Money can make you happy. Especially if you give it to someone else. A growing body of research shows that giving money to other people is more likely to make you happy than keeping the money. In this episode, Michael Norton from the Harvard Business School tells Dean about his fascinating research into sharing and generosity.
Why do people share? It’s so complex, there’s a science to it.
“We do amazingly generous and kind things and we feel gratitude toward people and we give gifts and we help,” says Michael Norton, a professor at the Harvard Business School. “There’s an emerging kind of science of understanding how fundamental it is to humans to not just act in our own interest, but actually act in the interest of others’ happiness.”
Norton studies whether money can make us happy. And it turns out that it can—but in surprising ways.
In one study, Michael Norton and his colleagues decided to test whether people get more happiness from spending money on themselves, or spending money on other people.
“In the very first experiments we would go out on campuses and go out in public places and give people envelopes filled with cash,” Norton says.
They would tell some people to spend the cash on themselves by 5 p.m., and they would tell others to spend it on someone else.
“Then we called them up that night and asked them how happy they are,” Norton says.
Time and time again, not just in North America but all over the world, the researchers saw generally the same result when people spent the money on themselves.
“They’re not less happy than they were,” Norton says. “It just doesn’t do anything. It doesn’t change their day and it doesn’t change their happiness.”
But when people gave that money away, he says it seemed to make them happier in the course of the day.
He also says the people who bought things for themselves bought very different things than those who gave to others. The college students in the first group, he says, bought things like makeup and books.
People who gave the money away, though, spent it more creatively.
“They gave money to homeless people,” Norton says. “They gave money to street performers. One woman bought a stuffed animal for her niece.”
And there was one more trend that crossed over both the “giver” and the “keeper” groups.
“When we give undergrads $5, they kind of run to Starbucks and buy coffee with it,” he says.
There still a difference between the groups, though. Some people drank the coffee themselves and some people handed it off to someone else.
“You think it’s got to be better to drink coffee than to give it to somebody else, because coffee’s great,” Norton says. “But your seventh coffee of the day probably isn’t going to change your day that much. … But people who buy coffee and give it away to somebody else actually get happier.”
Norton acknowledges that ego can play a factor in all of this. In fact, we get the most happiness out of giving when we feel that we’ve had an impact on someone else.
“It’s not quite just being egotistical but it is related, actually,” he says. “It’s this feeling that I as a human being am making a difference in someone else’s life. That seems to be the thing that really, really makes us happy.”
Norton says the issue of whether it’s therefore selfish to give is really a metaphysical question.
“My guess is there’s 73 different reasons why we do it,” he says. “And some of them are these kind of moral higher reasons and some are probably very basic things like, ‘If I buy you lunch maybe you’ll buy me lunch tomorrow.’”
He says when he works with charitable organizations, he tells them to use social incentives as well as higher-order motivations like being a good person. Basically: Make sure people know they’ll get credit for giving.
“It may not be as cleanly altruistic as some of us kind of dispositionally want giving to be,” he says. “But it’s going to make people give more, and in the end giving is the act that actually truly helps other people. Whether you feel altruistic or not, the true measure in my mind of altruism is, was someone benefited on the other end?”
Norton says research on giving in other species beyond humans is emerging now.
There is evidence, for instance, of other species helping one another. And several species of monkeys are very sensitive to fairness. This suggests that they are aware of inequity between themselves and others, Norton says, which in many ways is a precursor to giving.
“The early evidence is that in fact other animals do feel some sort of benefit from giving, or at least they engage in that behavior,” he says. “The problem is that we can’t give them 100-point scales and ask them to fill it out, so we need to be creative in how we measure the outcomes.”
Norton says some new research looks at the extent to which monkeys will “pay it forward.” The idea is to look at how they treat the next monkey after they have either been shown generosity or greed by a previous monkey.
“What we find is that when monkeys have been treated generously by a previous monkey—they’ve been given a good allocation of a treat—they pay that forward to another monkey,” Norton says. “They’re generous if someone was generous to them.”
But if they’ve been treated poorly by a previous monkey, watch out. They pay that forward, too.
“So when the world is being generous I’m going to be generous to the next person as well, or the next monkey as well,” Norton says. “But when the world is being greedy… I’m making sure that I’m going to be greedy toward the next person.”
Norton says we often overlook traits in animals that can be seen as generosity.
“Ants live in enormous cooperative societies and have amazing sacrifices where they literally give their life all the time for the colony,” he says. “We don’t tend to see that as generosity because it doesn’t feel like these human decisions that we make to be generous.”
Norton says he wants his research used in a very practical way. These are not just abstract ideas to him. He even tries to get people to organize their credit card statements into lists.
“Imagine those were categorized into groups that said basically: these are things that are good for my wellbeing, these are things that are neutral and these are things that are bad. How am I doing, how was last month for my wellbeing, and should I change things up for the month coming?”
Norton says there are things people can buy, like experiences, that bring more happiness than buying stuff.
Buying a coffee for a stranger has also been known to work.
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Its to encourage and too good for me.