When you're smiling

New study reports that people are happier spending money on other people than on them selfs:

Money can buy you happiness – as long as you're spending it on someone else.

New Canadian-led research, published today in the prestigious journal Science, says that spending your money on other people makes you happier than lavishing it on yourself.

"Spending on others can make people happy, yet people might not foresee this ahead of time," said Elizabeth Dunn, a psychologist at the University of British Columbia and the lead study author.

"When we asked people to predict which of our conditions would make them happiest, they tended to think they'd be happier spending it on themselves than spending it on others," Dunn said.

Recent surveys, the study notes, have shown people in Western societies have experienced few gains in their overall happiness level over the past several decades, despite a dramatic surge in real income.

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--This doesn't seem to make a lot of sense to me. If giving away money make us happier, wouldn't we do it more? The way I see it there are two possibilities.

1. People are systematically stupid and can't figure out that philanthropy beats buying for yourself.
   
2. The study is wrong

I doubt that people would be wrong on such a large level. We have huge amount of experience in buying things. If buying things for others makes us more happy, we would have figured that out by now.

My explanation, there is a survivorship bias. When people give things away they do it because it makes them feel better, but this is when people are making the choice. If we were to force people to give away money, it makes them unhappy. This is called taxation.