Money can buy happiness – but only if it’s used to buy ‘time’
A study by researchers in Canada has challenged the age-old adage that money can’t buy you happiness.
From a survey of more than 6,000 adults in the US, Denmark, Canada and the Netherlands, researchers found that using money to “buy back time” is linked to greater life satisfaction, which in turn makes people feel happier and more content.
In particular, the teams at the University of British Columbia and Harvard Business School found that paying someone else to do household chores like cleaning and cooking, or on gadgets that save them time, are happier with their lot than people who don’t.
In fact, using money to buy time has similar benefits to having more money, explained lead author Ashley Whillans, assistant professor at Harvard Business School.
As part of the surveys, respondents were asked if, and how much, they spent each month to buy themselves free time. They also rated their life satisfaction, and answered questions about feelings of time stress. Those who spent money on time-saving purchases reported greater life satisfaction, and this effect held up even after controlling for income.
“The benefits of buying time aren’t just for wealthy people,” said UBC psychology professor and the study’s senior author Elizabeth Dunn. “We thought the effects might only hold up for people with quite a bit of disposable income, but to our surprise, we found the same effects across the income spectrum.”
To test whether buying time actually causes greater happiness, the researchers also randomly assigned 60 adults with $80. One weekend, they were told to spend $40 of this money on a time-saving purchase, such as a robotic vacuum. The following weekend they were told to spend the rest on a “material purchase”. These results revealed that people felt happier when they spent money on a time-saving purchase than on a material purchase.
Despite the benefits, however, the researchers were surprised by how few people choose to spend their money on time-saving purchases in daily life. Using a sample of 850 millionaires, the team found almost half reported spending no money on outsourcing everyday tasks. A separate survey of 98 working adults asking how they would spend a windfall of $40 also revealed that only two per cent would use it in a way that saved them time.
“Although buying time can serve as a buffer against the time pressures of daily life, few people are doing it even when they can afford it,” said Dunn. “Lots of research has shown that people benefit from buying their way into pleasant experiences, but our research suggests people should also consider buying their way out of unpleasant experiences.”
The study was published in Proceedings of the National Academy of Sciences.
It builds on the findings of previous research by Cambridge Judge Business School and the Psychology Department of Cambridge University which found that happiness is not determined by something as simple as having, or not having, money to spend.
Instead, happiness caused by having more spare cash depends on what you spend it on, and if those items match your personality.
By analysing 77,000 banking transactions in the UK, and asking the customers to complete a personality and happiness questionnaire, the research identified 59 spending categories which were compared to the ‘Big Five’ personality traits. These include openness, experience, conscientiousness, extraversion, agreeableness, and neuroticism.
Eating out was rated as an extroverted and low conscientiousness spending category, for example, whereas ‘charities’ and ‘pets’ were rated as agreeable spending categories. The data showed that people generally spent more money on products that suited their personality, and this, in turn, made them happier.
This has also been seen on a more global scale. Research from 2014 by economists Eugenio Proto and Aldo Rustichini found that people tend to be happier in countries with higher-than-average incomes. In particular, they found a correlation between life satisfaction and GDP per capita, even when they adjusted the findings for purchasing power parity, but that this life satisfaction had an upper limit.
The data revealed that the average life satisfaction peaks with countries that have an average annual income of about $33,000, and after that, life satisfaction tends to drop as wealth rises.