Spending will make you happier, but not the way you might think

Common sense says that we are happier when we get more money to spend on ourselves. At least, that’s what passes for commonsense in modern capitalistic societies, from the United States to China. Indeed, when Elizabeth Dunn and colleagues at the University of British Columbia and at Harvard Business School asked a bunch of their students (the usual subjects in social science studies), that’s exactly what they found: students thought they would be happier getting $20 than $5, and that they would be happier spending the money on themselves than on others. Turns out, the students were spectacularly wrong.

Research over the past several years has steadily contradicted the capitalistic assumption about human nature. For instance, it is well known that there is only a weak correlation between income level and self-reported happiness across the globe, with the relationship plateauing (meaning that additional money does not increase happiness) at surprisingly low levels of income. And yet, people keep playing the lottery, or its white collar equivalent, the stock market. Why?

Dunn and colleagues have recently published an intriguing paper in Science magazine (21 March 2008) which begins to present us with a surprising answer: apparently, we literally don’t know what makes us happy. The researchers conducted two surveys and one controlled experiment, with the results of each clearly pointing toward the same conclusion: people feel significantly happier when they spend money on others, regardless of how much money they make. For instance, one of the data sets concerned the self-reported happiness of a group of people before and after they got a bonus at work. The results clearly showed that “prosocial spending was the only significant predictor of happiness” after people received the bonus, and this effect “was significant when controlling for bonus amount.” In other words, it didn’t matter how much of a bonus people received.

Dunn and collaborators suggest that in attempting to understand what determines people’s degree of happiness, we have been paying too much attention to what they call “life circumstances,” such as one’s religion, gender and income. It turns out that people adjust pretty readily to those factors, something that would not have surprised Stoic and Epicurean philosophers of time past. What makes a difference, Dunn et al. argue, is the sort of behavior in which one can be proactive, such as charitable giving. In other words, the ability to make a difference for others, no matter how small ($5 given away measureably increases our daily dose of happiness) alters our perception of life in a positive fashion.

This sort of research not only puts into question the entire structure of a society bent on personal gain and on the (empirically wrong) idea that a larger car will make you happier, but strongly suggests that people ought to reconsider what they assume to be “obvious” about the priorities in their own lives (oh, and the environment would benefit too!). Perhaps science is telling us that we should enroll in a philosophy class or two to find out who we are and what we want, the latest Hummer be damned.