Harvard professor talks money and happiness

Harvard Business School professor Michael Norton discussed his research on how spending habits can affect happiness.
Harvard Business School professor Michael Norton discussed his research on how spending habits can affect happiness. Photo by Blair Seideman.

Money can indeed buy happiness, according to Harvard Business School professor Michael Norton.

Addressing an audience of 50 in William L. Harkness Hall on Thursday afternoon, Norton’s talk was the first in the new Yale Distinguished Speaker Series on Happiness. The talk was co-sponsored by two undergraduate organizations — InspireYale and Yale Flourish — both of which aim to promote and explore the academic study of human happiness. Norton, whose extensive research on the role of money in happiness has brought him prominence in the scientific community, is the first of four speakers that will visit Yale in the next month.

“If you think money can’t buy happiness,” Norton said, “you’re not spending it right.”

People normally spend their money on themselves, Norton said, but the professor’s research has shown they would be happier if they spent more of it on others. He and his team tested this theory on students at the University of British Columbia. After asking students how happy they felt, the researchers gave money to two different groups — one that was told to spend it on themselves and another that was told to spend it on somebody else. When researchers contacted both groups later that day, those who spent their money on other people reported feeling much happier than those who did not.

“It’s less about the amount, and more about what you do with the money,” Norton explained.

His team replicated the experiment in Uganda. Even though subjects purchased different products, Norton found the results were the same.

“It turns out that giving to other people — whether it’s a silly scarf or life-saving medications — is roughly the same,” he said.

Norton has also used his findings to help organizations explore how money might be used to improve happiness among their members. In one of his studies, team productivity and relationships improved when subjects on sales teams were given money to spend on their teammates.

In his talk, Norton also said he thinks current corporate philanthropy practices should be restructured. According to his research, employee happiness and morale improve if employees are allowed to participate in their company’s philanthropic giving and donate to the causes they care about.

Toward the end of the talk, Norton assured his audience that though they are now aware of this phenomenon, they can still experience the psychological benefits of spending money on others. More than anything, Norton said he hopes to “liberate people to be nice” by making being nice less awkward.

“When people do nice things for you, you often think, ‘What do they want?’” Norton said. “The only thing we have left to be nice to people is to forward them links to YouTube and The New Yorker.”

This point resonated with Socheata Poeuv SOM ’12, who said Norton’s idea would give people more confidence to help others without being perceived as strange.

Laurel Cohen ’16 said her experiences as a community service organizer made more sense in light of Norton’s findings.

“It’s so interesting the ways you can trick people into going to something that they’ll feel good about doing later,” she said.

Norton’s new book “Happy Money: The Science of Smarter Spending,” which explores his findings in greater depth, will be released on May 14.

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