How to buy happiness | Michael Norton

716,540 views ・ 2012-04-24

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Translator: Jenny Zurawell
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So I want to talk today about money and happiness,
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which are two things a lot of us spend a lot of our time thinking about,
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either trying to earn them or trying to increase them.
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And a lot of us resonate with this phrase,
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we see it in religions and self-help books:
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money can't buy happiness.
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And I want to suggest today that, in fact, that's wrong.
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(Laughter)
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I'm at a business school, so that's what we do.
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So that's wrong,
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and in fact, if you think that, you're just not spending it right.
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So instead of spending it the way you usually spend it,
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maybe if you spent it differently, that might work a little bit better.
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Before I tell you the ways you can spend it that will make you happier,
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let's think about the ways we usually spend it
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that don't, in fact, make us happier.
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We had a little natural experiment.
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So CNN, a little while ago, wrote this interesting article
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on what happens to people when they win the lottery.
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It turns out people think when they win the lottery
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their lives will be amazing.
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This article's about how their lives get ruined.
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What happens when people win the lottery
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is, one, they spend all the money and go into debt;
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and two, all of their friends and everyone they've ever met
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find them and bug them for money.
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It ruins their social relationships, in fact.
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So they have more debt and worse friendships
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than they had before they won the lottery.
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What was interesting about the article was,
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people started commenting on the article, readers of the thing.
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And instead of talking about how it made them realize
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that money doesn't lead to happiness,
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everyone started saying, "You know what I'd do if I won the lottery ...?"
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and fantasizing about what they'd do.
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Here's just two of the ones we saw that are interesting to think about.
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One person wrote, "When I win, I'm going to buy my own little mountain
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and have a little house on top."
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(Laughter)
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And another person wrote, "I would fill a big bathtub with money
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and get in the tub while smoking a big fat cigar
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and sipping a glass of champagne."
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This is even worse: "... then I'd have a picture taken
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and dozens of glossies made.
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Anyone begging for money or trying to extort from me
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would receive a copy of the picture and nothing else."
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(Laughter)
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And so many of the comments were exactly of this type,
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where people got money and, in fact, it made them antisocial.
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So I told you it ruins people's lives and their friends bug them.
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Also, money often makes us feel very selfish
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and we do things only for ourselves.
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We thought maybe the reason money doesn't make us happy
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is that we're spending it on the wrong things;
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in particular, we're always spending it on ourselves.
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And we wondered what would happen
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if we made people spend more of their money on others.
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So instead of being antisocial with your money,
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what if you were more pro-social with it?
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We thought, let's make people do it and see what happens.
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Let's have some people do what they usually do,
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spend money on themselves,
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and let's make some people give money away,
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and measure their happiness and see if, in fact, they get happier.
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The first way we did this was, one Vancouver morning,
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we went out on the campus at University of British Columbia,
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approached people and said, "Do you want to be in an experiment?"
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They said, "Yes."
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We asked them how happy they were, and then gave them an envelope.
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One of the envelopes had things in it that said,
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"By 5pm today, spend this money on yourself."
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We gave some examples of what you could spend it on.
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Other people got a slip of paper that said,
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"By 5pm today, spend this money on somebody else."
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Also inside the envelope was money.
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And we manipulated how much money we gave them;
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some people got this slip of paper and five dollars,
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some got this slip of paper and 20 dollars.
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We let them go about their day and do whatever they wanted.
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We found out they did spend it in the way we asked them to.
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We called them up and asked them, "What did you spend it on?
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How happy do you feel now?"
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What did they spend it on?
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These are college undergrads;
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a lot of what they spent it on for themselves
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were things like earrings and makeup.
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One woman said she bought a stuffed animal for her niece.
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People gave money to homeless people.
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Huge effect here of Starbucks.
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(Laughter)
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So if you give undergraduates five dollars,
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it looks like coffee to them,
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and they run over to Starbucks and spend it as fast as they can.
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Some people bought coffee for themselves, the way they usually would,
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but others bought coffee for somebody else.
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So the very same purchase,
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just targeted toward yourself or targeted toward somebody else.
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What did we find when we called at the end of the day?
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People who spent money on others got happier;
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people who spent it on themselves, nothing happened.
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It didn't make them less happy, it just didn't do much for them.
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The other thing we saw is the amount of money doesn't matter much.
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People thought 20 dollars would be way better than five.
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In fact, it doesn't matter how much money you spent.
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What really matters is that you spent it on somebody else
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rather than on yourself.
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We see this again and again
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when we give people money to spend on others instead of on themselves.
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Of course, these are undergraduates in Canada --
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not the world's most representative population.
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They're also fairly wealthy and affluent and other sorts of things.
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We wanted to see if this holds true everywhere in the world
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or just among wealthy countries.
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So we went to Uganda and ran a very similar experiment.
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Imagine, instead of just people in Canada, we say,
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"Name the last time you spent money on yourself or others.
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Describe it. How happy did it make you?"
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Or in Uganda, "Name the last time you spent money on yourself or others
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and describe that."
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Then we asked them how happy they are, again.
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And what we see is sort of amazing,
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because there's human universals on what you do with your money,
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and real cultural differences on what you do as well.
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So for example, one guy from Uganda says this:
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"I called a girl I wished to love."
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They basically went out on a date,
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and he says at the end that he didn't "achieve" her up till now.
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(Laughter)
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Here's a guy from Canada.
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Very similar thing.
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"I took my girlfriend out for dinner.
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We went to a movie, we left early,
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and then went back to her room for ... cake," just cake.
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(Laughter)
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Human universal:
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you spend money on others, you're being nice.
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Maybe you have something in mind, maybe not.
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But then we see extraordinary differences.
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So look at these two.
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This is a woman from Canada.
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We say, "Name a time you spent money on somebody else."
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She says, "I bought a present for my mom.
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I drove to the mall, bought a present, gave it to my mom."
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Perfectly nice thing to do.
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It's good to get gifts for people you know.
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Compare that to this woman from Uganda:
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"I was walking and met a longtime friend whose son was sick with malaria.
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They had no money, they went to a clinic and I gave her this money."
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This isn't $10,000, it's the local currency.
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So it's a very small amount of money, in fact.
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But enormously different motivations here.
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This is a real medical need, literally a lifesaving donation.
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Above, it's just kind of, I bought a gift for my mother.
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What we see again, though,
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is that the specific way you spend on other people isn't nearly as important
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as the fact that you spend on other people in order to make yourself happy,
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which is really quite important.
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So you don't have to do amazing things with your money
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to make yourself happy.
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You can do small, trivial things and still get the benefits from doing this.
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These are only two countries.
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We wanted to look at every country in the world if we could,
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to see what the relationship is between money and happiness.
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We got data from the Gallup Organization,
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which you know from all the political polls happening lately.
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They asked people, "Did you donate money to charity recently?"
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and, "How happy are you with life in general?"
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We can see what the relationship is between those two things.
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Are they positively correlated, giving money makes you happy?
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Or are they negatively correlated?
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On this map, green will mean they're positively correlated,
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red means they're negatively correlated.
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And you can see, the world is crazily green.
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So in almost every country in the world where we have this data,
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people who give money to charity are happier people
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than people who don't give money to charity.
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I know you're looking at the red country in the middle.
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I would be a jerk and not tell you what it is,
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but it's Central African Republic.
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You can make up stories.
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Maybe it's different there for some reason.
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Just below that to the right is Rwanda, though,
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which is amazingly green.
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So almost everywhere we look,
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we see that giving money away makes you happier
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than keeping it for yourself.
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What about work, which is where we spend the rest of our time,
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when we're not with the people we know.
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We decided to infiltrate some companies and do a very similar thing.
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These are sales teams in Belgium.
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They work in teams, go out and sell to doctors
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and try to get them to buy drugs.
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We can look and see how well they sell things
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as a function of being a member of a team.
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We give people on some teams some money
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"Spend it however you want on yourself,"
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just like we did with the undergrads in Canada.
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To other teams we say, "Here's 15 euro. Spend it on one of your teammates.
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Buy them something as a gift and give it to them.
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Then we can see, we've got teams that spend on themselves
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and these pro-social teams who we give money to make the team better.
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The reason I have a ridiculous pinata there
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is one team pooled their money and bought a pinata,
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they smashed the pinata, the candy fell out and things like that.
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A silly, trivial thing to do,
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but think of the difference on a team that didn't do that at all,
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that got 15 euro, put it in their pocket, maybe bought themselves a coffee,
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or teams that had this pro-social experience
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where they bonded together to buy something and do a group activity.
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What we see is that the teams that are pro-social sell more stuff
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than the teams that only got money for themselves.
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One way to think of it is: for every 15 euro you give people for themselves,
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they put it in their pocket and don't do anything different than before.
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You don't get money from that;
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you lose money, since it doesn't motivate them to perform better.
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But when you give them 15 euro to spend on their teammates,
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they do so much better on their teams
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that you actually get a huge win on investing this kind of money.
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You're probably thinking to yourselves, this is all fine,
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but there's a context that's incredibly important for public policy,
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and I can't imagine it would work there.
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And if he doesn't show me that it works here,
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I don't believe anything he said.
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I know what you're all thinking about are dodgeball teams.
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(Laughter)
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This was a huge criticism that we got,
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that if you can't show it with dodgeball teams, this is all stupid.
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So we went and found these dodgeball teams and infiltrated them,
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and did the exact same thing as before.
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So we give people on some teams money to spend on themselves.
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Other teams, we give them money to spend on their dodgeball teammates.
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The teams that spend money on themselves
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have the same winning percentages as before.
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The teams we give the money to spend on each other
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become different teams;
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they dominate the league by the time they're done.
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Across all of these different contexts --
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your personal life, you work life, even things like intramural sports --
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we see spending on other people has a bigger return for you
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than spending on yourself.
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So if you think money can't buy happiness, you're not spending it right.
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The implication isn't you should buy this product instead of that product,
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and that's the way to make yourself happier.
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It's that you should stop thinking about which product to buy for yourself,
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and try giving some of it to other people instead.
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And we luckily have an opportunity for you.
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DonorsChoose.org is a nonprofit for mainly public school teachers
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in low-income schools.
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They post projects like,
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"I want to teach Huckleberry Finn and we don't have the books,"
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or, "I want a microscope to teach my students science
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and we don't have a microscope."
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You and I can go on and buy it for them.
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The teacher and the kids write you thank-you notes,
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sometimes they send pictures of them using the microscope.
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It's an extraordinary thing.
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Go to the website and start yourself on the process of thinking
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less about "How can I spend money on myself?"
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and more about "If I've got five dollars or 15 dollars,
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what can I do to benefit other people?"
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Ultimately, when you do that, you'll find you benefit yourself much more.
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Thank you.
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(Applause)
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