Prosocial Spending and Happiness: Using Money to
Benefit Others Pays Off
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Dunn, Elizabeth W., Lara B. Aknin, and Michael I. Norton. "Prosocial Spending and Happiness:
Using Money to Benefit Others Pays Off." Current Directions in Psychological Science(forthcoming).

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Prosocial Spending and Happiness: Using Money to Benefit Others Pays Off

Elizabeth W. Dunn1
University of British Columbia

Lara B. Aknin
Simon Fraser University

Michael I. Norton
Harvard Business School

Abstract
While a great deal of research has shown that people with more money are somewhat happierthan people with less money, our research demonstrates that how people spend their money also
matters for their happiness. In particular, both correlational and experimental studies show thatpeople who spend money on others report greater happiness. The benefits of such prosocial
spending emerge among adults around the world, and the warm glow of giving can be detectedeven in toddlers. These benefits are most likely to emerge when giving satisfies one or more corehuman needs (relatedness, competence, and autonomy). The rewards of prosocial spending are
observable in both the brain and the body and can potentially be harnessed by organizations andgovernments.

Keywords: MONEY, PROSOCIAL SPENDING, HAPPINESS, WELL-BEING

Imagine digging out your jacket for the first time since winter and discovering a
crumpled $20 bill in the pocket. How would you spend this windfall? Would you buy yourpartner a bouquet of yellow tulips? Give the cash to the homeless man you pass everyday on
your way to work? Or buy yourself a vegetable panini for lunch? These questions reflect a
broader human dilemma: What is the best way to use our money to maximize our happiness?
A large body of research examining the overall relationship between money andhappiness has shown that individuals with more money are happier (e.g., Diener, Ng, Harter &Arora, 2010; Diener, Tay & Oishi, 2013), although this relationship is weaker than many people
assume (Aknin, Norton, & Dunn, 2009; Kahneman, Krueger, Schkade, Schwarz, & Stone, 2006;
but see Cone & Gilovich, 2010). But, how people spend their money may be at least as importantas how much they have (Dunn & Norton, 2013).
In an initial experiment, we approached people on a university campus and gave them a$5 or $20 bill to spend by the end of the day (Dunn, Aknin, & Norton, 2008). We instructed half
the participants to spend the money on themselves (“personal spending”), and half to spend themoney on someone else (“prosocial spending”). That evening, people who had been assigned tospend the money on someone else reported feeling happier mood over the course of the day thanthose assigned to spend the money on themselves. Interestingly, the amount of money they got
had no bearing on their happiness.
When we described the experiment to other participants, however, their predictions weredoubly wrong: They believed that they would be happier spending more money ($20 vs. $5), andthat they would be happier spending it on themselves. Thus, people’s daily spending choices may
be guided by flawed intuitions about the relationship between money and happiness. Indeed,
research suggests that just being reminded of money may make people less attuned to the needs

of others (Vohs, Mead, & Goode, 2006). Thinking about money may propel us toward using ourfinancial resources to benefit ourselves, but spending money on others can provide a more
effective route to increasing our own happiness.
IS THE WARM GLOW OF GIVING UNIVERSAL?
Our initial research on prosocial spending and happiness was conducted in North
America, where people enjoy a level of wealth that is highly atypical compared to living
conditions experienced throughout human history and much of the world today. As a result, theemotional benefits of giving might be dampened or eliminated in countries where many people
are still struggling to meet their own basic needs. If, however, people derive emotional benefits
from prosocial spending even in poorer countries, then this would provide evidence that thewarm glow of giving may be a fundamental component of human nature. Aknin et al. (2013)
examined the correlation between charitable giving and happiness in 136 countries. In 120 out of
136 countries, there was a positive relationship between giving and happiness (controlling forincome and other demographic variables), and this relationship was significant in a majority ofcountries (Figure 1). Although the strength of the relationship varied between countries,
individuals in poor and rich countries alike reported greater happiness if they engaged inprosocial spending.

Aknin et al. (2013) also provided causal evidence for the emotional rewards of prosocial
spending in an economically diverse group of countries including Canada, India, South Africaand Uganda. In one experiment conducted in both Canada and South Africa, participants were
given the opportunity to spend money on a “goody bag” filled with treats (like chocolate). Half
were told that they would receive the goody bag they purchased (personal spending), and half
were told that a sick child in a local hospital would receive the goody bag (prosocial spending).
Participants who bought a gift bag for a sick child reported significantly happier mood thanparticipants who purchased the same goody bag for themselves. This finding is particularly
notable given that over 20% of the South African sample reported not having enough money tobuy food for themselves or their families in the preceding year.
These results suggest that the capacity to derive joy from giving might be a universal
feature of human psychology. If this is the case, then even young children might experiencehappiness from giving to others. Aknin, Hamlin, and Dunn (2012) gave toddlers just under age
two a pile of appealing treats (e.g., goldfish crackers). The children were asked to give one of
their treats away to a puppet who enthusiastically ate the treat (Figure 2). In addition, theexperimenter “found” an extra treat, which she asked the child to give to the puppet. Research
assistants coded children’s facial expressions for happiness. Children exhibited greater happiness
when they gave treats away to the puppet than when they received treats themselves (Figure 3).
Moreover, children showed the highest levels of happiness when they gave a treat away fromtheir own stash (vs. the experimenter’s extra treat). Taken together, this research shows that
adults around the world and even young children experience emotional benefits from using theirresources to help others, suggesting that humans may have a deep-seated proclivity to find giving
rewarding.

WHEN DOES PROSOCIAL SPENDING PROMOTE HAPPINESS?
The argument that human beings have a universal tendency to experience joy from giving
does not mean that every form of prosocial spending always produces emotional benefits. Most
people can probably think of a time when they did something generous and did not experience aboost in happiness, and the existing literature confirms that giving does not always produce joy(e.g., Berman & Small, 2012). Self-determination theory provides a framework forunderstanding when and why giving leads to happiness (Weinstein & Ryan, 2010). According tothis theory, human well-being depends on the satisfaction of three basic needs: relatedness,competence, and autonomy. Although prosocial spending is certainly not the only way to fulfill
these needs—and it may also be possible to meet these needs through personal spending—wesuggest that prosocial spending should be most likely to produce happiness under conditions thatsatisfy these needs.
Relatedness
Helping others may be most emotionally rewarding when it satisfies the fundamental
need for social connection. Consistent with this idea, individuals garner more happiness fromprosocial spending when giving provides the opportunity to connect with other people (Aknin,
Dunn, Sandstrom, & Norton, 2013). In one experiment, participants who received a $10
Starbucks gift card were happier if they spent it on a friend rather than on themselves—but only
if they took the time to go to Starbucks with their friend. Other research suggests that we may get
the biggest happiness bang for our buck when we spend money on close others rather thanacquaintances (Aknin, Sandstrom, Dunn, & Norton, 2011), perhaps because close relationships
are especially critical for satisfying the need to belong (Baumeister & Leary, 1995).
Competence
Prosocial spending is most likely to satisfy the need for competence when people can see
how their generous actions have made a difference. Thus, individuals may experience a bigger
happiness boost from giving to charities that make it easy to see the positive impact of donations.
For example, both UNICEF and Spread the Net are deserving charities dedicated to improving
children’s health in impoverished areas of the world, but Spread the Net offers a clear, concrete
promise: For every $10 donated, the charity will provide a bed net to protect a child at risk ofmalaria. When participants were given the opportunity to donate money to Spread the Net, those
who donated more money felt happier, controlling for their happiness before the donation(Aknin, Dunn, Whillans, Grant, & Norton, 2013). In contrast, giving money to UNICEF

provided no such benefit. People derive greater happiness from prosocial spending when they
feel like effective, competent helpers whose actions have made a real difference.
Autonomy
Because the need for autonomy is satisfied when people feel that their actions are freely
chosen, the emotional benefits of prosocial spending should be greater when people have a
choice about whether to give. From inside a scanner, people exhibited greater activation in
reward areas of the brain when they donated to a local charity, rather than when a donation was
required (Harbaugh, Mayr, & Burghart, 2007). Weinstein and Ryan (2010) showed that people
experienced happier moods when they gave more money away—but only if they had a choice
about how much to give. When participants were given choice, donating more money led them tofeel more autonomous, as well as more related and competent. The effect of giving on happiness
was mediated by overall satisfaction of the three basic needs, demonstrating that these needs are
deeply intertwined.
Taken together, this research suggests that the emotional benefits of prosocial spending
are likely to be greatest when giving satisfies the needs for relatedness, competence, andautonomy. When prosocial spending fails to increase happiness – in everyday life or in a
psychology experiment – consider whether the giving opportunity could be re-designed toincrease the likelihood that one or more of these needs is satisfied. By doing so, charities canmaximize the emotional benefits of giving for their donors, potentially increasing the likelihoodof repeat donations; the happier people feel when reflecting on previous prosocial spending, themore likely they are to spend on others in the future (Aknin, Dunn, & Norton, 2012).
BEYOND HAPPINESSWhile happiness is most frequently assessed though simple self-report measures, thebenefits of prosocial spending can be detected in the brain and body. As noted above, prosocial
spending produces activation in reward areas of the brain (Harbaugh et al., 2007; Moll et al,
2006; Zaki & Mitchell, 2011). And the emotional consequences of prosocial spending produce a
cascade of physical consequences. In the context of a large classroom, students received $10 andlearned that they could donate as much as they wished to another student in the class who had
not received any money (Dunn, Ashton-James, Hanson, & Aknin, 2010). The more money
students gave away, the happier their moods afterward, controlling for their happinessbeforehand. Conversely, the more money students kept for themselves, the more shame theyexperienced. And the more ashamed they felt, the higher their levels of cortisol, a stress hormonethat has been linked to a variety of health problems. These results suggest that everyday spending
decisions can get under the skin to influence health.
Although any one spending decision likely has short-lived effects on biologicalprocesses, these decisions may compound over time to shape important health outcomes. Olderadults who report giving more money and other resources to others exhibit better overall
health—from fewer sleep disorders to better hearing—even after controlling for a wide range ofvariables (e.g., gender, income, physical mobility; Brown, Consedine, & Magai, 2005).
Experimental research shows that prosocial spending can increase physical strength; after
donating to charity, participants were able to squeeze a handgrip for over twenty seconds longer
compared to controls (Gray, 2010). Participants also reported happier moods after donating, butinterestingly, their enhanced strength did not stem from their elevated happiness. Thus, prosocial
spending may have independent positive effects on both emotional and physical vitality.

FUTURE DIRECTIONS
Future research should further examine the pathways that explain how good deeds aretransformed into good feelings. For example, prosocial spending might promote happiness byendowing givers with a feeling of power or by enabling them to witness others’ gratitude. Given
that forms of generosity other than prosocial spending also predict happiness (e.g., volunteering;Thoits & Hewitt, 2001), research could explore whether the emotional benefits of giving money
might be explained by different pathways—with different antecedents and consequences—thangiving other resources.
Most of our research has focused on common forms of spending such as treating a friend
to coffee or making a charitable donation. But do the happiness benefits of prosocial spending
extend to “impact investments,” in which people invest money with the goal of aiding social orenvironmental causes – while also reaping a financial return? Future research should examine
more diverse forms of prosocial spending, including its most dreaded form: taxation. Althoughtaxes are rarely associated with happiness, it may be possible to harness research on theemotional benefits of prosocial spending to improve people’s feelings about paying their taxes.
Indeed, paralleling research suggesting that the benefits of prosocial spending are most likely toemerge when donors are given a choice (Weinstein & Ryan, 2010), new research suggests that
injecting an element of choice into tax payment increases taxpayer satisfaction (Lamberton,
2012).
Moving beyond individual happiness, future research should examine the broader
benefits of prosocial spending initiatives within teams and organizations. For example, Google
provides employees with an open invitation to apply for a bonus—not for themselves, but for adeserving co-worker (Dunn & Norton, 2013). Our most recent research provides initial evidencethat giving employees the opportunity to engage in prosocial spending can potentially enhance
job satisfaction and performance (Anik, Aknin, Norton, Dunn, & Quiodbach, in press). The time
is ripe for exploring how “prosocial bonuses” can improve organizational success.
Finally, many fascinating questions remain unanswered regarding individual differencesin the proclivity to engage in prosocial spending and to derive joy from doing so. For example,
could genetic differences in sensitivity to oxytocin (a hormone involved in bonding) explain whysome people get a bigger boost than others from prosocial spending? Do enjoyable earlychildhood experiences with giving lead people to seek out prosocial spending opportunities,
perhaps due to changes in the self-concept? Understanding the individual-level factors that alter
the emotional impact of giving will offer further insight into the psychology of prosocial
spending.
CONCLUSION
Much research on money and happiness has explored the overall relationship between
these variables; our research has shifted the focus toward considering how people can use theirmoney to increase happiness—whether they have a little or a lot of it. The benefits of prosocial
spending are evident in givers old and young in countries around the world, and extend not only
to subjective well-being but objective health. Despite people’s intuitions and inclinations to thecontrary, one of the best ways to get the biggest payoff personally from a windfall of $20 is tospend it prosocially.

ACKNOWLEDGEMENTS AND ENDNOTE
1

Address correspondence to Elizabeth W. Dunn. Douglas Kenny Building, 2136 West Mall,

Vancouver, BC V6T 1Z4. The research described in this article was supported by grants to thefirst author from the Social Sciences and Humanities Research Council (#410-2008-2509) andthe Canadian Institutes of Health Research (#MOP-110968).

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RECOMMENDED READING

Aknin et al. (2013). See reference list. Provides a broad review of the relevant literature, detailed
data from around the world, and discussion of alternative explanations.

Diener, E., Ng, W., Harter, J., & Arora , R. (2010). Provides a full discussion of research on therelationship between money and happiness around the world.

Dunn, E. W., Aknin, L. B. & Norton, M. I. (2008). See reference list. Presents our first studies on
the correlational and causal relationship between prosocial spending and happiness.

Dunn, E. & Norton, M. (2013). Happy money: The science of smarter spending. New York:
Simon & Schuster. Written for a broad audience, this book provides an approachable review of
research examining how people can get more happiness from their money.

Helliwell, J., Layard, R., & Sachs, J. (2012). World happiness report. New York: The Earth
Institute, Columbia University. This report commissioned by the United Nations offers athorough overview of predictors of happiness around the world.

Figure Captions
Figure 1. World map displaying the relationship between prosocial spending and happinessaround the globe. Reprinted with permission from Aknin et al, (2013). Prosocial spending andwell-being: Cross-cultural evidence for a psychological universal. Journal of Personality andSocial Psychology, 104(4), 635-652. APA publisher July 2013.
Figure 2. Four phases from Aknin, Hamlin, and Dunn’s (2012) toddler sharing study. Toddlers
were (a) introduced to a puppet and (b) given eight treats. Then, in counterbalanced order, each
toddler (c) was asked to give the experimenter’s extra treat to the puppet, and (d) was asked togive one of their own treats to the puppet. Sample video available at:
http://cic.psych.ubc.ca/Example_Stimuli.html
Figure 3. Children’s happiness, as rated by coders, for four phases of the toddler sharing study(Aknin et al, 2012). Error bars represent 95 percent confidence intervals around the mean.