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  • 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.

  • (Laughter)

  • I'm at a business school, so that's what we do.

  • So 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 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

  • on 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's about how their lives get ruined.

  • So what happens when people win the lottery

  • is, number one, they spend all the money and go into debt,

  • 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'd do.

  • And here's just two of the ones we saw that are just really interesting to think about.

  • One person wrote in, "When I win, I'm going to buy my own little mountain

  • and have a little house on top."

  • (Laughter)

  • 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 from me

  • would receive a copy of the picture and nothing else."

  • (Laughter)

  • And so many of the comments were exactly of this type,

  • where people got money

  • and, in fact, it made them antisocial.

  • So I told you that it ruins people's lives and that their friends bug them.

  • It also, money often makes us feel very selfish

  • and we do things only for ourselves.

  • 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 more prosocial 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, "Do you want to be in an experiment?"

  • They said, "Yes."

  • 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 pm today, spend this money on yourself."

  • So 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 pm 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 dollars.

  • 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'd 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

  • were things like earrings and makeup.

  • One woman said she bought a stuffed animal for her niece.

  • People gave money to homeless people.

  • Huge effect here of Starbucks.

  • (Laughter)

  • So if you give undergraduates five dollars, it looks like coffee to them

  • and they run over to Starbucks and spend it 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

  • or targeted toward somebody else.

  • What did we find when we called them back at the end of the day?

  • People who spent money on other people got happier.

  • People who spent 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 the amount of money doesn't matter that much.

  • So people thought that 20 dollars would be way better than five dollars.

  • 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 and 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 in Canada,

  • we said, "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 said, "I called a girl I wished to love."

  • They 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 her room for ... " only cake -- just a piece of cake.

  • Human universal -- so you spend money on other people,

  • you're being nice to them.

  • Maybe you 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, "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 and met a long-time friend

  • 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 enormously different motivations here.

  • This is a real medical need,

  • literally a life-saving donation.

  • Above, it's just kind of, I 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.

  • Or 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 almost every country in the world

  • where we have this data,

  • people who give money to charity are happier people

  • that 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 in fact, it's Central African Republic.

  • You can make up stories. 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 to doctors

  • and try to get them to buy drugs.

  • So we can look and 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 teammates this week.

  • Buy them something as a gift or a present and give it to them.

  • And then we can see, well now we've got teams that spend on themselves

  • and we've got these prosocial teams

  • who we give money to make the team a little bit better.

  • The reason I have a ridiculous pinata there

  • is one of the teams pooled their money and bought a pinata,

  • and they all got around and smashed 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 prosocial 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 prosocial 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 realize 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 basically that if he doesn't show me that it works here,

  • I don't believe anything he said.

  • And I know what you're all thinking about are dodgeball teams.

  • (Laughter)

  • This was a huge criticism that we got

  • to say, if you can't show it with dodgeball teams, this is all stupid.