And You Will Be Happy Too

January 23, 2013
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.


Bob S. said...


How do you square this information/research with the drive towards a more socialist government?

Since people aren't giving their money (it is being taken by the government) would that lower the level of happiness they experience?

And how does this correlate to the different political philosophies -- in which liberals are supposed to be more compassionate, more giving then mean hearted conservatives?

-- Although liberal families' incomes average 6 percent higher than those of conservative families, conservative-headed households give, on average, 30 percent more to charity than the average liberal-headed household ($1,600 per year vs. $1,227).

Jay Livingston said...

It may have escaped your notice that this post is not about political ideology. It’s about altruism and happiness. Maybe it’s true that Conservatives are more generous than Liberals or even that they are better people. But that’s not what Norton is talking about, nor is this post.

Apparently there are problems with Brooks’s data (the income data especially – the SCCBS data don’t match other sources). His data show some instances where Lib-Con differences are minimal or reversed. And self-identified “moderates” are stingier than either. But let’s assume that he’s generally right. Then according to Norton’s conclusions, Conservatives should, on average, be happier than Liberals. Maybe they are.

As for socialism, you have to compare political units (countries most likely). Defining and measuring happiness at the individual level within a single country is hard enough. Devising cross-national measures is harder still. But researchers have done it, and as far as I know, the available data don’t show any less happiness in countries with more extensive government social programs (medical, family, work, etc.). Canada comes out slightly higher on happiness than does the US. Denmark and Iceland come out higher still. I’m sure you would consider these countries far more socialistic than the US.

Bob S. said...

Yes I would consider those countries to be more socialistic then the USA.

The question is "is giving the only thing that affects happiness"?

I doubt it. The reason I brought up political parties is I repeatedly hear that the Liberal/Democrat/Progressive party is more altruistic then the Conservative/Republican side and the evidence I've seen shows otherwise.

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.

I find it interesting that socio-political philosophy that supposed wants to promote altruism has to do so by making people pay taxes to support their program.

One smaller social group teaches that it is the individual's responsibility to give. The other teaches that the government should determine how much each person should give.

So, yes it is about political ideology.