The Upside of an Empty Wallet: Giving Makes Us Happy

Giving money, gifts, and time to others may make you happier than if you spent it on yourself, according to recent research.

It’s the time of year when people open their checkbooks.

Charitable giving is at a high during the holidays — one survey revealed that on average, charities receive 41% of their annual contributions in the last few weeks of the year. Not to mention gifts: video games for the nieces, ugly sweaters for the cousins, and treats for the neighbors.

Thinking about all the money you’ll spend in December might hurt a little bit if you’re staring at a paycheck with the realization that if it’s going under a Christmas tree, it’s not going straight to you. If you’re like most people, you generally believe that spending money on yourself will make you happier than if you spend it on others, according to research by psychologist Elizabeth Dunn and colleagues.

But it turns out this assumption may be wrong. Dunn’s research went on to reveal that in fact, spending money on someone else will make us happier than spending it on ourselves. So we may be onto something with our donations and oodles of gift wrap.

One part of Dunn’s study found that with Americans, more spending on others was associated with greater levels of happiness. They surveyed a cross-section of Americans and asked them to estimate how they spent their money in a month, putting their expenses into two overarching categories: how much they spend on themselves (bills, expenses, and gifts for themselves) or on others (gifts for others and charity donations). So “prosocial spending” is linked to life satisfaction in a broad sense.

And this effect holds around the world. Researcher Laura Aknin and colleagues analyzed survey data from 136 countries to find the same relationship, regardless of the level of wealth or poverty of the respondents. It even held when they controlled for the possibility that a person might have spent to build or strengthen an advantageous relationship. There’s a similar relationship when people give their time instead of money: a study of German citizens showed that those who volunteered were more satisfied with their lives than those who didn’t.

Of course, these studies were correlational. Perhaps happy people are simply more likely to give than unhappy people? Many studies since the 1970’s have supported this idea: Consistently happy people and people in good moods are more likely to engage in prosocial spending and prosocial behaviors, like doing favors for people or pitching in more around the office.

But gift-givers out there might be interested to know that it also goes the other way around: giving appears to cause more happiness.

To uncover this finding, Dunn and her team approached random samples of students and measured their happiness levels. Then, they gave them some cash and instructed them to spend that money by 5pm the same evening — either on themselves, or on someone else (via a gift or charity donation). At the end of the day, the researchers measured the students’ happiness levels again and sure enough, those who spent the money on others were happier. Whether they got to spend $5 or $20 didn’t make much of a difference, so the way people spend their money may be more important to than how much they have at their disposal.

Scientists have begun to examine what happens in the brain when we spend on others. In a study published in Science, participants laid in an fMRI machine and were asked to split $100 between themselves and a local food bank. When they donated the sum to the food bank, the fMRI showed brain activity in their reward centers of the ventral striatum. This area is also associated with positive reactions to rewards like drugs and attractive faces.

The simple act of remembering a time when you spent on others can make you happier, according Aknin and Dunn. Dunn used this effect to demonstrate a virtuous cycle of giving: If research participants recalled a memory of a time when they spent on others, this was likely to put them in a better mood. If it did, they would be more likely to choose to spend a sum of money on someone else instead of themselves. Giving and happiness trigger one another.

(Researchers even saw the positive effect of giving in toddlers.)

So if you’re dreaming of a trip to Thailand or a new jean jacket, we understand completely. But that very same cash can make you quite happy if you direct it to another person. Even a tiny gift can set off a virtuous cycle: good moods, more giving.