Why Give to Others?

Everyone has heard of the saying "money can't buy happiness". And we know that the relationship that money has on happiness obeys a diminishing return function. But, there has been new recent evidence suggesting that "money can buy happiness...when you give to others". This finding is so counter-intuitive that many people fail to accept it as reality unless they are given money with the stipulation that they must give the money as a gift to other people.

Michael Norton has racked up over 2 million views of his Ted talk discussing why money can increase happiness when it is spent on other people. Furthermore, it does not matter how much money is given, nor what the money is spent on. This is an amazing finding when we stop to thinking about it. Giving $5 to a friend brings the same amount of happiness as giving the same friend $100. Giving someone money for Starbucks brings the same amount of happiness as giving someone money for life saving water.

If the above findings were not persuasive enough to begin giving to other people, Norton also discovered that these results are universal. It is human nature to feel the empathy associated with giving to other people. The following graph shows that nearly every single country in the world feels happier after giving money to other people as opposed to hoarding it for themselves. A correlation scale between the feeling of happiness after giving to another person is used. A correlation rating of 1.0 (dark green) means that every person who gave felt happier. Whereas a correlating rating of -1.0 (dark red) means that every person who gave felt less happy. A correlation of 0 means that no relationship exists between giving and happiness.

Norton also found out that companies who gave employees money with the requirement that they must spend it on co-workers saw a huge increase in productivity. For instance, a company gave money to their employees to spend on themselves (as in the case of salary and raise payments), and the company experienced a 70% loss on their capital they paid employees. However, a company gave out the same amount of money to employees with the requirement that employees must spend money on their co-workers. Under this test, the company realized a 420% return on their capital. Maybe companies should start paying their employees and require them to give to co-workers?

Lastly, money can corrupt people. CNN did a mini series on showing the negative experience of lottery winners a full year after their "spectacular day". I will conclude with one final quote Henry Ford. "Money does not change men, it merely unmasks them." Go give $1/day to your family, close friends, or distant acquaintances that you wish to get to know better. See what happens.