New research by Havard Business School shows that spending on someone else, either on a friend or a cause, can lead to increased well-being:
“Our findings suggest that very minor alterations in spending allocations—as little as $5 in our final study—may be sufficient to produce non-trivial gains in happiness on a given day.”
The cool thing is that it isn’t how much you give away that influences increases in happiness, it’s the percentage of your income you spend on others that matters. Apparently, this phenomenon works on a sliding scale. The higher the percentage of your giving, the more the gains. Those able to give thousands or millions of dollars do not have an advantage here.
An interesting backdrop on this recent research is the well-known finding that there’s a big lift in happiness once someone moves out of poverty into the lower-middle class, but further increases in income do not lead to increases in happiness.
The implication here is that to continue getting happiness gains relative to income, you have to begin to give when you have just enough to give and increase the percentage of your giving as you’re able.
The other interesting comment in the article indicates the importance of intention:
“Intentional activities—practices in which people actively and effortfully choose to engage—may represent a promising route to lasting happiness. Supporting this premise, our work demonstrates that how people choose to spend their money is at least as important as how much money they make,” the researchers explain.
This is really interesting. While governments have arguably had mixed results in promoting social justice by redistributing wealth using mandatory taxes, it seems that individuals have a built-in psychological incentive to redistribute on their own once they have enough. What if we created a society that leveraged this opportunity in human nature? For instance, bigger tax breaks for charitable giving, an efficient market in philanthropy, and a robust culture of generosity.
In any case, I think intention and choice really matter when it comes to how we contribute to the common good. I’m inclined to believe that the most good is done on both the giving and receiving side of the equation “when the giver actively and effortfully engages.” Our gifts have more power when they’re voluntary and aligned with our passions. And this way of giving is more personally satisfying.
Any comments on these ideas?
