Money Buys Happiness

But not in the way you might think. According to a new study out of the University of British Columbia in Canada and published in this week's Science, how you spend your money—and more specifically, who you spend it on—is more important than how much you have, and can go a long way in determining how satisfied you are. In a series of experiments, psychologist Elizabeth Dunn (who looks extremely happy on her homepage) and her colleagues found that higher levels of happiness were reported by people who spent more money on gifts and charitable donations—what Dunn calls "pro-social" spending—than they spent on themselves. Past research has shown that once people have enough money to cover their basic needs, like food and rent, increased income, such as a pay raise or winning the lottery, can boost their happiness level, but only slightly and for a short time. But a number of studies have shown that a sense of community and acts of kindness can have a lasting impact on our well-being. —Heather Wax