From SPSP Press Release:
Giving away money to feel wealthy
New research shows that people all around the world – from Canada to Uganda, from South Africa to India – derive more happiness from spending money on others than they do on themselves.
For the first time, we show that giving away money or spending it on others confers the ironic psychological benefit of increasing the giver’s sense of wealth,” says Michael Norton of Harvard Business School and co-author with Elizabeth Dunn of the University of British Columbia of the upcoming book Happy Money: The Science of Smarter Spending. In a suite of new, not-yet published, studies, Norton and colleagues showed that charitable giving makes people feel wealthier.
This research follows on other recent work published in Psychological Science by Norton and colleagues that shows that giving time to others – from helping with homework to shoveling a neighbors’ driveway – actually makes people feel that they have more time. “In fact, giving time away alleviates people’s sense of time famine even more than receiving unexpected windfalls of free time.”
That people feel wealthier from spending money on others may explain why poor individuals tend to give away a higher fraction of their income than members of the middle class do. In one study, researchers reported that Americans earning less than $20,000 a year give a higher percentage of their income to charity than others earning up to $300,000 a year.
“Our results suggest when the poor give money away, that very act might mitigate their feelings of poverty,” Norton says. “More broadly than this specific benefit, our investigation contributes to the growing body of research documenting the benefits of prosocial behavior, which include greater happiness, reduced mortality, and better immune function.”
Buying experiences to feel happy
In related research, psychologists are finding that spending money on experiential purchases, such as vacations, concerts, and meals out, tends to bring us more happiness than material purchases, such as clothing, jewelry, or electronic gadgets. Amit Kumar and Thomas Gilovich of Cornell University are investigating one potential explanation for this difference: that experiences prompt storytelling more than possessions do.
In new research, they asked participants to recall either a significant experiential purchase or a significant material purchase. They then asked them how much they had talked about the purchase they recalled, and questions related to the satisfaction they derived from their purchase. Participants rated a higher satisfaction for experiences than for possessions, which was because they were more likely to talk about the experiences with other people.
In another experiment, the researchers measured what happens when people cannot talk about their purchases. They asked participants if they would be willing to pay a price to be able to talk about a beach vacation (experiential purchase) or an electronic good (material purchase). “Participants were more likely to switch from a better purchase that they could not talk about to a lesser purchase that they could talk about in the experiential condition than in the material one,” Kumar says.
“Well-being is likely to be enhanced by shifting the balance of spending in our consumer society away from material goods and towards experiential ones,” Kumar says. “This research also suggests that there are benefits to be had not only by nudging people to choose experiences over possessions, but also by encouraging people to share stories about their experiences.”
Knowing what is best to help others
The roots for how we give to others form at a very young age. Children, it turns out, are very sophisticated givers – not only coming to someone’s aid when needed but also coming up with the best strategy for doing so, often independent of an adult’s instruction.
In new research, Kristina Olson of Yale University and Alia Martin have found that children often will act, thinking they know better than others what is best for them or others. In a series of experiments, the researchers investigate whether 3-year-old children will help someone by ignoring the specific request and instead offering a better alternative.
In one study, for example, when an experimenter asks the child for a specific marker, but the child knows that marker does not work, the child will instead offer up a better marker. In another study, a pre-recorded child asks the child participant to give her a piece of chocolate via a tube that supposedly connects them. If the participant knows that chocolate makes the other child sick, the participant will decide to give her fruit snacks instead.
“Perhaps most provocatively, children will selectively decide not to help in this way if they don’t like the person,” Olson says. “For example, if an experimenter has previously been mean, children won’t warn the adult of a potential harm – such as something sharp in the container they are reaching in – but will if the experimenter was not mean.”
“These results suggest that children are able to help adults and peers already by the preschool years in rather complex ways, even when the beneficiary is misguided about what he or she wants,” Olson says. “Children don’t just blindly do as they are requested, but rather consider a person’s goal and consider alternative possible ways to achieve that goal.”
Read the entire press release here.
Related Situationist posts:
- The Situation of Money-Based Happiness
- Adult Well Being and Social Connection
- Dan Gilbert on the Situation of Happy
- On Money and Motivation
- The Situation of High Marginal Income Tax Rates and Motivation
- Money and the Situation of Happiness
- The Situation of Money and Happiness
- Receiving by Giving
- Something to Smile About
- Resisting Materialism
- Money Priming
- Body Image and Materialism
- Law, Competition, Self-Interest
- The Situation of Being Green
- The Situation of Objectification
- The Situational Effects of Wealth and Status
- Shocking for Money
- Kristina Olson on the Psychology of Inequality