It's a question many of us have pondered: What's the relationship between money and happiness? Michael Norton goes beyond speculation and digs deep into the data. Norton is a professor of business administration at the Harvard Business School and a member of the university's Behavioral Insights Group. He and Elizabeth Dunn, an associate professor of psychology at the University of British Columbia co-authored Happy Money: The Science of Smarter Spending. The 2013 book uses behavioral science to show how money can buy happiness – if you follow certain principles.
Thrivent Financial: What led you to this direction of study?
Michael Norton: If you think of the two currencies we care a lot about – money and happiness – most people would like to make more money. And most people would like to be happier. Partly the belief is, well, if I made more money, I'd be happier.
So our research question became, if these two currencies are so important, how do they relate to each other? Can money buy happiness? And if not, what can we do about it?
Thrivent: So does money buy happiness?
MN: According to our research, the answer is sort of yes and no. It's "no" in the sense that how we typically spend money, or the things we spend most of it on, don't pay off in much happiness. However, we've identified other things you can do with money that make a bigger emotional impact.
"It makes us happier to give money away to other people, rather than spending it on ourselves."
Thrivent: What's an example?
MN: Instead of buying physical goods, such as watches and cars, you buy experiences, like vacations. The data suggests stuff doesn't seem to make us much happier. But experiences do seem to make us happy, both while we're having them and afterward, because we have something meaningful to look back on.
Thrivent: What discoveries have surprised you the most?
MN: One is that it makes us happier to give money away to other people, rather than spending it on ourselves. That could be treating a friend to lunch, buying someone a gift or donating to a charity. Lots of our studies have come to that conclusion.
It wasn't surprising that being generous makes us happy. Generosity resonates with most people. But what was surprising is that people weren't doing very much of it. And when we encouraged them to be more generous as part of our research, they did get happier.
Find ways to be generous (and maybe even become a little happier)
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