receiving the bonus, and the manner in which they spent that bonus was a more important predictor of their happiness than the size of the bonus itself (13).

Building on our correlational and longitudinal evidence that spending on others may promote happiness, we next demonstrated the causal impact of prosocial spending, using experimental methodology (13). Participants (N = 46) rated their happiness in the morning and then were given an envelope that contained either $5 or $20, which they were asked to spend by 5:00 p.m. that day. Participants randomly assigned to the personal spending condition were instructed to spend the money on a bill, an expense, or a gift for themselves, whereas participants assigned to the prosocial spending condition were instructed to spend the money on a gift for someone else or charitable donation. Participants were called after 5:00 p.m. that day and again reported their happiness. We submitted postwindfall happiness to a 2 (windfall size: $5 versus $20) x 2 (spending direction: personal versus prosocial) between-subjects analysis of covariance (ANCOVA), with prewindfall happiness included as a covariate. This analysis revealed a significant main effect of spending instructions [F_1,41 = 4.39, P < 0.04, effect size estimate ( ²_p) = 0.10], whereby participants in the prosocial spending condition (M = 0.18, SD = 0.62) reported greater postwindfall happiness than did participants in the personal spending condition (M = –0.19, SD = 0.66). Neither the main effect of windfall size (F_1,41 = 0.09, NS) nor the Windfall Size x Spending Direction interaction (F_1,41 = 0.12, NS) approached significance. These experimental results provide direct support for our causal argument that spending money on others promotes happiness more than spending money on oneself.

In moving away from the traditional focus on income toward an examination of spending choices, our perspective dovetails with recent theorizing by Lyubomirsky, Sheldon, and Schkade (8) on the architecture of sustainable changes in happiness. According to Lyubomirsky et al. (8), the historical focus on life circumstances (e.g., income, gender, and religious affiliation) as predictors of happiness may be somewhat misplaced; because people readily adapt to the stable circumstances of their lives, circumstantial factors tend to have rather limited long-term effects on happiness levels. Thus, intentional activities—practices in which people actively and effortfully choose to engage—may represent a more promising route to lasting happiness. Supporting this premise, our work demonstrates that how people choose to spend their money is at least as important as how much money they make.

Finally, despite the observable benefits of prosocial spending, our participants spent relatively little of their income on prosocial ends; participants in our national survey, for example, reported devoting more than 10 times as much money for personal as for prosocial spending each month. Although personal spending is of necessity likely to exceed prosocial spending for most North Americans, our findings suggest that very minor alterations in spending allocations—as little as $5 in our final study—may be sufficient to produce nontrivial gains in happiness on a given day. Why, then, don’t people make these small changes? When we provided descriptions of the four experimental conditions from our final study to a new set of students at the same university (N = 109) and asked them to select the condition that would make them happiest, Fisher’s Exact Tests revealed that participants were doubly wrong about the impact of money on happiness; we found that a significant majority thought that personal spending (n =69) would make them happier than prosocial spending (n = 40) (P < 0.01) and that $20 (n = 94) would make them happier than $5 (n =15) (P < 0.0005). Given that people appear to overlook the benefits of prosocial spending, policy interventions that promote prosocial spending—encouraging people to invest income in others rather than in themselves—may be worthwhile in the service of translating increased national wealth into increased national happiness.

References and Notes

Received for publication 25 September 2007. Accepted for publication 12 February 2008.