For the longest time, armchair philosophers have told us that money can’t buy happiness. It has been postulated that after a person has enough income to meet basic needs of food, clothing, shelter, and security, additional income seems to have little impact on happiness. However, recent research disproves this notion. Money can buy you happiness – the only catch is that if you spend it in of the one of the following three ways:
1. Spending on others: Social scientists have found that spending money to buy gifts for others or donating to charities promotes happiness (Dunn et al., 2008). You don’t have to shell out enormous amounts of money on others to reap this benefit; amounts as low as $5 spent on others are sufficient to produce significant gains in happiness. However, people are still hesitant to spend money on others, mainly because they feel that spending money on themselves will make them happier than spending money on others. Research shows otherwise.
2. Buying an experience: Studies support spending money on an experience (e.g., events, trips, vacations, spas, massages, concerts, sporting events, dining, etc.) lead to greater happiness compared to spending money for acquiring material possessions (e.g., televisions, clothing, jewelry, electronic equipment, cars, etc.) (Van Boven, 2005). This is because experiences, in contrast to material possessions, provide you with a more memorable story, don’t diminish in their subjective pleasurable value on comparison with others, and bring family and friends together. In other words, you are more likely to reminisce about a vacation with a family than a big screen television, and your memories of the vacation are not going to get tarnished if your neighbor were to buy a television that was bigger than yours. This doesn’t mean that material possessions or things cannot be used to provide you with an experience. For example, you buy a book because it is a collector’s item and never read it (a thing) or you buy a book and plunge into with gusto, savoring every plot twist, making it an experience. The latter will lead to more enduring happiness. It comes as no surprise that happy people tend to extract experiences out of material possessions.
But before you book your next holiday, a couple of caveats are in order here. First, people who buy experiences mainly for bragging rights so that they get more “likes” on social media may not get pleasure from such experiences (Seidman, 2016). Second, recent research shows that individuals with abundant resources are happier from purchasing experiences than material goods compared to individuals with limited resources in whom both material purchases and experiences provide happiness (Lee et al., 2018). Put in real life terms, if one is resource-strapped, then they would experience equal happiness buying a new pair of shoes or going on a weekend getaway.
3. Buying time: Despite rising incomes, people are feeling pressed for time, which undermines wellbeing. Research shows that spending money on time-saving services promotes happiness (Whillans et al., 2017). What this means is that if you outsource chores that you dislike such as cleaning your home, mowing the lawn, etc., then you have more time to relax, catch up with friends, or pursue your hobbies.
The take-home message here is that money, even small amounts of it, can buy you happiness; you only need to know how to spend it.
To learn more about evidence-based self-management techniques that promote happiness and also work for depression, check out Dr. Duggal's Author Page.
Dunn, E. W., Aknin, L. B., & Norton, M. I. (2008). Spending money on others promotes happiness. Science, 319, 1687-1688.
Lee, J. C., Hall, D. L., & Wood, W. (2018). Experiential or material purchases? Social class determines purchase happiness. Psychological Science, 29(7), 1031-1039.
Seidman, E. (2016). Fourteen ways to jump for joy. In S. O’Connor (Ed.), The Science of happiness (pp.34-41). New York, NY: Time Books.
Van Boven, L. (2005). Experientialism, materialism, and the pursuit of happiness. Review of General Psychology, 9(2), 132-142.
Whillans, A. V., Dunn, E. W., Smeets, P., Bekkers, R., & Norton, M. I. (2017). Buying time promotes happiness. Proceedings of the National Academy of Sciences, 114(32), 8523-8527.