Money, or the love of same, is the root of all evil. So sayeth the Bible. But humans have no trouble turning that wisdom on its head and shaking loose the opposite axiom—Greed is Good. All of us have occasionally looked to money as a route toward happiness, notwithstanding the fact that one of the most banal lessons of Hollywood movies is: Money CANNOT buy you happiness. Think Scarface, whose leetle friend was no substitute for the real thing.
So which is it? Study after study has suggested that income level, beyond the level of basic needs, has very little effect on personal satisfaction, self-worth, or overall happiness. Yet research by Robert H. Frank and others had demonstrated that most people implicitly assume personal spending will lead to more happiness.
Two psychologists at the University of British Columbia in Vancouver, Elizabeth W. Dunn and Lara B. Aknin, together with Michael I. Norton of the Harvard Business School, wondered whether the matter was governed not by how much money you had, but rather by how you spent it. "Specifically," the researchers reported in Science vol. 319 (sub. required), "we hypothesized that spending money on other people may have a more positive impact on happiness than spending money on oneself."
With that biblical hypothesis in mind (think rich men and camels and the eye of a needle), the researchers set out to identify situations where money DID buy some happiness. That’s not easy, because "the mere thought of having money makes people less likely to help acquaintances, to donate to charity, or to choose to spend time with others." (Science Vol. 314).
Not a promising situation. The researchers first took a nationally representative sample of Americans and had them rate their general happiness and break down their spending into two categories: personal (bills, expenses, gifts for themselves) and prosocial (gifts for others, donations to charity). Regression analysis revealed strong support for the group’s hypothesis: Personal spending was unrelated to perceived happiness, but higher prosocial spending was associated with greater happiness.