From a health standpoint, olive oil is the better choice. But butter still has its place. All oils are a mixture of fats including monounsaturated fatty acids (MUFA), polyunsaturated fatty acids (PUFA) and saturated fatty acids (SFA)—but in each oil (and in butter, too, which is basically a solidified oil), one type of fat dominates.
Olive oil is predominantly rich in heart-healthy monounsaturated fat, which decreases your risk for cardiovascular disease by lowering LDL cholesterol and increasing HDL cholesterol. On the other hand, butter is mostly saturated fat, which increases LDL cholesterol and causes inflammation in your body. So generally, it’s best to use olive oil.
However, the distinctive smell, flavor and consistency of butter works best in certain baked goods—including cakes, cookies and pastries—so it’s OK to make these occasionally and enjoy the butter. Another butter-vs.-oil difference: Because butter is solid at room temperature, you have more control over how much (or how little) of it you spread on bread; with olive oil, it’s difficult to gauge how much oil is absorbed. So dip lightly!