To Buy Happiness, Spend Money on Other People

In a new video, Michael Norton shows that spending money on others yields more happiness than spending it on yourself.
by Carmen Nobel

Video directed and produced by Joanie Tobin

In their book Happy Money: The Science of Smarter Spending, authors Elizabeth Dunn and Michael Norton draw on years of quantitative and qualitative research to explain how money can buy happiness, but only if we spend it in certain ways.

The key lies in adhering to five key principles: Buy Experiences (research shows that material purchases are less satisfying than vacations or concerts); Make it a Treat (limiting access to our favorite things will make us keep appreciating them); Buy Time (focusing on time over money yields wiser purchases); Pay Now, Consume Later (delayed consumption leads to increased enjoyment); and Invest in Others (spending money on other people makes us happier than spending it on ourselves).

Recently we featured a video illustrating the emotional benefits of buying experiences. In the following sequel, Norton again gives some cash to two women in Harvard Square. The catch this time: Each of them must spend the money on someone else.

"We've shown in our research that giving money to others actually does make people happier," says Norton, an associate professor of marketing at Harvard Business School. "One of the reasons is that it creates social connections. If you have a nice car and a big house on an island by yourself, you're not going to be happy because we need people to be happy. But by giving to another person, you're…creating a connection and a conversation with that person, and those things are really good for happiness."

Watch the video to find out how the women in Harvard Square chose to invest in others—and whether it made them happier!

Click Here

About the Author

Carmen Nobel is the senior editor of Harvard Business School Working Knowledge.
    • Anonymous
    I must be completely ecstatic, Now on a serious note this really make sense to me, I help people out, or give money or things to people it makes me feel happier because I was able to help someone that truly needed it, Kudos to al the givers out there!!!
    • Debbie Broderick
    I don't buy for myself much I like to help other everyday I do something for someone. But not for be it makes me smile to see that I have helped someone
    • Inaam
    • Trainer, KBTC
    In fact, it appears people are looking for happiness in an act of purchase but that happiness cannot be quantified, though the purchase involves a price or giving up money to others to make them feel good or even to stay connected, it is like an opportunity benefit people sought nowadays.
    Great the idea of at least some who were not even spending on others, would now view in a way that if they want to stay connected or derive happiness, they should be spending wisely