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A large body of research is dedicated to discovering the links between personal happiness and financial wealth. Many have concluded that while personal happiness does not grow according to the amount of money a person has in their possession, many also argue that a certain amount of material wealth is required in order to obtain basic needs such as shelter, nutrition, and sanitation. This paper is concerned with the relationship between an individual’s wealth and happiness once these basic needs have been met. Using the term “prosocial spending,” this paper argues that spending money on other people is perhaps the universal way to ensure that our wealth can increase our happiness.
A large body of research has been dedicated to discovering the psychological links between the amount of money we earn, how we earn it, and how we spend it. Many agree that personal wealth can help us attain material items that grant us quick satisfaction, but academic researchers and many in the general public ask whether material wealth can “buy” lasting happiness (Hsee, Yang, Li, and Shen 2009). This might be possible for some individuals, especially in richer societies where standards of living are quite high and personal wealth is a necessary part of social living (Hsee et al., 2009). The connection between happiness and wealth also depends on cultural context. Some cultures value material possessions highly, while others spend very little on material goods once their basic needs have been met. For example, securing the future of their loved ones in a struggling economy is significantly important, so any increase in material wealth will give them satisfaction. In short, personal happiness and well-being is a highly subjective matter varying from one person and culture to the next. Yet, there is some very strong evidence suggesting that there is at least one aspect of accumulating wealth common among most people and cultures all over the world: spending money on other people leads to long-term satisfaction and emotional well-being. This action is referred to in scholarly literature as “prosocial spending” (Aknin et al., 2013).
In broad terms, prosocial spending simply means spending money on others. More specifically, this involves giving money to another person directly, spending your own money to purchase gifts for others, giving personal belongings to others, donating to charities, or a wide variety of other spending activities (Aknin et al., 2013). Spending money on others can enhance personal happiness, and this is an important point in analyzing whether happiness depends on giving money once a person has reached their desired standard of living.
Personal Psychological Well-being
Life satisfaction depends on a wide variety of factors. In addition to having our basic needs met (e.g., food, shelter, clothing, sanitation, and so forth), we also need to enjoy pleasant affective experiences, which include both long-lasting and transient emotional events (Howell & Howell, 2008). Most people need to be part of a wider group of friends, family, and colleagues with whom they share regular activities and personal events. Constant interaction with people is one way to satisfy personal psychological well-being (Howell & Howell, 2008). To illustrate how this works, money in terms of donation, gift, exchange of goods, or giving in general is introduced, as they play an important part in these activities and events. This is not to say that greater wealth equals to greater happiness. Rather, they play an important part in facilitating our interpersonal relationship needed to secure our psychological well-being.
Evidence suggests that the act of giving money or purchasing a gift for someone else can enhance our psychological well-being because doing so can deepen our emotional connection with another person (Aknin et al., 2012). More specifically, it is claimed that this connection creates strong recalling memories that we can look back to, thus making us feel happy repeatedly even long after the act of giving has taken place (Aknin et al., 2012). In other words, when we gain happiness through spending money on other people, the memories of happiness make us feel happy frequently and want to spend money on them again (Sknin et al., 2012). This claim is supported by experimental evidence from Aknin et al.’s study. 51 participants in this study were asked to choose between spending an amount of money ($5 or $20) either on themselves (personal spending) or on another person (prosocial spending). The authors found that the prosocial spenders were happier than the personal spenders when they looked back on their respective activities (Sknin et al., 2012). In addition to this result, the prosocial spenders were more likely to spend more money on others repeatedly throughout their lives, which giving them a long-term source of happiness. This finding tells us that the act of personal spending might gain us some level of happiness, but this type of happiness is not long-lasting because it does not produce a memory of a positive past experience.
Memory of positive past experiences with other individuals is important, because it helps us to create stronger social ties. Strong social ties with friends and family are considered a great source of personal happiness and psychological well-being, because in a strong relationship, we share our emotions more, express ourselves frequently, and create memories more often (Aknin et al., 2011). Without having the support of people around us, life can become much more difficult. Furthermore, spending money on people helps to enhance our image by frequently reminding them our good deed and the pleasantness of the exchange. This acts to strengthen relationships, even though many people might not admit that money is a factor in their affection for another person. It is what money represents that is of most value. For example, giving someone a gift is a symbol that they care. Similarly, paying for the bill at dinner, is a symbol that the person feels enough affection for the other that they are willing to make their life easier by saving them some money on the cost of their dinner, for example. The gesture that money can create can speak volumes about how a person feels about another. Without using words, money can indicate to another how they feel. This gesture can go a long way towards building meaningful relationships. On the other hand, the act of not paying can cause problems in a relationship in several ways. For example, a man might feel that a woman is only interested in him for his money if he continually has to pay for the bills and she does not offer to do so. On the other hand, a woman might think a man is not interested in her if he is not paying for the bill.
The link between spending money on others and establishing strong relationships with those people is an important topic because of the general importance of social belonging. If spending money on others is, in fact, an important part of creating social bonds, this would suggest that prosocial spending is not only a source of happiness for individuals, but also a source of happiness and well-being for society as a whole. The argument that humans are driven to create lasting and positive interpersonal relationships is referred to as the “belongingness hypothesis” (Baumeister & Leary, 1995). There are two main criteria behind this principle: First, frequent pleasant interactions are needed with several other people are needed. Also, the interactions need to be based on a enduring and stable framework in order for there to be authentic concern for the other person (Baumeister & Leary, 1995). In other words, in order to maintain a minimum lasting interpersonal relationship, there must be a need to form constant interaction with people, and the interaction creates social stability and affective concern that are long-lasting. Like Aknin et al. (2011), and Baumeister and Leary (1995) all believed, these benefits depend on frequent social interaction. More specifically, the need to belong is only satisfied when people spend regular time together after developing strong feelings for one another. Otherwise, the social bonds will last only a short amount of time and thus fail to create long-term satisfaction. Returning to a point made by Aknin et al., prosocial spending plays an important role in developing strong relationships because it provides the giver and the recipient with a reason to interact. It could also be argued that spending money on another person is a sign that you are willing to make a personal sacrifice on behalf of that individual. Thus, in addition to the benefits of the financial or material reward the recipient gains, they also receive a symbol of friendship and caring. For the “giver,” this means gaining personal satisfaction after having taken a step to maintain a long-term friendship.
As Aknin et al. (2011) discuss, there are many variations in what it means to have a strong social tie with other individuals. For example, family relationships (even the very meaning of “family”), friendships, as well as financial resources vary a great deal across the world. People also celebrate the act of giving in different ways, as different cultures celebrate birthdays and holidays in their own unique ways. This means that the aforementioned findings and conclusions may not necessarily apply to all contexts. However, as the next section argues, there is strong evidence suggesting that the link between happiness and prosocial spending or behavior is a universal trait amongst humans.
Prosocial Spending Across Different Cultural Contexts
While there are many different views across the globe regarding measurements of well-being, evidence shows that the act of sacrificing time and material goods for the benefit of another individual is a universal human trait. This is a role that is traditionally assumed by men, being the provider in the relationship, and that has been the case throughout history and in the vast majority of cultures. During the time when males were hunters and gatherers, and even prior to the human stage in evolution, males were the physically stronger gender, and due to this fact, they were responsible for hunting food for the family, and protecting it. However, the days of wielding a spear or sling shot are no longer necessary, and this has caused men to assume a different role. Instead of venturing into the woods looking for a large deer to kill, for example, men can now buy their meat at the supermarket. However, this act is also frequently performed by women, and does not satisfy the traditional male desire to provide for his family. Men often fill this void by paying for meals and other needs. Even though the gender roles in many countries has significantly changed, men still predominantly pay for dates and other expenses. This is very likely to trigger a sense of happiness with the men.
Meanwhile, the role of women has changed significantly. They are now working, and better able to provide for themselves, and for their spouses, if necessary. Despite women no longer performing many of the traditional tasks such as cooking and cleaning, many men still demand that they pay for many of the bills. On the other hand, many women feel it is important for them to claim their independence by paying for their own portion of the expenses. This is a development in the evolution of what this paper calls the “payment impetus.” But evolution has likely caused people to have an innate desire to stick with customs practiced by their ancestors. This would include the male role of being the provider, and the female role of supporting her man. Of course, this cannot be claimed to be true for all people, but the research shows the satisfaction that is generated by paying for the bills. The research lacks, however, in differentiating between the happiness generated by a man who pays, and the happiness generated by a woman who pays. If gender is to be taken into consideration, the happiness that is generated may only be apparent in men, while women do not show such an appeal for paying.
For example, according to Aknin et al. (2013) regardless of the wealth of a given country, financial generosity provide subjective well being to people from all over the world. Yet this research does not differentiate between a man and a woman’s happiness from paying. What the research does say generally, however, is that paying is not only something that can benefit those who are less fortunate, but the benefactor also retains a positive takeaway from the interaction. Many people dedicate their lives for the purpose of improving the lives of others, and this can be an extremely rewarding proposition. The authors base this argument on the evolutionary theory that social cooperation helped early humans survive, which is possibly why generosity continues to create positive feelings across different cultural contexts. These researchers categorize generosity, giving, and the need for social interaction under the term “psychological universals,” which basically refer to “’core mental attributes shared by humans everywhere’”. While there are some clear differences between how people express their needs and desires, there are certain human characteristics that show little to no variation across different cultures. For example, many if not most individuals are motivated by altruism, or concern for the welfare of others (Aknin et al., 2013). This in turn enhances social and emotional well-being for all those involved. In countries all over the world, prosocial spending is one of the most common expressions of altruistic behavior.
One challenge to the proposed social and emotional benefits of prosocial spending is the idea that this activity greatly depends on personal income level – something that is a major issue in poor countries where many individuals lack the financial resources to take care of their basic personal needs. Past research has suggested that in general, people in wealthy nations can afford to have their basic personal needs met, have greater financial freedom, and are therefore happier than people in poor nations (Diener et al., 2010). The basic principle here is that for people that have few possessions and resources, giving to others involves a great deal of sacrifice and in some cases personal harm. While researchers generally argue that happiness does not automatically increase according to wealth, there is a body of research claiming that in general, people in under-developed countries are less happy than people in developed countries (Diener et al., 2010; Hsee et al., 2009). Of course there are many exceptions; for example, there are impoverished areas in developed nations and rich areas in under-developed countries. But in terms of average income earners per capita, it is reasonable to argue that the greater level of wealth of a society, the greater the level of overall happiness. However, this tends to be true only up until a certain point. According to Oishi and Schimmack (2010), once a nation reaches a certain level of income, people’s happiness increases very little, none at all, or even decreases as more wealth is accumulated. As evidence of this continues to emerge, researchers are beginning to look at non-economic indicators of well-being.
Oishi and Schimmack (2010) point out that there is an increasing trend among scholars to measure a country’s well-being based on subjective indicators. Subjective indicators include broad terms like “happiness” and “life satisfaction” which are measured by psychological scientific ratings, either in the form of an index (e.g., Happy Life Expectancy Index) or through interview (Oishi & Schimmack, 2010). The authors claim that the strength of this type of indicator is stronger in capturing people’s experiences and evaluations than economic or social indicators. Economic information such as GDP per capita, as well as education and poverty, on the other hand, report specific areas of social progress but they do not necessarily indicate personal satisfaction or well-being. For example, even though many East Asian nations like South Korea and Japan are high on many economic indicators, they do not report higher levels of life satisfaction or daily happiness (Oishi & Schimmack, 2010). In contrast, many Latin American countries are not high on economic indicators, but they do report fairly high on life satisfaction and daily happiness (Oisi & Schimmack, 2010). This shows that purchasing items for other people is not necessarily necessary for personal satisfaction.
The connection between wealth and happiness can be explained by the fact that individuals who report high levels of happiness tend to enjoy greater personal freedom, which is often a result of having money to spend. For example, Oishi and Schimmack (2010) state that once individuals have reached a basic or average standard of living, they enjoy their time the most when they are able to share their money, health, and daily activities with friends and loved ones. At the same time, these authors suggest that these activities do depend on attaining a certain level of income (average annual income, for example), since regular work and shared leisure depends on living space, participation in community events, basic amenities, and other regular costs. In short, these authors are suggesting that social happiness and development depends on a combination of income and personal satisfaction. Since people in social networks spend their own money to engage in activities with others, they are essentially spending money on one another, helping out where they can and establishing a friendly system of exchange driven by trust and mutual agreement. This shows that the sharing of wealth can be a major factor in one’s personal happiness.
This paper has argued that prosocial spending (spending money on other people) is one of the most reliable and universal ways to ensure that the accumulation of wealth leads to greater personal happiness. Prosocial spending creates happiness by putting us in regular contact with other people (e.g., recipients), by deepening our personal relationships through a token of friendship and trust, and by providing us with lasting memories of a positive exchange of money or gifts. Prosocial spending also contributes to social happiness, since giving to others creates bonds in the community and provides assistance to those in need. While scholarly literature argues that general happiness depends on reaching a certain standard of living, the same literature posits that once our basic needs are met, our happiness increases not according to wealth necessarily, but on the degree to which we use our financial resources socially and with generosity.
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