Does Money Make Us Happy?

May 2, 2012 Katharina Lochner

How To Buy Happiness

If you think money can’t buy happiness, you’re not spending it right. This is how Michael I. Norton, Professor of Business Administration at Harvard BusinessSchool, opens his TED Talk on how money CAN indeed buy happiness. However, it is important HOW you spend the money, he says.

Michael Norton cites studies that found lottery winners to be less happy after their winning than before because it ruins their social lives and because they spend most of the money on themselves. He was asking himself the question what would happen if they spent it in a more pro-social way. In his experiment, people were given money and asked to spend it either on themselves or on others. People who had spent the money on other people were happier at the end of the day than those who had spent it on themselves. The amount of money did not matter that much.

Across the world and its different cultures, spending money on others is positively correlated to happiness. The same holds true for work teams: When they receive money and spend it together for their team, they are happier than when each team member just puts the money into their own pockets. In Norton’s study, the way money was spent even had an effect on sales performance: pro-social teams sold more than other teams.

Maybe it is not the fact that we are spending money which is crucial for the effect spending money on others has on happiness. Maybe it is more the altruism involved. Altruism is a character strength that has moved into researchers’ focus again through the Positive Psychology movement. Aspects of altruism like for example volunteerism have been shown to be beneficial for mental and physical health, as Christopher Petersen and Martin Seligman report in their book “Character Strengths and Virtues”. Science journalist Stefan Klein has even written a book on the topic: “Der Sinn des Gebens”(only available in German; the translated title would be “The Meaning of Giving”, quite a nice word play in German because “the meaning of life” is “der Sinn des Lebens” in German, so the title “Der Sinn des Gebens” is the same except for one letter). His conclusion is that caring for others prevents us from being lonely and depressed and contributes to longevity. And last but not least, he sees cooperation as a competitive advantage. In any case, there might be more to the saying “It is more blessed to give than to receive.” With this in mind, you CAN buy happiness. What makes the difference is what or better whom you spend the money on.

About the Author

Katharina Lochner

Dr Katharina Lochner is the former research director for the cut-e Group which was acquired by Aon in 2017. Katharina is now a researcher and lecturer at the University of Applied Sciences Europe in Iserlohn, Germany. In her role at cut-e, she applied the research in organizational and work psychology to real-world assessment practice. She has a strong expertise in the construction and evaluation of online psychometric tools.

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