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  • 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, it's not so much that money can't buy happiness.

  • (Laughter) (Applause)

  • It is not so much that money can't buy happiness,

  • it's that If you think that, you're 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.

  • 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.

  • CNN a little while ago, wrote this interesting article

  • on what happens to people when they win the lottery.

  • 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:

  • 1) They spend all the money and go into debt

  • 2) All of their friends and everyone they've ever met,

  • find them and bug them for money.

  • It ruins their social relationships in fact.

  • They have more debt and worse friendships than they had before they won the lottery.

  • What was interesting, people started commenting

  • on the article, readers of the thing.

  • Instead of talking about how it had made them realize

  • money doesn't lead to happiness,

  • everyone was saying: "You know what I would do if I won the lottery?",

  • fantasizing about what they'd do.

  • Here are just two of the ones we saw, that are interesting to think about.

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

  • and have a little house on top".

  • (Laughter)

  • Another person wrote:

  • "I would fill a bath tub 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 received 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.

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

  • it also makes us feel very selfish and we do things only for ourselves.

  • Maybe the reason why money doesn't make us happy

  • is that we're always spending it on the wrong things.

  • In particular, we're always spending it on ourselves.

  • And we thought, what would happen

  • if we made people spend more money on other people?

  • So, instead of being antisocial with your money

  • what if you're a bit more prosocial with your money

  • and we thought let's make people do it and see what happens.

  • Let's have some people do what they usually do

  • and spend money on themselves,

  • and let's make some people give money away,

  • measure their happiness and see if in fact they get happier.

  • The first way we did this, on one Vancouver morning,

  • we went on a campus at University of British Columbia.

  • We approached people and said: "Do you want to be in an experiment?"

  • If they said yes, we asked them how happy they were,

  • and then we gave them an envelope.

  • One of the envelopes had things in it that said:

  • "By 5 p.m. today spend this money on yourself".

  • We gave some examples of what you can spend it on.

  • Other people in the morning got a slip of paper that said

  • by 5 p.m. today to spend this money on somebody else.

  • Also, inside the envelope was money. We manipulated how much we gave them.

  • So, some people got this slip of paper and 5 dollars.

  • Some people got the 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 spend it the way we asked them to.

  • We called them up at night and asked:

  • "What did you spend it on and how happy do you feel now?"

  • Well, these are college undergrads, a lot of what they spent it on for themselves

  • was things like earrings and make up. Apparently, some of them were women.

  • What about for other people? Very different things.

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

  • People gave money to homeless people.

  • Huge effect here of Starbucks.

  • (Laughter)

  • If you give undergraduates 5 dollars, it looks like coffee to them

  • and they run over to Starbucks and spend it as fast as they can.

  • 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 towards yourself or towards somebody else.

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

  • People who spent money on others got happier.

  • People who spent it on themselves, nothing happened.

  • It didn't make them less happy, it just didn't do much for them.

  • The other thing we saw, is that the amount of money doesn't matter much.

  • So, people thought that 20$ would be way better than 5$.

  • In fact, it doesn't matter how much money you spend,

  • what really matters is that you spend 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.

  • These are undergraduates in Canada -

  • not the world's most representative population.

  • They're also fairly wealthy, affluent and all these sorts of things.

  • We wanted to see if this holds true everywhere in the world

  • or just among wealthy countries.

  • So we went to Uganda and ran a very similar experiment.

  • Imagine instead of being in Canada, where we would say to people:

  • "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".

  • Then we ask them how happy they are.

  • Again, what we see is amazing because there are human universals

  • on what you do with your money,

  • and real cultural differences on what you do, as well.

  • For example, these are some similarities.

  • These are two gentlemen from Canada and Uganda.

  • Here is one guy from Uganda, who says this.

  • We said: "Name a time you spent money on somebody else."

  • Men frequently talk about spending money on women, as it turns out.

  • He said: "I called a girl I wished to love."

  • I think he means romantically love, though it's unclear

  • if he means physical love.

  • "We went out on a date...".

  • At the end he says that he didn't achieve her until now.

  • Here is a guy from Canada, very similar thing.

  • "I took my girlfriend out for dinner. We went to a movie. We left early.

  • Then went back to her room for only cake".

  • (Laughter)

  • Human universal: you spend money on other people,

  • you're being nice to them.

  • Maybe you've something in mind, maybe not.

  • But then we see these similarities,

  • but also extraordinary differences.

  • Look at these two. This is a woman from Canada.

  • We say: "Name a time when you spent money on somebody else".

  • She says: "I bought a present for my mom.

  • I drove to the mall, bought a present and gave it to my mom".

  • Perfectly nice thing to do. It's good to get gifts for people 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 10000$, it's the local currency. It is a very small amount of money, in fact.

  • Enormously different motivations.

  • 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 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.

  • 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 benefits from doing this.

  • These are only two countries.

  • We wanted to go broader and look at every country in the world if we could,

  • to see what the relationship is between money and happiness.

  • I'll show you a world map in a second. We got data from the Gallup Organization,

  • which you know from the political polls that have been happening lately.

  • They ask people: "Did you donate money to charity recently?"

  • "How happy are you with your life in general?"

  • We can see what the relationship is between those two things.

  • Are they positively correlated?

  • Giving money makes you happy? Or, they're negatively correlated?

  • On this map, green means they're positively correlated,

  • red means they're negatively correlated.

  • You can see the world is crazily green.

  • In almost every country in the world, where we have this data,

  • people who would give money to charity, are happier than people

  • who don't give money to charity.

  • I know you're all looking at that red country in the middle.

  • I'd be a jerk and not tell you what it is. It's Central African Republic.

  • You can make up stories, maybe it's different there for some reason.

  • Just below that to the right is Rwanda which is amazingly green.

  • So, almost everywhere we look, we see that giving money away

  • makes you happier than keeping it for yourself.

  • Across the world we see this in your everyday life

  • that this is the impact of spending money on others rather than yourself.

  • But this is your own everyday life, and sometimes you personal life.

  • What about our work life, where we spend all the rest of our time

  • when we're not with the people we know.

  • We decided to infiltrate companies and do a very similar thing.

  • 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.

  • We can look at how well they sell things as a function of being a member of a team.

  • For some teams we give people some money for themselves,

  • and say: "Spend it however you want on yourself".

  • Just like we did with the undergrads in Canada.

  • But to other teams we say: "Here's 15 euros.

  • Spend it on one of your teammates.

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

  • Now we got teams that spend on themselves

  • and we have these prosocial 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 pooled their money and bought a pinata.

  • They got together, smashed the pinata and all the candy fell out.

  • A very silly and trivial thing to do,

  • but think of the difference on the team that didn't do that at all

  • that got 15 euro, put it in their pocket, maybe bought themselves a coffee.

  • Or teams which had this prosocial experience

  • where they all bonded together to buy something and do a group activity.

  • What we see is that the teams that are prosocial sell more stuff

  • than the teams that only got money for themselves.

  • One way to think about it is for every 15 euro

  • you give people for themselves,

  • they put it in their pocket and don't do anything different than before.

  • You don't get any money from that. You actually lose money

  • because it doesn't motivate them to perform better.

  • But when you give them 15 euro to spend on teammates,

  • they do so much better on their teams that you get a huge win

  • on investing this kind of money.

  • You're probably thinking to yourselves, "This is all fine, but there is a context,

  • that is incredibly important for public policy,

  • and I can't imagine it would work there."

  • Basically, "If he doesn't show me that it works here,

  • I don't believe in anything he said."

  • What you're all thinking about are dodgeball teams.

  • (Laughter)

  • This was a huge criticism we got.

  • To say "If you can't show a dodgeball team, this is all stupid".

  • We went out and found these dodgeball teams and infiltrated them.

  • We did the exact same thing as before.

  • We give some teams money to spend on themselves.

  • Other teams, we give them money to spend on their dodgeball teammates.

  • The teams that spend money on themselves,

  • were just at the same winning percentages as they were before.

  • The teams we give money to spend on each other, they become different teams

  • and in fact dominate the league by the time they're done.

  • Across all these different contexts: your personal life, your work life,

  • and even silly things like intramural sports.

  • We see that spending on other people has a bigger return for you

  • than spending on yourself.

  • So if you think money can't buy happiness, you're not spending it right.

  • The implication is not you should buy this product instead of that product

  • and that's the way to make yourself happier.

  • In fact, you should stop thinking of which product to buy for yourself

  • and try giving some of it to other people instead.

  • We luckily have an opportunity for you to give money away today.

  • If you look on the back your name badge, at the very bottom of your badge -

  • look now, as I actually want you to do this later,

  • you'll see DonorsChoose.org is a non-profit,

  • mainly for public school teachers in low-income schools.

  • They post projects, like: "I want to teach Huckleberry Finn to my class

  • and we don't have the books"