Spending and Savoring

Whether it is heard on an anti-materialism segment on television or simply from a humble preacher, it is so often said that money cannot buy happiness. However, many go through life with the conventional pursuit of money in mind. The link between money and happiness has been a long debated and recently researched controversy. Interestingly, modern research provides a positive correlation between the entity and state of being. Robert Frank, author of the book, How not to Buy Happiness, asserts that, “People do not spend their extra money in ways that yield significant and lasting increases in measured happiness.” Frank is suggesting that the problem is not in the money but rather inherent in the way people spend it. Spending money in an altruistic way leads to innumerable acts of financial generosity: from spotting a friend at the movie theater to paying for a stranger’s coffee. Human beings around the world derive happiness from spending prosocially and on experiences as opposed to materialistic objects.

The not so Secret to HappinessFirst, prosocial spending is feeling empathy and concern to use personal financial resources to benefit others. The act of prosocial spending increases an individual's happiness. Though, happiness is by nature a subjective state of being. For instance, a luxurious BMW may contribute to the contentment of one, while a loving family or good health may suffice for another. Finding the crumpled and forgotten five dollar bill in a revisited article of clothing is a perpetual source of serendipity and happiness for yet another. So , as the level of happiness is self-reported, the terms means different things for different people when conducted in the following polls and studies.

Money can buy happiness?For example, a study conducted by Harvard University researchers found that spending money on others, prosocial spending, raised people’s emotional as well as their physical well-being. More specifically, 600 North Americans were randomly selected. About half was asked to spend a twenty dollar windfall on themselves, while the other half was asked to spend it on someone else. According to the results, people that bought a gift for a friend or sibling, or donated to charity reported they were significantly happier by the end of the day. The benefits “extended not only to subjective well-being, but objective health”. Despite people’s inclination that spending the windfall on oneself will grant more satisfaction, “the biggest payoff personally...is to spend it prosocially”. This study suggests that there are long and short term advantages, health and happiness, to prosocial spending.

Additionally, Harvard University conducted another experiment to see if the same results ensued in human beings in other places of the world, as opposed to solely North Americans. Students from the University of British Columbia in Canada were either given five or twenty dollar bills, and asked to spend it on others or themselves before the end of the day. When researchers called back the participants that night, the same results occurred: those who had prosocially spent the money felt notably happier. Elizabeth Dunn, associate professor and psychologist, along with other researchers, noted that these similar results could be a “North American phenomenon.” Consequently, a similar study took place in Uganda. The procedure went as follows: participants were randomly selected and assigned to write about a time in which they spent money on themselves or spent it prosocially. After describing the spending experience in detail using a procedure meant to evoke “vivid reminiscence, participants were asked to report their happiness on the Subjective Prosocial Spending and Well-being Happiness Scale, a four-item measure of subjective well-being that has been used with samples around the world”. Not surprisingly, the participants who spent prosocially reported higher states of subjective well-being. This reinforces the idea that happiness is derived from spending money on others.

It's about the experience, right?Furthermore, spending money on experiences such as travel rather than materialistic objects such as a three thousand dollar rug is more impactful for people in the long run. The costly rug will only provide a one time experience, while going out with friends to lunch will be different each time, offering unique access to happiness opportunities. It was also found in another study conducted by Elizabeth Dunn that the more money one had, the less they savored the daily pleasures in life; having the ability to savor life’s pleasures is important for happiness.
With excess money, one is fully aware that he/she can purchase whatever desired. In turn, it becomes unnecessary to savor every little pleasure that comes one’s way. So if not spent in the right way money gets in the way of happiness by undermining the ability to savor experiences.

In conclusion, while many coin money with negative connotations, the act of prosocial spending and spending money on experiences rather than objects actually improves an individual's happiness. While money can both aid and impede the pursuit of happiness, people who give money to others or to charity are just inherently happier people by character. So regardless of cultural background, generosity has a seemingly positive effects on happiness. Survey data from 136 countries shows that “prosocial spending is consistently associated with greater happiness”. All in all, if spent correctly, money can buy happiness after all.