You work hard for your money.
So it would be natural to assume that you’d get the most pleasure from spending it on the person who deserves it most: you. But guess what? This, too, turns out to be wrong. In a 2008 study from the University of British Columbia, students given money to spend on others reported greater happiness than students instructed to spend the same amount on themselves. It also found that while spending more money on charity or gifts predicted higher levels of happiness, students who spent more on themselves were not happier.
When you take a closer look at the research, you can see why. Most of the students in the study who spent on themselves used the money to grab a quick bite, while students who spent on others made more impactful choices. “They often bought lunch for someone else,” says Dr Lara Aknin, one of the study’s co-authors. “We had a couple of students who bought flowers for their parents. Some people bought toys for siblings. Some people decided to bring home dinner for their family.” These were all occasions, in other words, in which the value of the purchased good was compounded by novelty and social contact. “The number one predictor of happiness for people is social relationships,” says Aknin. “Using our money to strengthen social relationships might be one reason we see the emotional benefits that follow.”
Remember our earlier lesson: experience is usually a better buy than stuff. And when you spend on someone else, what you’re really buying is an experience – the experience of that person’s happiness, and the knowledge that you are responsible for it. How do you put a price on that? Unfortunately, it’s not easily done, which is part of the reason we tend to underestimate the value of spending money on others.
When money is the mediator, value and price don’t always match.