Posted by Jay Livingston
Giving money away makes you happier.
Michael Norton has done research that shows that money, even small amounts, can indeed buy happiness . . . if you spend it on others rather than on yourself. His supporting data come not just from the US or other wealthy countries but from all over the world. The question is why?
At the Society for Personality and Social Psychology meetings in New Orleans, Norton called on “signaling.”*
One of the ways people signal they are wealthy is to give money away.I’m not sure when the economists came up with signaling. It seems to accompany their realization that a lot of important things people do cannot not be explained by simple economic self-interest. Other social sciences – notably sociology – have long assumed the existence of social motives. We didn’t even bother to come up with a single word for it. The entire basis of “symbolic interaction”– from the Mead-Cooley-James models of a the early 20th century to Goffman’s Presentation of Self – is the assumption that we are always signaling things about ourselves, signaling both to others and to ourselves.
The signaling Norton uses seems fairly close to “conspicuous consumption,” a term coined a century ago by another economist. What’s being signaled is still wealth, not other aspects of who the person is.
Norton does acknowledge another set of sociological concepts, relative satisfaction (or deprivation) and social comparison – the idea that what matters is not the absolute amount you have as measured on some objective scale, but how you feel about that amount. And that feeling depends on comparing yourself with others.
We suggest that acts of generosity can also signal wealth to the givers themselves, making them feel subjectively wealthier even as money leaves their pockets,It’s still all about money. But is having a lot of money or feeling that you have a lot of money the only explanation?
There are other possibilities. For one, people feel better about themselves when they live up to the ideals of their society (or smaller social groups), and most societies preach that altruism is a virtue. Apparently, most of us take this lesson to heart, which is why economists have such a hard time convincing the unenlightened that greed, for lack of a better word, is good and that society will be better off if we all try to maximize our own self-interest.
The rewards for altruism are not financial, they are human. In some cases they are direct – a sincere and joyful “Thank you” or some other indication that you like me, you really like me. But often, it just makes us feel good to know that we have done something nice for someone else.**
Given all the evolutionary reasons for social motives, I don’t know why economists keep being surprised when people behave in unselfish ways.
* I have not been able to find Norton’s presentation. I am relying on this report. Norton summarizes his earlier research on giving and happiness in his TED talk (which I highly recommend).
** I hate websites that unbidden start playing music when you open them, but I was tempted to add auto-start background music of “Make Someone Happy” (“and you will be happy too”) to this post – a Bill Evans version, of course.