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How to buy happiness? Spend money on other people

man looking happy giving things to others

One of the most under-appreciated things you can do to increase your happiness is to spend money on other people. This idea is largely based on a landmark 2008 study by Dunn et al that showed that spending money on others makes you happier than spending it on yourself. But how many people actually do it?

In this article, I want to suggest a few ways you can make more of this science, and regularly buy yourself some happiness.

A review of the evidence

Before launching into discussion of how to buy happiness by spending on others, I want to cover what the research actually shows.

The 2008 study by Elizabeth Dunn and Lara Aknin was entitled ‘Spending Money on Others Promotes Happiness’. It first looked at a representative sample of 632 Americans, and found that those who spent a greater portion of their income on others tended to be happier.

Dunn and Aknin then designed a study of 46 people that were given either $5 or $20 to spend by 1700 that day. One half of the participants were told to spend it on themselves, while the other half were instructed to spend it on others. When the researchers called them later the same day, those who spent the money on others reported being happier than the subjects who’d spent the money on themselves.

A small study is only an indication

That study in itself was a decent indicator that spending money on other people was a good way of buying happiness. The paper got a lot of attention, and inspired further research into how we can use money to make ourselves happier.

But the replication crisis in psychology (and in science in general) led the authors themselves to admit that 46 wasn’t a big enough number of people to make the claims that strong. They therefore decided to try to replicate the study, and published their results in a 2020 paper called ‘Does Spending Money on Others Promote Happiness?’.

More evidence supports the claim that spending on others promotes happiness

In the 2020 paper, the authors were able to replicate their results. They recruited 730 individuals and allowed them to use a small windfall ($2.50) to buy a goody bag with chocolates and juice boxes in. The participants were assigned to buy the goody bags for themselves or for sick children in a hospital. Those that bought the goody bags for the sick children reported being happier than those who bought them for themselves, as measured across two different happiness scales.

The experimenters did a second study where they asked half the participants to remember a time when they’d spent $20 on themselves, and the other half when they’d spent $20 on someone else. This time, they didn’t find any effect.

You might be happier if you engage more in the giving

In a third experiment, they got a greater level of engagement from the participants in remembering the experience of spending the $20 on themselves or other people1. This time, there were two small effects: those who remembered spending the money on others were slightly happier after remembering, and they also reported being happier at the time they did the spending (at least as far as they remembered).

What does this tell us about buying happiness?

These experiments indicate a few things that we can use to make ourselves happier. Firstly, if we spend money on other people rather than ourselves, that’s likely to make us happier in the moment. This at least seems to hold true for small amounts of money, and providing it’s money we don’t need for something critical, like food, housing etc.

Secondly, this pro-social spending will likely give us happier memories. If we actively remember those times when we gave away the money, we’ll remember having been happier than the times we spent money on ourselves.

Thirdly, actively recalling times when we spent money on others should, all things being equal, make us a little bit happier. This effect is the smallest of the three, but at least has the advantage of being free!

But, the effect size of spending on others is small to medium

Before I recommend giving away all your money, however, it’s important to talk about the effect size. The effect size just means how much of a difference the behaviour is likely to make, on average. In other words, will giving away the money make me 100x more happy than keeping it, or is it barely worth bothering about?

For the main experiment, where the subjects chose to get a reward worth $2.50, or donate it to a sick child, the effect size was d = 0.36, r = 0.18. In everyday language, this signifies a small to medium effect.2 By the standards of psychological effects that we have come to accept as true, that’s a fairly strong result. But of course it doesn’t fully capture how it will necessarily work for you, a unique individual, in the real world.

My recommendation would be to experiment with spending money on others, and reflect on how it made you feel. Obviously without setting out strict parameters and controlling for every other variable in your life, you’re not going to have a perfect experiment, but if you do this consistently for a while, you might get a sense of how it feels for you.

It’s also worth considering the potential downside. What’s the risk of you spending a little money on others? Assuming you’re not lacking basic necessities, very little. And you may well get a small to medium boost of happiness.

How to spend money on others to make yourself happier

Assuming you do want to act on these findings, given the balance of probabilities, it’s worth considering the best ways to build them into your everyday life. Lots of people are aware of scientific findings, but aren’t taking full advantage.

Nor does the research say how to do the ‘pro social spending’ in the real world. Presumably you won’t be going round buying $2.50 juice boxes for everyone you know!

Ways to spend money on others

  1. Set regular reminders to buy things for other people. This could be anything from buying a sweet treat, like in the experiment, to an experience, which is likely to give the other person more lasting happiness.
  2. Try giving to different people. Some people get more value from gifting things to people they know, whereas others prefer to give to strangers. If you feel awkward doing that, leaving money to buy a coffee for the next person in line can make it less so.
  3. Set up budgets for pro-social spending. If you set aside money each month, perhaps through a sub-account in your main bank account, that will make sure you remember to spend the money that way, rather than letting it dissipate in whatever ways you usually spend it.
  4. You can set up regular charitable donations. These are easy to do as regular payments from your bank account, or you can give as you earn to ensure it’s tax-efficient. And remember to do some research on how to get the most from your charitable donations. The research suggests that you need to have a level of ownership over your giving, so taking an active interest in where the money goes is likely to boost your happiness.
  5. Journal about your experiences spending on others. This can strengthen your memories of doing those things, which makes it easier to get the boost of happiness from remembering them. Noting how your gift may have impacted the other person will engage your sense of empathy.

If you enjoyed this article, you might also like to learn how to become happier by reducing the amount of advertising in your life.

Footnotes

  1. They selected participants who had shown greater levels of engagement in previous studies, and mandated that they write a minimum of 150 characters about the experience
  2. See McLeod, S.A (2019, July 10), ‘What does effect size tell you?’, Simply Psychology