Can spending decisions impact wellbeing?
Money doesn’t buy happiness—or does it? Säde Stenlund, a postdoctoral fellow in the Department of Social and Behavioral Sciences at Harvard T.H. Chan School of Public Health, was first author of a recent study that looked at how spending decisions may impact wellbeing.
Q: The study examined if and how people’s spending decisions impact their happiness. How did you and your co-authors conduct the study?
A: My colleagues from the University of British Columbia and I [Stenlund did the research while at UBC] worked with the nonprofit organization TED to recruit 300 participants in Indonesia, Kenya, Brazil, the United States, the United Kingdom, Canada, and Australia. Two hundred participants were each given a windfall of $10,000—this was a big surprise to them all—and directed to spend it all within three months. Half of them were assigned to share their spending with family, friends, and on Twitter, and half were assigned to keep their participation in the study private. Every month, these participants filled out a survey in which they shared how they spent their windfall and how happy they felt about each of their purchases. We then surveyed them on their general wellbeing at the end of the spending period and three months after that. The remaining 100 participants served as a control group; they did not receive any money or report on any spending, but they did complete our surveys on wellbeing at baseline and throughout the study.
There have been previous studies on spending money and happiness, but none have been as diverse or included such wide variety of spending categories. Our study is unique for including individuals from both high- and low-income countries, allowing us to explore cultural differences in the relationship between spending and wellbeing, and including a breadth of kinds of spending, allowing us to best capture spending in daily life.
Q: What did you find?
A: We found that, among participants who received the windfall, the ways they used the money affected their happiness depending on where they lived. There were similarities around the world: Spending money on charity, experiences, education, and personal care boosted happiness among all those who received the money. But compared to those in low-income countries, participants in high-income countries derived more happiness from buying gifts and time-saving purchases and derived less happiness from paying off debt and paying for housing. We also observed that participants who kept their spending private derived more happiness from charitable donations and gift-buying than those who shared their spending with others.
Our control group also provided significant insights. When we measured their overall wellbeing over time, it was lower than those who received the windfall. This difference was pretty much the same as that between participants who received the windfall and spent their money in ways that made them happy versus windfall recipients who derived less happiness from their purchases. This underscores that the way we spend money can boost happiness; it’s not simply about acquiring money.
Q: What are the study’s public health implications?
A: This is really a psychology-driven study, but it relates to what I’m working on now at Harvard Chan School: optimism and health outcomes. More and more, the public health field is recognizing and highlighting the importance of happiness, its role in mental health and therefore overall health. This study offers one pathway toward a better understanding of what kinds of things support happiness on a population level, and hopefully offers individuals a new perspective and opportunity to reflect on their spending choices.
