Experimenting with Purpose: When Does Money Buy Happiness?
By Ashley Whillans
We are introducing a new series of monthly guest posts on the NPP blog entitled “Experimenting with Purpose.” In these posts, graduate and post-doctoral students from the NPP network share recent insights from purpose research conducted at their labs.
The first contributor to our series is Ashley Whillans from the University of British Columbia.
If you found an unexpected $20 bill in your coat pocket this afternoon, what do you think would be the best way to spend this money to maximize happiness? Take a minute to think about your response. If you imagined spending this $20 on something for yourself—such as indulging in your favourite foamy cappuccino—you might want to rethink your spending decision. In fact, you may even want to turn to entrepreneur Warren Buffet for expert financial advice.
Image: © 2011 JD Hancock
Warren Buffett’s money advice has been advocated by investors world-wide. And, while most people are happy to rely on expert opinion when it comes to making money, people consider themselves self-experts when it comes to spending money, particularly when asked to think about how to spend money to boost personal happiness. However, the problem with trusting our own personal instincts when it comes to spending money is that they are often incorrect. From big screen televisions to second homes, material purchases often have little to no impact on our personal happiness. This is where Warren Buffet’s valuable advice comes into play.
Buffet recently wrote an article for CNN entitled: “My Philanthropic Pledge,” suggesting that we should give to charity as a way to enhance our emotional well-being. When asked about giving 99% of his wealth away, Warren Buffett replied that he “couldn’t be happier with his decision.” He went on to explain that although some material purchases can make life more enjoyable, many do not. “Too often,” he wrote, “a vast collection of possessions ends up possessing its owner. The asset I most value…is interesting, diverse, and long-standing friends.” Thus, when it comes to spending money, Warren appears to know how to stretch the happiness of every cent.
Luckily for us, we don’t need to give away a fortune to reap the emotional rewards of prosocial spending. In a series of experiments conducted by Dr. Dunn and her colleagues at the University of British Columbia and Harvard Business School, people who spent as little as $5 on someone else over the course of a day were happier at the end of that day as compared to people who were asked to spend $5 on themselves. Additionally, the emotional benefits of prosocial spending extend beyond personal reward. In a series of recently published studies (link to PDF) employees who were given the opportunity to spend money on others (in the form of prosocial bonuses—money they were awarded to spend on others rather than themselves) were not only happier and more satisfied with their jobs, but also showed increased sales and performance-related success.
In conclusion, stepping on a path towards happiness in your personal life and at work can be as simple as spending your next $20. The next time you find a $20 bill in your coat pocket take Warren’s advice: spend this money on others rather than on yourself—in doing so, you will help yourself and society in the process.
When do you think spending money is most conducive to happiness?
Make a comment and share your thoughts with us.
Associated Project Theme: Purpose & Wealth