Katy's December Newsletter
The Secret to Happiness
As crooner Andy Williams reminds us during these winter months, “it’s the happiest season of all.” But I beg to differ with his contention that “parties for hosting,” “marshmallows for toasting,” and “caroling out in the snow” are responsible for that distinction. (And it’s a good thing too, since there won’t be parties or much caroling this year.)
Like most kids, I once loved the holidays because I relished finding presents under the Christmas tree. But now, my delight comes from ensuring the right gifts reach other people. And as you’ll learn in this month’s Q&A, a focus on giving is actually a proven path to happiness during the holidays.
But before I dive into an interrogation of a researcher who’s proven how and why giving can bring you joy this season, here are a few recommended listens and reads…
Recommended Listens and Reads
How Nudges Can Help with COVID-19 Vaccination: Once there is a safe, widely available vaccine for COVID-19, we’ll face a new problem: getting people to take it. In an invited op-ed for The Economist earlier this month, I described how behavioral science can help.
The Function of Regret: On a recent episode of Choiceology, I interviewed California Institute of Technology economist Colin Camerer about how we can use our regrets productively and how to let things go.
Changing Behavior for Good: In this article, The Philadelphia Citizen beautifully describes the work of the Behavior Change for Good Initiative I co-direct with Angela Duckworth at the University of Pennsylvania.
Q&A: What Makes Us Happy
Today I’m sharing an interview I conducted for Choiceology with Harvard Business School Professor Mike Norton. Mike is an expert on what kinds of spending make us happy. Below, he explains research proving that it really is better to give than to receive during the holidays and throughout the year.
Me: Mike, I find your research on how money and happiness connect fascinating. Can you tell us a bit about it?
Mike: Of course. Looking at credit card statements, it turns out that people spend most of their money on stuff for themselves. And I'm not criticizing — of course we do because we have to pay rent, we need shoes, stuff like that. So it's not surprising, but we wondered, does that make people happy? And if not, is there anything else people can do?
It turns out that the percent of your income you spend on stuff for yourself doesn't make you unhappy, but it’s not related to happiness. So all we needed was anything that beat nothing. We thought, what about the opposite? And in a series of surveys and experiments, we tried to show that for most people, most of the time, giving makes you happier than spending on yourself.
Me: I particularly love the study where you gave people instructions about how to spend their money and then measured their happiness. Could you describe that?
Mike: We wanted to show that not only does your habitual spending correlate with how happy you are, but also that we could cause you to become happier if you spent on other people. We decided to go out and give people cash — small amounts, $5 or $20 — and tell them to spend it in different ways. In one of the studies, we went out on a college campus in the morning and gave people an envelope with cash in it. Some people had a slip of paper that said “by 5:00 p.m. spend this money on somebody else” and other people had a slip that said spend it on yourself. We called them that night and asked, “how happy are you?” And then, “what did you buy?”
What we found is that, like in the other research, spending on yourself isn't bad for you, but doesn't make you any happier. So people who spent on themselves basically had a regular day. And it's not that surprising because we spend on ourselves all the time. So if I gave you money for a free coffee, it will be awesome to get a free coffee, but it's your 1,000,000th coffee of your life. But imagine going to Starbucks, getting a coffee, and then giving it to somebody else. It's a really different experience. The person's going to smile and thank you.
Me: In spite of the well-known adage “‘tis better to give than to receive,” it doesn't seem like people know this innately — that spending on others can maximize their happiness. Am I right that people are a bit mixed up?
Mike: I think spending on other people is almost a self-control problem. Everybody knows that giving is good, right? It's not one of these hidden things you've never thought of. So I see it a little bit like exercise. I know that I should go for a run and not eat pizza, but at any given moment I want to eat pizza and not go for a run.
I know I should give to other people, not only because it's the right thing to do, but because I've had experiences when I felt good about it. But in any given moment I want to buy new stuff for myself and so we have to make it a habit rather than make those decisions in the moment when we’re not usually our best selves. Planning out how we're going to give and how much we're going to give is a better way to go about it.
Me: You talked a little bit about this, but I want to dive in deeper. Why do you think it makes people happier to give than to buy more stuff for themselves?
Mike: There are a few reasons it makes us happier. One is very simple: Giving is different than what we typically do. Giving to others is more emotionally rich, but also it’s just different and we know that if we're in a rut it can help to do new things. But I think you also feel good in part because other people tell you that you did a good thing. So we ran a study where we asked what makes you happier, giving when no one knows that you gave or giving when everybody knows.
Many religions have anonymous giving as the highest form of giving, and that does make you happier than spending on yourself, but not nearly as happy as if everybody knows. So the purest form doesn't make us the happiest, but it turns out that it's still good that we give no matter what. We really like people to smile and say thanks.
Me: Does the research show how long the happiness we get from giving lasts?
Mike: We know two things. We know pretty confidently that on a given day, giving to somebody else makes most people happier than spending on themselves. We also know that if I asked you how much of your income you spend on yourself and other people, that the percent of your income you spend on others is correlated with being a happier person. It’s like those days of happiness from giving are adding up over the course of your yearly income to being a happier person. But we don't know that for sure — there are lots of other reasons the percentage of income you give correlates with you being a happier person. The story looks like the moments are adding up, but we actually don't have the data to say that each of those little boosts over time add up to making you a happier person. It's a really important question in behavioral science.
To learn more about the relationship between money and happiness, check out Mike Norton’s book Happy Money or listen to the episode of Choiceology about money and happiness.
This interview has been edited for clarity and length.
That’s all for this month’s newsletter. See you in the New Year!
Katy Milkman, PhD
Professor at Wharton and host of Choiceology, an original podcast from Charles Schwab