This week’s guest blog is from Tom Lane, Assistant Professor in Economics at the University of Nottingham. Here, Tom outlines the key points from his talk on his literature review on how happiness relates to economic behaviour.
The idea that being generous makes us happy isn’t new. But what is the evidence behind it? The important question is not simply whether giving gifts makes us feel good – we know from experience that this is the case. We also need to take into account that gifting is expensive and restricts our ability to spend on ourselves.
What does the evidence say?
So the question is: does giving to others make us more happy than we would have been if we’d kept the money for our own purposes?
- Having given to charity in the past month was estimated to have a similar effect on happiness as a doubling of household income. A study covering data from the Gallup World Poll across 139 countries (Aknin et al, 2013) found that.
- This relationship was found to be strong not just in higher income countries, where giving to charity is a more affordable luxury, but also in lower-income countries.
- The correlation also extends to our use of time. Higher levels of happiness are associated with volunteering, being helpful towards colleagues and neighbours, and pro-environmental behaviours (which usually require some sacrifice in terms of time, effort or money on the part of those engaging in them).
Different contexts, cultures, and ages
A decade ago a team of researchers set out to test whether they could show that giving to others specifically led to increases in happiness (Dunn et al, 2008). Part of their study focused on measuring the happiness of employees at a company before and then two months after they received a bonus.
- those who had spent the bonus on charitable donations or gifts had experienced the greatest improvement in their happiness
- those who had spent money on others had experienced a greater improvement in their reported happiness, after participants were given a small amount of cash at the beginning of the day and randomly instructed to spend it either on themselves or on others.
In the last decade, this result has been replicated by further studies and shown to be robust to a wide range of contexts.
Giving has been found to improve happiness:
- regardless of whether it comes out of earned or windfall income (Geenen et al, 2014)
- across a range of diverse cultures (Aknin et al, 2015)
- even among toddlers (Aknin et al, 2012).
Giving as an ‘experience’
A potential criticism of this research is that it only deals in averages. People are different and, just because giving gifts tends to be good for most of us, this doesn’t need to hold true for all. Selfish people may, after all, be selfish for a reason.
This was the motivation for important recent research by Hanniball et al (2019). Using methods similar to those of the previous experimental literature, they tested the effect of generosity on the happiness of ‘delinquent youth and ex-offenders’, i.e. on people with a history of antisocial behaviours.
They found that, even among this group, spending on others was more beneficial to happiness than spending on oneself.
On this, Professor Paul Frijters raises an interesting point. Giving to others can be regarded as an experience. We know that spending on experiences often leads to greater happiness than spending on material goods (see, for instance, Gilovich et al, 2015).
But the quality of an experience is often difficult to accurately predict in advance (ask anyone who’s ever been skydiving, or visited Madame Tussauds). Perhaps the most revealing aspect of the Dunn et al experiment was what they asked of a group of impartial observers. Which set of participants did the observers expect to have been made happier: the set instructed to spend money on themselves, or the set instructed to spend it on others? The observers believed, wrongly, that the people spending the money on themselves would be made happier.
The conclusion to this? Perhaps people would be kinder to each other if they actually realised it would make them feel better. This is something that could potentially be tested. Although folk wisdom promotes the idea that it will, it may be that most people are intuitively skeptical, perceiving this as a mere societal trick to make them behave themselves. Now that there’s enough objective evidence to support the folk wisdom, let’s spread the word.