Does money make people happier? Less than you may think.
The wealthy are happier than the poor, studies have found, and wealthy countries are happier than poor ones—but only a little, on average.
That’s probably surprising, since money helps us live healthier, longer lives, allows us more time to spend with family and friends and gives us more control over our lives—all key ingredients for happiness.
If that’s the case, why doesn’t money buy a lot more happiness?
“Because people don’t spend it right,” according to a recent paper in the Journal of Consumer Psychology.The authors—professors of psychology and experts on the science of happiness—offer principles to help people spend money in ways that are likely to increase their happiness, including:
- Buy more experiences and fewer material goods. That is, spend on leisure activities—vacations, adult-education classes, concert tickets—instead of on more stuff. Experiences stay with you, but we adapt to possessions quickly so their pleasure wears off.
- Spend money on others. Giving money or gifts strengthens social bonds, which amplify happiness, and activates brain areas associated with receiving rewards.
- Buy many small pleasures rather than one large one, especially if money is limited. The buzz from even a big purchase wears off relatively quickly.
- Delay consumption, prolong anticipation. Looking forward to an event is a great source of pleasure, even if the event ends up being a letdown.
- Consider how purchases will affect your day-to-day life. Happiness is often shaped by the “uplifts” of daily life, and unhappiness by the hassles, more than by major life events.
- Pay close attention to the happiness of others. Research suggests that the best way to predict how much you’ll derive pleasure from something is to see how much others have enjoyed it.