Don’t Worry, Be Happy: Why Spending Money Is Good for You
“Money can’t buy happiness,” goes the saying, but the results of a new study are putting the conventional wisdom to the test. Spending money can actually make you happier, provided you’re buying things that match your personality, according to new research conducted at the University of Cambridge.
The three researchers analyzed nearly 77,000 bank transaction records for 625 British consumers over a six-month period. Each transaction was sorted into one of 59 different categories, which were then matched with one of five major personality traits: openness to experience (artistic versus traditional), conscientiousness (self-controlled versus easy-going), extraversion (outgoing versus reserved), agreeableness (compassionate versus competitive), and neuroticism (prone to stress versus stable). Charitable donations and purchases for pets were aligned with agreeableness, for example, while spending money on fitness or home insurance was associated with conscientiousness.
Study participants were also asked to take a personality test. When the researchers compared the personality test results with people’s spending patterns, they discovered that those whose purchases most closely aligned with their personality were also happier.
“We found that individuals spend more on products that match their personality, and that people whose purchases better match their personality report higher levels of life satisfaction,” the researchers wrote in a paper published in the journal Psychological Science.
Extroverts, for example, spent $77 more per year on drinks at bars than introverts. Conscientious people spent $183 more in the health and fitness than those people where that personality trait wasn’t as dominant.
In a second experiment, researchers gave people $10 and told them either to spend it at a bar or a bookstore. Introverts who got to spend their money on books were happier than those who had to go to a bar, while the reverse was true for extroverts.
“Spending on products associated with personality traits that are opposite to people’s own personality not only may fail to improve their well-being, but also could even be detrimental to it,” the study’s authors wrote.
The results run counter to the idea that once a person’s income tops a certain amount – around $75,000, according to a Princeton University study — money has little effect on overall happiness.
“Historically, studies had found a weak relationship between money and overall wellbeing,” Joe Gladstone a research associate at Cambridge Judge Business School and one of the authors of the study, said in a statement. “Our study breaks new ground by mining actual bank transaction data and demonstrating that spending can increase our happiness when it is spent on goods and services that fit our personalities and so meet our psychological needs.”
For individuals who might be wondering whether buying concert tickets or booking a rock climbing adventure would make them happier, the results provide some guidance. “When people have a choice between two products of similar valence, they should choose the one that best fits their own psychological characteristics,” the authors noted.
Online retailers also have something to learn from the study. Tweaking recommendation engines to show people products that seem to be a better match with their personality could both increase a store’s revenue and also help overwhelmed shoppers make decisions, the researchers suggested.
In addition, the results put an interesting spin on the common advice to spend your money on experiences, not things. Shunning material goods for experiences might not make you happier if the experiences you buy aren’t a good fit for your personality, while other research suggests more materialistic people might not get the same happiness bump from experiences as those who are less materialistic.
Of course, some people have already guessed at what the Cambridge researchers discovered. Actress Bo Derek once quipped, “Whoever said money can’t buy happiness simply didn’t know where to go shopping.” It seems like she had the right idea.