The Science of Generosity

Could it be that generosity is actually an important secret to happiness and success?

It seems that way.

There has been quite a bit of research recently showing that giving money away makes people a lot happier than spending it on themselves.

And it turns out that giving to others produces an emotional boost for people all over the world, regardless of whether they have a lot of money to give or not.

In one of the largest studies to date on the topic, a team of leading researchers (from Harvard Business School and the University of British Columbia, among others) looked at data from more than 200,000 people in 136 countries around the world. They looked at all parts of the globe, from Canada to Uganda, and consistently found that spending money on other people led to greater well-being and happiness. This result held true for rich and poor countries alike. The study found that it doesn’t matter how much money you have — if you spend some of it on other people, you will personally see the benefits (in addition to the people you’re spending it on, of course).

In fact, the researchers found that donating to charity boosted happiness to a similar degree as doubling your household income!

Additional research, cited in the fascinating book “Happy Money: The Science of Happier Spending” by Elizabeth Dunn and Michael Norton, shows that giving your money away makes people happier and physically healthier. And it doesn’t take much. The authors note that, “Spending as little as $5 to help someone else can increase your own happiness.” Apparently the dollar amount you give is not nearly as important as the perceived impact of the donation — If you can see your money making a difference, it will make you happy regardless of the monetary amount.

So it seems that doing good actually does you good.

But is generosity also linked with greater professional success?

Dr. Adam Grant, the youngest tenured professor at University of Pennsylvania’s prestigious Wharton School, wrote a book on the subject, called “Give and Take.” In it, he shows that an overwhelming majority of the most successful people are incredibly generous. And that helping others actually drives their success. Therefore it should come as no surprise to hear that Warren Buffett has pledged to give away 99% of his fortune, or to see that Jack and Suzy Welch believe that “the best, most effective, most awe-inspiring leaders share one pronounced trait: They love to give raises.”

One study even found that giving your money away actually causes greater wealth.

Economist Arthur Brooks collected data (along with his Harvard University colleagues) from 30,000 American families in 41 different communities located all across the US. After breaking down all of the stats, he found that when people donate to charity, they then go on to actually achieve greater wealth. And this wasn’t just a correlation — it was directly caused by the charitable gift.

Brooks said of the findings, “If you have two families that are exactly identical — in other words, same religion, same race, same number of kids, same town, same level of education, and everything’s the same — except that one family gives a hundred dollars more to charity than the second family, then the giving family will earn on average $375 more in income than the non-giving family — and that’s statistically attributable to the gift.”

He actually found the same thing when running the numbers to look at volunteering or donating blood — those activities also led to people doing better financially.

But how can this be explained?

Well, psychologists and neuroscientists have identified a few ways that giving could lead to success. Research from the University of Oregon found that charity activates parts of the brain that are associated with meeting basic needs like food and shelter — indicating that our brains know that giving is good for us. Other experiments have shown that people are promoted into positions of leadership after they are witnessed giving charitably. Or perhaps we are just hard-wired as humans to get an emotional boost from helping others, which leads to more life satisfaction, better social interactions and networking, being more engaged and more productive in business, with greater wealth as a result. It isn’t easy to perfectly understand this phenomenon, but the benefits of giving continue to be proven.

However, when asked, people still think they’ll be happier if they spend money on themselves instead of other people.

If you’re one of those people, think again.

Of course we need to take care of ourselves and make sure our own needs are met, but perhaps it’s time to rethink at least some of our spending habits. And to spend more on the people and causes we really care about.

After all, it turns out the smart money is on giving it to others.

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