Can money buy you happiness? New study has the answer.

Who says that money can’t buy you happiness? Certainly not researchers from the Cambridge Judge Business School and the  Cambridge University Department of Psychology who reported that purchases really could have a positive impact on a person’s life satisfaction rating.

The researchers, who published their findings in the latest edition of the journal Psychological Science, teamed up with a UK-based multinational bank to examine nearly 77,000 transactions, asking the customers involved to fill out a standard personality and life-satisfaction survey.

They found that people who spent a more on purchases that closely aligned with their personality traits tended to be more satisfied with life, and that the spending-personality trait association was even stronger than the link between happiness and total income or total spending.

“Historically, studies had found a weak relationship between money and overall well-being,” Joe Gladstone, a research associate from Cambridge Judge Business School and one of the authors of the new study, explained 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.”

Findings could be used by online retailers to make customers happy

Gladstone, along with Sandra Matz, a PhD candidate in the Cambridge Psychology Department, and Big Data Analytics and Quantitative Social Science lecturer David Stillwell, reviewed a total of 76,863 anonymous transactions from 625 participants as part of their study.

The customers were asked to complete a standard personality and life satisfaction questionnaire, and consented to their responses being matched anonymously to their bank transaction date. Data was then broken down in 59 different categories of spending, each with at least 500 transactions over a six-month period.

Those spending categories were then matched with the “Big Five” personality traits, according to Gladstone and his colleagues: openness to experiences (artistic vs. traditional), conscientiousness (self-controlled vs. easygoing), extraversion (outgoing vs. reserved), agreeableness (compassionate vs. competitive) and neuroticism (prone to stress vs. stable). The purchases of the actual customers were then rated into one or more of these classifications.

The results showed that, in general, people tended to spend more money on products that match their personalities, and that those who bought goods or services that more closely matched their personalities reported higher overall satisfaction with their lives. The authors believe that the results could be used by online merchants to improve their search-based recommendations to recommend goods that will actually make customers happier, thus improving the relationship between buyer and seller.

“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 neighborhood or even the right friends and partners,” said Matz. “By developing a more nuanced understanding of the links between spending and happiness, we hope to be able to provide more personalized advice on how to find happiness through the little consumption choices we make every day.”

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