Money, spending and happiness

No mount of money is a substitute for happiness, or so the traditional wisdom goes. And science has tended to suggest that the traditional wisdom is right – that is, until a team of researchers from Cambridge came along this year and published a study suggesting that money can buy happiness if you spend it the right way.

The researchers designed their study as a response to “decades of research reporting surprisingly weak relationships between consumption and happiness.” The conventional view has been that money can’t buy happiness, but lack of money can definitely lead to unhappiness.

Supporting this idea have been studies like this one published in 2014 in, appropriately, the Journal of Happiness Studies. The 2014 study found that while there are many different areas of life associated with overall happiness, some of these domains are associated with happiness in a positive way and others in a negative way.

For example, it found that family is mostly associated with happiness in a positive way. That is, positive family-related events tend to enhance overall life satisfaction more than negative family-related events detract from it. With money, the opposite is true – on average, financial problems take away from happiness more than financial successes add to it.

Even when people do have money, spending money is often associated with unhappiness, as if people who spend more money are trying to fill an emotional hole. A 2008 study found that people who are sad and self-focused tend to spend more money than other people.

With these kinds of results in mind, it’s no surprise the dominant view has been that money doesn’t lead to happiness.

But a group of psychologists and business professors at Cambridge guessed that there might be more to the story than this. After all, buying stuff is fun, can it really have no relation with happiness?

So they put together a study looking at over 76,000 British bank transaction records to see if any subtler patterns showed up. What they found was that money doesn’t automatically buy happiness, but if you spend it the right way it might.

Specifically, people who spend money on things that match their personality tend to be happier. It turns out one reason previous research hasn’t found a link between spending and happiness might be that the research didn’t look at what people are spending money on.

The 2016 study found that spending money on things that fit with your personality isn’t just associated with happiness – it appears to actually cause happiness. Moreover, spending money on things that go with who you are seems to actually be more closely tied to overall life satisfaction than either your income level or the total amount of money you spend. In other words, buying things that are you looks to be really important.

So the takeaway isn’t to shop more or shop less but to shop smart. Indiscriminately throwing around money won’t make you happy – but saving your money by passing on that thing you know you don’t really want in your heart of hearts, then splurging a little on something that really calls out to you might move you in the right direction.

Image: FreeImages.com/Manuel De La Pena