Here is an excerpt of a blog discussing a recent article published in Science:

Another recent article by Elizabeth W. Dunn, Lara B. Aknin, and Michael I. Norton, published in 2008 in Science, concluded that money can buy happiness, so long as the money is spent on someone else. They described three studies. The first was a survey of Americans and found that the am0ount of money people spent in gifts to others or gave to charity was positively associated with general happiness, even when overall income was controlled. (By the way, they also found that overall income predicted happiness.). In their second study, they surveyed employees at a company who had received profit-sharing bonuses. The amount of the bonus spent on others predicted happiness six to eight weeks later, whereas the amount of the bonus spent on themselves did not. Their third study was a true experiment: Research participants were given either $5 or $20 and instructed to spend the money either on themselves or on others. Then their happiness was ascertained, Those who spent the money on others were happier, and the amount of money did not matter. One more finding was reported: Additional participants were asked to predict what would make people happier, and they mistakenly said that the most happiness would result from spending $20 on themselves.