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The answer: Canadian happiness researchers at the University of British Columbia. In a study involving 200 participants from countries with varying economic conditions, published in Communications Psychology, they examined how spending affects happiness in everyday life.
GDP Levels and the Happiness-Spending Link
The popular saying “money can’t buy happiness” isn’t backed by scientific evidence. According to the International Monetary Fund, advanced economies have significantly higher GDP per capita than emerging markets. This economic disparity shapes spending patterns and their impact on happiness. Research also indicates that the correlation between income and happiness in the U.S. and Europe has grown since the 1970s, paralleling increases in GDP and economic inequality.
Most contemporary Americans believe money can buy happiness. A recent survey found that six out of ten Americans (59%), including 72% of millennials and 67% of Gen Z, agreed with this sentiment. However, most happiness research has been conducted in affluent regions like the U.S. and Europe. Canadian researchers aimed to fill this gap.
Spending $10,000
The study assessed the emotional outcomes of spendings’ choices in a diverse, multinational sample. Researchers selected 200 participants from Australia, Brazil, Canada, Indonesia, Kenya, the United Kingdom, and the United States. Eligibility criteria included having an active Twitter (X) account and fluency in English. Each participant was given $10,000 to spend over three months. A control group of 100 individuals, who neither received money nor tracked their expenditures, provided monthly survey responses about their spending habits.
Participants were divided into two groups: one could publicly share their expenses, while the other kept them private.
Spending on Others and on Experiences Boosts Happiness
The study revealed that spending money on others—such as through charitable donations or gifts—and investing in experiences like special dinners or travel significantly increased happiness. This aligns with previous research suggesting that spending on experiences often brings more joy than material purchases. Additionally, spending on self-care and education also contributed to higher happiness levels.
Interestingly, participants who made charitable donations or gave gifts privately reported greater happiness than those who did so publicly. This finding highlights the importance of autonomy in financial decisions for emotional well-being.
The emotional benefits of expenses varied by economic context. Participants from high-income countries derived more happiness from time-saving services and gifts. Conversely, in low-income countries, spending on housing and debt repayment brought the most joy.
Key Takeaways
Thoughtful spending—especially on others and experiences—can genuinely enhance happiness. The study provided unique insights into the emotional consequences of spending choices. However, emotional responses depend on the autonomy of decisions and the economic environment.
Around the world, people who spent money in ways that made them happy experienced greater improvements in overall subjective well-being 3 and 6 months later.
Study authors
Adapting spending to individual circumstances and cultural contexts may help foster greater happiness. Incidentally, German researchers suggest that age also influences happiness levels.
