“As a happiness researcher, I am pleased to share the findings of one of the largest and most diverse studies on this topic,” said Dr. Dunn. “One of the novel contributions of the study is that we can estimate the relationship between these spending choices and happiness because of the sample’s substantial size and diversity. Our results show across all of the demographic groups, spending money on others is robustly related to happiness “
Prosocial Spending
The over 60 percent of participants who reported donating to charity in the past month appear, on average, to have higher levels of Subjective Well-Being, a measure of happiness, compared to those who did not donate to charity. In fact, the relationship between individuals donating to charity and higher levels of happiness was equivalent to earning $36,000 more income, or a near 6 percent increase in happiness.
The link between donating to charity and happiness varied across age groups with older participants reporting the strongest connection to happiness. Yet even for young adults, the association between donating to charity and happiness was equivalent to earning $25,000 more income, or a 4.25 percent increase in happiness.
The study also shows that personal income does not impact the relationship between donating to charity and happiness. For participants living below the poverty line, donating to charity was linked to increased happiness equivalent to $22,000 more in income, or a 3.73 percent increase in happiness. Moreover, people living from paycheck to paycheck reported feeling happier, equivalent to earning $30,000 more income, or about a 5 percent increase in happiness.
Remarkably, even participants who thought spending money on themselves would lead to greater happiness reported higher levels of happiness if they donated to charity.
Time-Saving Purchases
Slightly less than half (47 percent) of participants reported making time-saving purchases, such as hiring house cleaners or ordering food delivery, in a typical month. Individuals who spent money on time-saving purchases reported higher levels of happiness – equivalent to earning $14,000 more income – compared to those who did not.
Time-saving purchases appear beneficial even for individuals who struggle to make ends meet. Participants living paycheck to paycheck reported higher levels of happiness when they made time-saving purchases, equivalent to earning $12,000 more in income, or a nearly 2 percent increase in happiness.
Even for people who prioritize money over time there is a link between greater happiness when using money to buy time, equivalent to earning $20,000 more income. This somewhat unintuitive finding suggests that people who chronically value money over time might benefit from the recommendation to use some of their money in order to have more time.
“The purpose of the new research was to determine if the links between happiness, prosocial spending, and buying time varies depending on individual characteristics, such as age, gender and income,” said Dr. Dunn. “Those interested in this study and its findings can be more confident knowing that people engaging in prosocial spending and time-saving purchases report being happier, as this is the largest study ever conducted examining the links between these spending choices and happiness among Americans.”
**The study, co-authored by Dr. Elizabeth Dunn and PhD student Iris, surveyed an economically diverse sample of 15,545 American adults who had previously applied for a loan with Happy Money. Participation was voluntary. To differentiate the study from others, participants were asked about their subjective well-being, spending behavior, personal values and beliefs, and demographics, including age, gender and income. The mean age of the sample was 37.40 years old with 79.25% identifying as female, 20.28% identifying as male and 0.46% identifying as neither female nor male. The median income was $46,117, and 88.64% of the sample reported living from paycheck to paycheck. Prosocial spending was measured by assessing whether people spent money on others by asking if they have donated to charity in the past month. To assess whether people spent money on time-saving purchases, participants were asked, “In a typical month, do you spend any money on time-saving purchases?” The income levels were derived from the correlation and income based on the equivalent dataset of happiness.
About Happy Money
Happy Money is a financial technology company valued at over $1.1B that offers a people-first lending experience in partnership with credit unions and other community-focused financial institutions. Building on the success of our credit card debt reduction product, The Payoff Loan™, Happy Money also offers personal loans to help people fund their dreams and goals – from important bills to home improvement projects. We believe money can be a tool for happiness; it’s all in how you use it. Through automation and proprietary underwriting models, we personalize the lending process, taking a more holistic view of an individual’s creditworthiness to offer flexible rates and payment plans that work best for their unique financial situation.
Through our proprietary distribution channels and platforms, we aim to connect our financial partners to be stronger together, help them thrive in an increasingly digital world, and enable them to provide the happier lending experience that their customers want. Backed by leading investors, Happy Money has helped nearly 250,000 members since inception – working with lending partners to fund $4.5 billion in loans*. As a fully distributed company, Happy Money has a passionate and purpose-driven employee base of over 400 people across the United States, For more information, please visit happymoney.com,
*As of 7/1/22
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