Money can buy happiness. But how it does that may depend on where you live, a new study says.
The study, published last month, followed 200 participants who each received a one-time gift of US$10,000 dollars. Researchers wanted to look at how everyday spending choices impacted the happiness of people from different countries.
The study found that giving gifts to others and buying time — through paying for services like food delivery or a cleaner — made individuals in wealthier countries happier than those in poorer countries. People from low-income countries felt happier when paying off debt or paying for housing than people from wealthier countries.
“Paying off debt might be, in lower income countries, a way to secure your future, or secure your financial situation,” said Säde Stenlund, lead author of the study. “It might have more negative connotations in higher income countries.”
Psychologists have studied connections between spending money and happiness for years, says Stenlund, now a postdoctoral researcher at Harvard’s T.H. Chan School of Public Health. But most of those studies focus on wealthy, western countries.
“This is really the first study on spending money and happiness that looks at such a diversity of people across the globe,” she said.
Giving and experiences
The study was funded by an anonymous donation to the non-profit TED, best known for its educational TED Talks. The study’s participants were from Australia, Brazil, Canada, Kenya, Indonesia, the US and the UK.
Participants had three months to spend their $10,000. At the end of each month, they listed how they had spent their money and how happy each purchase made them feel. They also answered questions about their overall happiness and sense of well-being.
Three months after the spending period ended, they completed another survey about their happiness, enabling researchers to gauge how their happiness had changed over time.
How people spend their money seems to have almost the same impact on people’s happiness as receiving money, says Stenlund.
In general, participants from all countries said they felt the happiest when giving to charities or paying for experiences.
For years, researchers have observed that purchasing experiences often makes people happier than purchasing things.
“Experience is something that could change who we are,” said Frederick Grouzet, a psychology professor at the University of Victoria who studies the relationship between personal goals, values and happiness. “It’s a personal experience that could be a personal growth experience.”
Givers are happier
Research has long shown that generosity makes people happier.
But certain kinds of giving are in decline.
A recent report from the Fraser Institute think-tank found that, in 2021, just under 18 per cent of Canadians donated to charity. That is the lowest percentage of Canadians donating to charity in 20 years, the report says.
Recent data from Statistics Canada also show many Canadians feel increasingly unhappy.
But Grouzet cautions against assuming there is a direct connection between a country’s declining generosity and increasing unhappiness.
“There are so many factors that contribute to happiness,” he said. If Canadians suddenly increased their giving, it would not automatically result in a happier nation, he says.
But how people spend money is a reflection of their personal values, he says.
“If we value material wealth, then we spend money in accumulating things, or accumulating money — anything that could show that I’m financially successful,” he said. “But if you value social relationships, if you value community, then you spend money on others, and you support others.”
The study also found a difference in personal happiness after people told others about their spending.
Half of the participants were instructed to share about receiving the $10,000 and how they spent it on X, formerly Twitter. The other participants were told to keep the news about receiving and spending the money as private as possible.
People who kept the information private got more happiness from spending on gifts or giving to charity than those who shared that information publicly.
People may have been happier when their giving was private because they felt like it was easier to give the way they wanted to, said Stenlund.
“If your giving is autonomous and it comes from your values, then [it seems] you derive more happiness from it,” said Stenlund.
Study participants across countries also generally derived the most happiness from spending money on charitable donations, gifts for others, education or personal care, like gym memberships.
They derived less happiness from paying for medical expenses or necessities like housing, utilities, food and transportation.
Stenlund says she hopes people use this information to reflect on whether they have “space in [their] budget for the happiness-boosting categories.”
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