Giving Money Brings Joy

A study has found that money does indeed bring happiness—spending money on other people, that is.

Authored by Harvard Business School professor Michael I. Norton and Elizabeth W. Dunn ’99, a psychology professor at the University of British Columbia, the report used a combination of real-life and laboratory data to conclude that people who give money to others—no matter how little—are happier than people who do not.

“We were interested in studying happiness by seeing people’s actions rather than their circumstances,” Dunn said. “Instead of focusing on how much money they make, we looked at how they used it.”

In one part of the study, 16 employees at a Boston firm received bonuses ranging from $3,000 to $8,000. Norton said he was surprised to find that whether or not the employees had spent money on others turned out to be the only significant predictor of their happiness level about two months later, and spending on others brought more happiness than the relative size of their own bonus.

Norton said that the results have applications in marketing—a word that most associate just with advertising—which is his specialty area.

“However, marketing is also about consumer focus: what people do with their money and how they can make wiser decisions,” he said.

Dunn said that this study, which was published last month in the weekly journal Science, brings something new to the science of happiness.

“The focus wasn’t on spending in previous studies, it was on general prosocial behaviors,” she said.

Tal D. Ben-Shahar ’96, who teaches Psychology 1504: “Positive Psychology,” said that humans are deeply connected in a “web of empathy,” thus tying individual happiness to that of others.

“Sometimes there’s nothing quite as selfish as generosity,” he said.

But despite the knowledge that generosity brings more happiness, why are people more inclined to spend money on themselves?

Norton says that money has the power to “trap you.”

“Once you get money, you start thinking less about how to use it for others,” he said.

As for college students, a demographic not known for having much disposable income, Ben-Shahar said that these principles have implications beyond just money.

“You can volunteer, you can help a roommate, you can join a student organization in whose cause you believe,” he said. “There are many ways to benefit.”