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IT’S counterintuitive but three psychologists claim to have found
statistical and experimental evidence that spending money on other
people rather on oneself brings more happiness.
Elizabeth W. Dunn, Lara K. Akmin and Michael I.
Norton of the Department of Psychology, University of British
Columbia, Vancouver, Canada, reported this surprising finding in the
March 21, 2008 issue of Science.
There’s a growing literature on happiness in
the relatively new field of behavioral economics. Much of it deals
with the effect of income on happiness, variously defined as a
feeling of contentment, a state of well-being, or emotional
equilibrium. This is the first research paper that I’ve seen that
dealt with the hypothesis that how people spend their money is as
important as how much of it they earn or have.
Dunn et al. were intrigued by the results of
surveys of happiness that consistently showed that the level of
happiness in rich countries had remained flat in the last decade. Is
it because people with large disposable incomes spend their money on
themselves, consuming costly services and products? The three
psychologists set out “to identify whether and how disposable
income might be used to increase happiness.”
They concede that when people think about money
it’s generally for their own gratification rather than to help
others or to give to charity.
Notwithstanding this mindset or cultural bias,
Dunn and her collaborators maintained that “money can also provide
a powerful vehicle for accomplishing prosocial goals…” and that
it “may have measurable benefits for one’s happiness.”
To test the relation between spending choices
and happiness, they asked a representative sample of 632 Americans
to rate their state of happiness, to reveal their annual income, and
to estimate how much they spent on themselves and how much on others
monthly.
Two indices were constructed: one for personal
and the other for prosocial spending. The two indices were entered
at the same time into a standardized regression. It was found that
personal spending was not related to happiness whereas prosocial
spending was “associated with significantly greater happiness.”
They also found that the two were “independent and similar in
magnitude” except that personal spending had no relation to
happiness. This was the initial evidence that how people spend their
money may be as important for their happiness as how much money they
earn.
To test further this finding, they looked at a
“windfall” situation. The happiness of 16 employees before and
after they received a profit-sharing bonus from their company was
analyzed. One month before the bonus, the employees were asked about
their general happiness and their annual income. Six to eight weeks
after receiving their bonus, the employees were asked again to rate
their happiness and on what they spent their windfall.
The two spending indices—personal and
prosocial—were entered into a regression with Time 1 and Time 2
that showed that “prosocial spending was the only significant
predictor of happiness” at Time 2. The employees who used more of
their bonus for prosocial spending experienced greater happiness and
that the manner they spent the bonus was a more important predictor
than the size of the bonus itself.
To establish the causal impact of prosocial
spending, the psychologists set up an experiment. Forty-six
participants were asked the state of their happiness in the morning
and then were given envelopes that contained either US$5 or $20. One
group, randomly selected, was told to spend before 5 o’clock in
the afternoon of the same day the money for personal purposes. The
other group was told to spend the money on a gift for someone else
or to give it to charity also by 5 o’clock of the same day.
Covariance analysis with prewindfall happiness
as one of the covariates showed that greater postwindfall happiness
was experienced by the prosocial spending group than did the
participants in the personal spending group.
“These experimental results” Dunn wrote,
“provide direct support for our causal argument that spending
money on others promotes happiness more than spending money on
oneself.”
Under normal and stable circumstances of
life—income, gender, religion, etc.—people’s adaptations have
little effect on levels of happiness. It is “intentional
activities” or the exertions of effort to engage that may be a
more promising route to “lasting happiness.”
The three psychologists noted rather wistfully
that the participants in the survey and experiment, after having
been told the results, “spent relatively little of their income on
prosocial ends.” In their final report, they said that as little
as $5 was enough “to produce nontrivial gains in happiness on any
given day.” Why didn’t they?
To find out, a new set of 109 respondents were
asked to select the condition that would make them happiest. “A
significant majority” chose personal rather prosocial spending as
the route to happiness.
There are several ways of interpreting the
result of this experiment. I suggest two.
The first is to explain it with Milton
Friedman’s permanent income theory of consumption that says, among
others, that people prefer to hang on to their money rather than
spend. If they do spend, it’s for personal or family consumption.
If they choose to give it away, it’s with the expectation of
getting it back partly or wholly sometime in the future.
Disinterested prosocial spending is unlikely and by inference may
not bring happiness to the giver.
The second is to use the theory of William D.
Hamilton, an evolutionary biologist, that individuals act
altruistically to ensure the survival of relatives with whom they
share their genes. However, altruistic behavior could evolve if the
cost that the altruist paid was less than the benefit of the
recipient, with some weight given to blood relationship.
In either or both cases, prosocial spending has
a lower priority than spending for personal satisfaction.
opinion@manilatimes.net
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