Can Spending Money Increase Happiness?

“By being a customer at [the electricity company] you contribute to a better world every day, without any extra expenses. You can choose by yourself how our profit will be distributed to several different charity organizations”

If you log in to a specific electricity company’s web page, you will see this text. The message is clear. By being a customer, you contribute to a better world. Without any extra charge.

It might be a wild guess, but I assume that most of us want to contribute to a better world. It will make us all happy, right? Another wild guess is that only a few people want to pay anything extra to contribute. But, is my assumption correct? Maybe it is worth a lot to pay a little extra sometimes?

As we will learn, the relationship between money, happiness and helpfulness is a bit hard to understand. Now, we will get some clarity among the concepts. You will learn how to increase your, and others, happiness.

The relationship between money and happiness has been in the attention of researchers in behavioral economics for some years. A lot of people tend to believe that money brings you happiness and the research has actually shown that it is true – given that the money is spent the right way.

Elizabeth Dunn and her co-workers are the leading researchers in this field. They have shown that higher experienced happiness makes you spend more money on others, for example your friends, family or a charity organization. And, if this was not enough, to give also contributes to higher experienced happiness!

Imagine yourself an upward-rising spiral. When you spend money on others, you will be happier yourself, which probably will lead you to spend even more on others and become even happier as a result.

But, is it that simple? The thing is, that money as a motivator sometimes inhibits the benevolence and pro-social attitude that happy people often experience. Elizabeth Dunn and her co-workers are looking at how the knowledge of the upward-rising spiral affects the experience of happiness. The initial studies are looking good. They show that increased knowledge about the fact that giving makes you happy, makes people spend even more money on others.

So, to conclude, it is a clever trick by the electricity company mentioned in the beginning to mention the fact that the customers can contribute to a better world without any extra expenses. But, perhaps it would be even better to remind to the customers that they actually spend some money on others. Because it can increase their happiness (and make them spend even more in the long perspective).


  • Money can bring happiness – if they are spent the right way
  • By spending money on others, people increase their own happiness
  • Increased happiness makes you spend even more on others, which brings you even more happiness. Imagine about an upward-rising spiral.


Reference: Dunn, E. W., Aknin, L. B., & Norton, M. I. (2008). Spending money on others promotes happiness. Science, 319, 1687-1688.