They say money can’t buy happiness. Michael Norton says “if you think money can’t buy happiness, you’re not spending it right!”
Norton, Associate Professor of Marketing at Harvard Business School, and Elizabeth Dunn, Associate Professor of Psychology at University of British Columbia, have joined forces to create 5 principles of smarter spending in their new book, Happy Money.
We had the opportunity to talk to Michael about his research. Check out what he had to say, and then find out how you can win an autographed copy of Happy Money below!
99Papers.org: What prompted you to research the relationship between money and happiness? Did your findings surprise you?
Mike: My coauthor Liz Dunn and I met when we were in graduate school, which means we met when we were both completely broke. When we got our first grown-up jobs – as professors – we were big enough nerds to wonder what research said about how we should spend our newfound salaries to get the most happiness “bang for our buck.”
We were surprised to learn that although there are roughly 70 trillion books offering guidance on saving money and investing money, there was almost no research offering guidance on how to spend money. And what was even more surprising, the little research that we could find suggested that the things people usually spend money on – like bigger houses, nicer cars, and fancier televisions – have pretty much no impact on happiness. This suggested that we had some work to do: what are the ways that money can be turned into happy money?
99Papers.org: What do you hope readers will take away from Happy Money?
Mike: We hope that Happy Money gives people the guidance that we felt was missing: how to spend money in ways that research has proven are most likely to make us happier.
The book offers five principles – (1) Buy Experiences, (2) Make it a Treat, (3) Buy Time, (4) Pay Now/Consume Later, and (5) Invest in Others – each of which you can implement right away, today, by changing how you spend as little as $5.
99Papers.org: One of your secrets to buying happiness is to invest in others. What suggestions do you have for people who want to start incorporating “prosocial” giving into everyday life?
Mike: We’ve conducted research in countries ranging from the United States to Uganda and from Belgium to South Africa. Everywhere we’ve looked, we see a human universal: people who spend more money on others – whether donating to charity or buying gifts for friends – are happier people.
And most importantly, you don’t have to give thousands of dollars to experience the warm glow of giving. In our experiments, asking people to spend small sums of money on others – $20, or even $5 – makes them happier at the end of the day.
Consider forgoing your coffee for the day and giving that money to a homeless person or a street performer, or –of course– hopping online to fund a classroom project. And if you must have your coffee each morning, at least consider buying one for someone else, too. These small acts of investing in others can add up to a happier you.
99Papers.org: What are you working on next?
Mike: One of our biggest areas of ongoing research is applying our insight that giving makes individuals happy to solve broader problems. For example, we encourage companies to reward their employees with prosocial bonuses, money that employees are required to spend not on themselves but on their co-workers. We’ve shown that these kinds of bonuses are very effective in improving employee satisfaction and performance.
And we are also trying to address a seemingly impossible-to-fix problem: people’s hatred of paying taxes. In new research, we are exploring how framing taxes as “prosocial” – helping children learn, or people drive safely – might make people slightly happier with paying their taxes. (Though we’re the first to admit we’re likely to fall short of people actually coming to love the IRS…)
Michael is giving you all the chance to win an autographed copy of Happy Money. Leave a comment telling us how giving to classroom projects through 99Papers.org has made you happy now through June 14th, and you’ll be entered to win one of 10 copies!