How to buy happiness Michael Norton

so I want to talk today about money and

happiness which are two things that a

lot of us spend a lot of our time

thinking about either trying to earn

them or trying to increase them and a

lot of us resonate with this phrase so

we see it in religions and self-help

books that money can’t buy happiness and

I want to suggest today that in fact

that’s wrong and that I’m out of

business school so that’s what we do so

that that’s wrong and in fact if you

think that you’re actually just not

spending it right so that instead of

spending it the way you usually spend it

maybe if you spent it differently that

might work a little bit better and and

before I tell you the ways that you can

spend it that will make you happier

let’s think about the ways we usually

spend it that don’t in fact make us

happier we had a little natural

experiment so CNN a little while ago

wrote this interesting article and what

happens to people when they win the

lottery it turns out people think when

they win the lottery their lives are

going to be amazing this article is

about how their lives get ruined so what

happens when people win the lottery is

number one they spend all the money and

going to death and number two all of

their friends and everyone they’ve ever

met find them and bug them for money and

it ruins their social relationships in

fact so they have more debt and worse

friendships than they had before they

won the lottery what was interesting

about the article was people started

commenting on the article readers of the

thing and instead of talking about how

it had made them realize that money

doesn’t lead to happiness everyone

instantly started saying you know what I

would do if I won the lottery and

fantasizing about what they do and

here’s what just two of the ones that we

saw that are just really interesting to

think about one person wrote in when I

win I’m gonna buy my own little mountain

and have a little house on top

and another person wrote I would fill a

big bathtub with money and get in the

tub while smoking a big fat cigar and

sipping a glass of champagne this is

even worse now then I’d have a picture

taken and dozens of glossies made anyone

begging for money or trying to extort

for me would receive a copy of the

picture and nothing else and so many of

the comments were exactly of this type

where people got money and in fact it

made them anti-social so we I told you

that it ruins people’s lives and that

their friends bugged them it also money

often makes us feel very selfish and we

do things only for our self and we said

well maybe the reason that money doesn’t

make us happy is that we’re always

spending it on the wrong things

and in particular that we’re always

spending it on ourselves and we thought

I wonder what would happen if we made

people spend more of their money on

other people so instead of being

antisocial with your money what if you

were a little bit more pro-social with

your money and we thought let’s make

people do it and see what happens so

let’s have some people do what they

usually do and spend money on themselves

and let’s make some people give money

away and measure their happiness and see

if in fact they get happier so the first

way that we did this on one Vancouver

morning we went out on the campus at

University of British Columbia and we

approached people and said you want to

be in an experiment and they said yes we

gave we asked them how happy they were

and then we gave them an envelope and

one of the envelopes had things in it

that said by 5:00 p.m. today spend this

money on yourself so when we gave some

examples of what you could spend it on

other people in the morning got a slip

of paper that said by 5:00 p.m. today

spend this money on somebody else also

inside the envelope was money and we

manipulated how much money we gave them

so some people got this slip of paper

and five dollars some people got this

slip of paper and $20 we let them go

about their day they did whatever they

wanted to do we found out that they did

in fact spend it in the way that we

asked them to we called them up at night

and asked them what you spend it on and

how happy do you feel now

what did they spend it on well these are

college undergrads so a lot of what they

spent it on for themselves was things

like earrings and makeup one woman said

she bought a stuffed animal for her nice

people gave money to homeless people

huge effect here of Starbucks so

if you give undergraduates $5 it looks

like coffee to them and they’ve run over

to Starbucks and spend that as fast as

they can but some people bought a coffee

for themselves the way they usually

would but other people said that they

bought a coffee for somebody else so the

very same purchase just targeted toward

yourself are targeted towards some

somebody else what did we find when we

call them back at the end of the day

people who spend money on other people

got happier people who spend money on

themselves nothing happened it didn’t

make them less happy it just didn’t do

much for them and the other thing we saw

is that the amount of money doesn’t

matter that much so people thought that

$20.00 would be way better than $5 in

fact it doesn’t matter how much money

you spent what really matters is that

you spent it on somebody else rather

than on yourself we see this again and

again when we give people money to spend

on other people instead of on themselves

of course these are undergraduates in

Canada not the world’s most

representative population they’re also

fairly wealthy and affluent in all these

other sorts of things we wanted to see

if this holds true everywhere in the

world or just among wealthy countries so

we went in fact to Uganda and ran a very

similar experiment so imagine instead of

just people can release a name the last

time you spent money on yourself or

other people describe it how happy did

it make you or in Uganda name the last

time you spent money on yourself or

other people and describe that and then

we asked them how happy they are again

and what we see is sort of amazing

because there’s human universals on what

you do with your money and then real

cultural differences on what you do as

well so for example one guy from Uganda

says this he says I called a girl I wish

to love we basically went out on a date

and he says at the end that he didn’t

achieve her up till now here’s a guy

from Canada very similar thing I took my

girlfriend out for dinner we went to a

movie we left early and then went back

to a room for only cake just

human universal so you spend money on

other people you’re being nice to them

maybe have something in mind maybe not

but then we see extraordinary

differences so look at these two this is

a woman from Canada we say name a time

you spent money on somebody else she

says you know I bought a present for my

mom I drove to the mall in my car bought

a present gave it to my mom

perfectly nice thing to do it’s good to

get gifts for people that you know

compare that to this woman from Uganda I

was walking in met a longtime friend

who’s whose son was sick with malaria

they had no money they went to a clinic

and I gave her this money this isn’t

$10,000 it’s the local currency so it’s

a very small amount of money in fact but

enormous Lea different motivations here

this is a real medical need literally a

life-saving donation above it’s just

kind of I got bought a gift for my

mother what we see again though is that

the specific way that you spend on other

people isn’t nearly as important as the

fact that you spend on other people in

order to make yourself happy

which is really quite important so you

don’t have to do amazing things with

your money to make yourself happy you

can do small trivial things and yet

still get these benefits from doing this

these are only two countries we also

wanted to go even broader and look at

every country in the world if we could

to see what the relationship is between

money and happiness we got data from the

Gallup Organization which you know from

all the political polls that have been

happening lately they ask people did you

donate money to charity recently and

they ask them how happy are you with

your life in general and we can see what

the relationship is between those two

things are they positively correlated

giving money makes you happy are they

negatively correlated on this map Green

will mean they’re positively correlated

and red means they’re negatively

correlated and you can see the world is

crazily green so in every almost every

country in the world where we have this

data people who give money to charity

are happier people than people who don’t

give money to charity I know you’re all

looking at that red country in the

middle I would be a jerk and not tell

you what it is but it’s in fact it’s

Central African Republic you can make up

stories out maybe it’s different there

for some reason or another just below

that to the right is Rwanda though which

is amazingly green so almost everywhere

we look we see that giving money away

makes you happier than keeping it for

yourself what about your work life which

is where we spend all the rest of our

time when we’re not with the people we

know we decided to infiltrate some

companies and do a very similar thing so

these are sales teams in Belgium they

work in teams they go out and sell

basically to doctors and try

to get them to buy drugs so we can look

to see how well they sell things as a

function of being a member of a team

some teams we give people on the team

some money for themselves and say spend

it however you want on yourself just

like we did with the undergrads in

Canada but other teams we say here’s 15

euro spend it on one of your team mates

this week buy them something as a gift

or a president give it to them and then

we can see when now we’ve got teams that

spend on themselves and we’ve got these

pro-social teams who we give money to

make the team a little better the reason

I have a ridiculous pinata there is one

of the teams pulled their money in

bought a pinata and they all got around

and smash the pinata and all the candy

fell out and things like that a very

silly trivial thing to do but think of

the difference on a team that didn’t do

that at all that got 15 euro put it in

their pocket maybe bought themselves a

coffee or teams that had this pro-social

experience where they all bonded

together to buy something and do a group

activity what we see is that in fact the

teams that are pro-social sell more

stuff than the teams that only got money

for themselves and one way to think

about it is for every 15 euro you give

people for themselves they put it in

their pocket they don’t do anything

different than they did before you don’t

get any money from that you actually

lose money because it doesn’t motivate

them to perform any better but when you

give them 15 euro to spend on their

teammates they do so much better on

their teams that you actually get a huge

win on investing this kind of money and

I realized that you’re probably thinking

to yourselves this is all fine but

there’s a context that’s incredibly

important for public policy and I can’t

imagine it would work there and if

basically if he doesn’t show me that it

works here I don’t believe anything he

said and I know that what you’re all

thinking about our dodgeball teams

this was a huge criticism that we got

you know to say if you can’t show with

dodgeball teams this is all stupid so we

went out and found these dodgeball teams

and infiltrated them and we did this

exact same thing as before so some teams

we give people on the team money they

spend it on themselves other teams we

give them money to spend on their

dodgeball teammates the teams that spend

money on themselves they’re just the

same winning percentages they were

before the teams that we give the money

to spend on each other they become

different teams and in fact they

dominate the league by the time they’re

done across all of these different

contexts your personal life your work

life even silly things like intramural

sports we see spending on other people

has a bigger return for you than

spending on yourself and so I’ll just

say I think if you think money can’t buy

happiness you’re not spending it right

the implication is not you know you

should buy this product instead of that

product and that’s the way to make

yourself happier it’s in fact that you

should stop thinking about which product

to buy for yourself and try giving some

of it to other people instead and we

luckily have an opportunity for you

donorschoose.org is is a non-profit for

mainly public school teachers and

low-income schools they post projects so

they say I want to teach Huckleberry

Finn to my class and we don’t have the

books or I want a microscope to show my

teach my students science and we don’t

have a microscope you and I can go on

and buy it for them the teacher writes

you a thank-you note the kids write you

a thank-you note sometimes they send you

pictures of them using the microscope

it’s an extraordinary thing go to the

website and start yourself on the

process of thinking again less about how

can I spend money on myself and more

about if I’ve got five dollars or 15

dollars what can I do to benefit other

people because ultimately when you do

that you’ll find out you’ll benefit

yourself much more thank you