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How to Spend Your Way to Happiness

The Best Things in Life Are … ?

Two days ago, I was happily walking down a street in Vancouver with my wife and my 6-year-old son. A young woman biked by, looking rather content. I recognized her as Elizabeth Dunn, a psychology professor at the University of British Columbia. Dunn is author of a brilliant paper in Science, in which she and her colleagues demonstrated a surprising link between spending money and happiness (which I’ll describe below). After returning home to Arizona, I happened across Prof. Dunn again, this time while browsing the lead stories in the New York Times, one of which discussed some very recent research on money and happiness. I’ve only met Dunn a couple of times, but she is one of those people who seems to be smiling all the time. What makes a happiness researcher happy? Well, I just looked at the articles on her website for clues.

Apparently, it’s not being wealthy. A study Dunn conducted with Lara Aknin and Michael Norton revealed that although people believe they’d be a little happier if they made a lot more money, and considerably more miserable if they made a lot less, they’re wrong. In actuality, poor people aren’t that unhappy, and really wealthy people aren’t any happier than those with comfortable middle-class incomes.

In fact, another study Dunn conducted with colleagues in Belgium and England suggested a down side to being wealthy: Wealthy people savor their experiences less than poorer people. If you’re poor, you’ll sip slowly and appreciatively on your glass of beer at the local pub; if you’re wealthy, you’ll be disappointed that your glass of 91 point Chardonnay isn’t quite up to the standards of the fine Bâtard Montrachet you had last week at the French Laundry. These researchers found that Belgians who made a lot of money, or even less wealthy Belgians who’d been primed by seeing a pile of Euros, experienced less positive emotions thinking about a romantic evening or a hike to a lovely waterfall. In another experiment, they found that Canadians spent less time savoring a bar of chocolate when they’d been primed by seeing a pile of loonies (Canadian dollars).

Can money make you happy if you spend it properly? Another recent study by economists Thomas DeLeire and Ariel Kalil found that spending money, whether it’s on food, cars, stereos, or fancy houses, was not generally linked to happiness. The one exception was spending money on leisure activities – which was associated with greater happiness. Why? DeLeire and Kalil’s analysis suggested that leisure activities increase people’s social connections.

Other research by Dunn and her colleagues suggests that people can increase their happiness by giving their money away. In one study, they found that those who spent most of an unexpected pay raise on themselves did not experience a boost in happiness; those who spent relatively more on others did get a boost, though. In a follow-up experiment, they asked UBC students to rate their happiness in the morning, then gave them an envelope containing $5 or $20, and randomly assigned them to spend the money either on themselves or on someone else (by buying a gift or giving the money to charity). At the end of the day, the students again reported how happy they were. Another group of students guessed that they’d be happier if they got more money and kept it for themselves. But in fact, those who had spent their money on themselves had not changed their mood since the morning, whereas those who spent their money on others were happier. In a later study, Dunn and her colleagues also asked students to play a Dictator game (you have ten dollars, and you can choose to give as many as you want to another student). Those who were stingy experienced less positive feelings and showed more signs of physiological distress.

A later study by William Harbaugh at the University of Oregon found that giving money away increases neural activity in the brain’s reward centers, and does so especially when the giving is voluntary. So if you wanna be happy, it seems, spend your money in ways that brings you closer to others. Like taking a vacation in Vancouver with your wife and child. No wonder I was feeling cheerful that day.


Aknin, L., Norton, M. I., & Dunn, E. W. (2009). From wealth to well-being? Money matters, but less than people think. Journal of Positive Psychology, 4, 523-527.

Dunn, E.W., Aknin, L., & Norton, M. I. (2008). Spending money on others promotes happiness. Science, 319, 1687–1688.

Dunn, E.W., Ashton-James, C., Hanson, M. D., & Aknin, L.B. (in press). On the costs of self-interested economic behavior: How does stinginess get under the skin? Journal of Health Psychology.

Harbaugh,W. T., Mayr, U., & Burghart, D. R. (2007). Neural responses to taxation and voluntary giving reveal motives for charitable donations. Science, 316, 1622–1625.

Quoidbach, J., Dunn, E.W., Petrides, K. V., & Mikolajczak, M. (in press). Money giveth, money taketh away: The dual effect of wealth on happiness. Psychological Science.

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