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