Michael Norton is an Associate Professor of Business Administration at Harbard business school.
If you believe “Money Can’t buy happiness”, then you’re not spending it correctly. When people think about winning the lottery – they think it will make them happy. However they spend it all, go into debt, and all their friends ask for money – their instinct is to get more antisocial and closed off. Winning the lottery ruins people’s lives – but is this because they only spend it on themselves?
Michael ran a test at university of British Columbia – giving students either $5 or $20 and asking them to spend it on either themselves or someone else by the end of the day. The ones who gave their money away were happier, but those who spent on themselves felt the same. Also, the amount of money spent or given away didn’t make a difference. A similar experiment showed the same result in Uganda – a completely different culture to Canada. The magnitude of the gift wasn’t too significant – a girl who bought a gift for her mother felt as happy as a Ugandan who bought life-saving malaria treatment for a stranger.
Michael extended this to the workplace – giving a team $15 each to spend on themselves or an experience for the team. The team ‘pro-social’ events were sometimes silly bonding exercises – like buying a pinata and smashing it together. However, the company got a 72c return in productivity on every 15c spent on team bonding. The productivity return for people spending on themselves is far less – only 4.2c per 15c spent.
The same experiment was carried out with dodgeball teams – and the ones who spent on each other became much better teams. They dominated the league. The teams that spent on themselves stayed the same.
To make yourself happier, don’t think about which product to buy. Find a way to spend it on someone else, or to charity.