A new Canadian study has shown that spending your money can buy you a feeling of happiness - and not only when you’ve just bought yourself that new pair of shoes.

In fact, the greater degree of happiness was recorded among those who spent their money on other people.

Elizabeth Dunn, lead study author and assistant professor of psychology at the University of British Columbia in Vancouver, said, ‘It’s tied to ‘pro-social’ spending. Most research has looked at the relationship of how much people make and how happy they are. We examined what they did with it. It’s an obvious question but it hasn’t been tackled’.

In the study, 632 American subjects were asked to rate their happiness, and to report their income and spending habits, including gifts and charitable donations. Those who reported the highest degree of giving also recorded the higher levels of satisfaction.

The second part of the study involved 16 employees rating their happiness both before and after receiving a profit share windfall from their company. Of these employees, those who ‘pro-socially’ gave away more of their bonuses were also found to be happier.

The third stage of the study involved 46 participants being given set amounts of money (between $5 and $20) and randomly assigned to spend it on either something for themselves or something for someone else (including charitable donations). Again, those who spent their money on others recorded higher happiness levels.

Explaining the findings, Dr. Alan Manevitz, a clinical psychiatrist at New York-Presbyterian Hospital/Weill Cornell Medical Center in New York City said, ‘Reaching out and doing things for other people allows you to kind of create a community. Social networks, we know, make people happier. It’s all about creating social networks and community ties and having a sense of self that you feel is worthwhile so money therefore can be used in service of that’.