Despite countless reports that money can’t buy happiness, many of us wouldn’t object to having a couple of zeros added to our bank account.
Now, new research has found that it may not be as simple as having, or not having, money to spend.
The happiness caused by having more spare cash actually depends on what you spend it on, and if those items match your personality.
Researchers from Cambridge Judge Business School and the Psychology Department of Cambridge University analysed 77,000 actual UK bank spending transactions.
Customers were also asked to complete a personality and happiness questionnaire, and to consent to their responses being matched anonymously for research purposes with their bank data.
The final study was based on 76,863 transactions of 625 participants and whittled down 112 spending categories automatically grouped by the bank into 59 categories that had at least 500 transactions over a six-month period.
Spending categories were compared to the widely recognised ‘Big Five’ personality traits – openness to experience, conscientiousness, extraversion, agreeableness, and neuroticism.
For example, ‘eating out in pubs’ was rated as an extroverted and low conscientiousness spending category, whereas ‘charities’ and ‘pets’ were rated as agreeable spending categories. Home insurance, health and fitness were rated as popular spending categories for conscientious people, while neurotic people were less likely to be happy if they spent money on stationery.
The researchers compared the participants’ actual purchases to their personalities using this scale, and found that people generally spent more money on products that match their personality. For example, a highly extroverted person spent approximately £52 ($73) more each year on ‘pub nights’ than an introverted person.
Similarly, a highly conscientiousness person spent £124 ($175) more annually on ‘health and fitness’ than a person low in conscientiousness.
Overall, this analysis revealed that people who spent more money on purchases which matched their personality were happier.
Matching spending with personality was more important for individuals’ happiness ‘than the effect of individuals’ total income or their total spending.’
‘Historically, studies had found a weak relationship between money and overall wellbeing,’ says Joe Gladstone, a research associate at Cambridge Judge Business School and author of the study.
‘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.’
The researchers believe the findings hold widespread implications, including for internet merchants using search-based recommendation engines.
Companies can use this information to recommend products and services to improve the wellbeing of their customers, allowing companies to forge better relationships with customers based on what makes them happier.
The researchers also backed up their findings by running a second experiment, where they gave people a voucher to spend in either a bookshop or at a bar.
Extroverts who were forced to spend at a bar were happier than introverts forced to spend at a bar, while introverts forced to spend at a bookshop were happier than extroverts forced to spend at a bookshop.
‘Our findings suggest that spending money on products that help us express who we are as individuals could turn out to be as important to our well-being as finding the right job, the right neighbourhood or even the right friends and partners,’ said Sandra Matz, lead author.
‘By developing a more nuanced understanding of the links between spending and happiness, we hope to be able to provide more personalised advice on how to find happiness through the little consumption choices we make every day.’