3 Steps to Buy Happiness

by Robert Rizzo | Twitter, Facebook,

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Many of us have heard the old saying, “You can’t buy happiness.”

But recent studies indicate that may not be true—if you buy the right things.

Simply having money does not equal more happiness

According to Elizabeth Dunn, researchers at Princeton used Gallup data to assess the impact of income on happiness.

Their goal was to prove or disprove the common assumption that a person’s happiness continues to increase as their income increases.

More money, more happy. Seems simple enough.

What they discovered was that this hypothesis remained true to a point.

The study indicated that happiness increased steadily until the person attained an annual income of about $75,000 a year.

Above that point, additional income did not appear to significantly increase happiness.

So should you stop buying “Quick Picks” at the local mini-mart?

While that might be a debatable investment strategy, the desire to have more money may still be a good one.

Unrealistic expectations

First we need to adjust our expectations about how much money will increase our life satisfaction.

In studies that Dunn conducted with fellow researcher Michael Norton, people expected life satisfaction to double if their earnings roughly doubled from $25,000 to $55,000.

The reality was their life satisfaction only increased 9%!

So if having more money doesn’t bring more happiness, what does?

Givers are happier…and healthier

Dunn and Norton decided to explore if there was a connection between how the money was spent and the amount of happiness a person experienced.

To do this, they and a team of researchers gave random participants, passing by on the street, the equivalent of $5- $20 on various occasions and in various countries.

Half of the study participants were told to spend the money on themselves, the other half were told to spend the money on someone other than themselves.

The researchers later followed up with the participants.

When we follow up with people who receive cash from us, those whom we told to spend on others report greater happiness than those told to spend on themselves. And in countries from Canada to India to South Africa, we find that people are happier when they spend money on others rather than on themselves.—Dunn and Norton, Don’t Indulge. Be Happy. – NY Times

Key Point: Greater happiness resulted from spending money on others, not spending on themselves.

And if more happiness is not enough to inspire you to give, consider the fact that givers are also less-stressed then non-givers.

Arthur Brooks, author of Who Really Cares, in an article in the NY Sun (before its demise), cited several studies that all indicated givers are more happy and less sad, whether they are giving time, money, or even blood. He goes on to say that research indicates a strong correlation between giving and lower levels of stress.

How you can buy happiness

So if you want to buy happiness, here are three guiding principles to remember when you and your workmates hit the next Power Ball.

  1. Spend less money on yourself, under-indulge – According to research, greater satisfaction is achieved through an occasional indulgence. Too much of a good thing and a person ceases to savor the experience.
  2. Spend money on experiences instead of stuff – If you do spend money on yourself, spend it on an experience that you can share with a friend.
  3. Give to others – Giving never ceases to return benefits to the giver and the receiver.

For more info check out these videos by Dunn and Norton.

Elizabeth Dunn at Pop!Tech 2010


Michael Norton  at TEDxCambridge

Michael Norton is an associate professor at Harvard Business School. Elizabeth Dunn is a professor at the University of British Columbia. They are co-authors of the forthcoming book, “Happy Money: The Science of Spending” (Simon & Schuster).

  1. http://www.forbes.com/2008/03/20/money-buys-love-tech-science-cx_ec_0320love.html
  2. http://www.nytimes.com/2012/07/08/opinion/sunday/dont-indulge-be-happy.html?_r=1&pagewanted=all
  3. “Why Giving Makes You Happy – The New York Sun.” 2008. 11 Jul. 2012<http://www.nysun.com/opinion/why-giving-makes-you-happy/68700/>

Photo Credit: Woman Offering Colorful Present — Image by © Royalty-Free/Corbis


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Robert is the founder of RobertRizzo.com | Mediocrity-Free Living. He is passionate about helping people discover the rewards of daily giving.

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