>>Michael Norton: Thank you for having me.
I want to talk about two things that we think
a lot about in our everyday lives.
One is money, and one is happiness.
And we spend a lot of our time trying to get
more and more of them.
We think about them all the time.
We wonder: Are we happier than other people?
Do we have more money than other people?
We also think about the relationship between
the two as well.
So you'll often hear this phrase -- it is
a very irritating phrase.
It is in religions.
It is in self-help books.
Many of you have a friend who will say it
to you from time to time.
Usually it is a friend who does a lot of yoga.
[ Laughter ]
>>Michael Norton: And usually it is a friend
who is actually very wealthy, which makes
it even more irritating.
[ Laughter ]
They say -- as they fly around in their private
jet: Money can't buy happiness, they say.
I want to suggest actually that it's wrong,
that, in fact, money can buy happiness.
It is just the way we usually use our money
is bad for our happiness.
And there are better ways to use it for your
money than the way we usually do.
And so what we say is, in fact, if you think
money can't buy happiness, you are just not
spending it right.
[ Laughter ]
>>Michael Norton: And I will tell you at least
one way you can spend your money differently
to get more happiness out of the money that
you spend.
But before I tell you that, let's think about
the ways we usually spend our money to figure
out why maybe it's not making us that much
happier.
So we had this funny experience happen where
-- a story on CNN which covered some of our
research on money and happiness.
Interviewed these lottery winners.
This is one of them here.
A $5 million check, amazing.
It would change your life.
Imagine if you are who you are now but you
had also $5 million.
Surely it would be amazing.
You would be happy.
It would be the greatest thing ever.
It turned out this story is actually about
how winning the lottery makes people unhappy,
that for many people who win the lottery,
it ruins their life.
That's why there is a question mark: Does
it guarantee happiness?
Not an interesting story.
The answer is no, it doesn't guarantee happiness.
For one thing, you win 5 million but you spend
10 million.
The other thing that happens is you start
to look like a dollar sign to everyone who
has ever known you.
So everyone, your friends, your family, your
parents come up to you and say, Hey, can I
have a few thousand dollars?
Things like that.
It ruins your life for many people when they
win the lottery.
Remember, the story is about how winning the
lottery ruins your life.
Here's what's interesting.
What happened was in the comments section
-- you should never read the comments on the
Internet because they will drive you insane,
but I happen to read some of the comments
on this one.
People instantly wrote -- Article's about
how winning the lottery was bad.
They instantly started writing how amazing
it would be if they won the lottery.
Let me show you what a couple of people wrote.
This first person wrote: When I win, I'm going
to buy my own little mountain and have a little
house on top.
That is his ultimate dream of life, is to
be alone on the top of a mountain in a tiny
house.
Here is the person who is even more amazing.
I would fill a big bathtub with money -- that's
not a typo -- and git in the tub while smoking
a big fat cigar and sipping a glass of champagne.
Already pretty creepy.
[ Laughter ]
>>Michael Norton: Creepier, then I'd have
a picture taken and dozens of 8x10 glossies
made.
Anyone begging for money or trying to extort
from me would receive a copy of the picture
and nothing else.
[ Laughter ]
>>Michael Norton: Horrible.
Again, ultimate dream of life is to be alone
in a tub of money taunting people with pictures.
But both of these examples alone, in a house
on a mountain, alone in a tub with money taunting
people, they are extreme but they are pretty
emblematic.
So what people usually do, me, you, everybody
does with money is we buy stuff and we buy
it for ourselves.
That's mainly what we think about when we
have money.
Especially when we win lots of money, we think
what can I get more myself?
It turns out that if you look at the research,
some of ours and other people's, it doesn't
make you very happy to buy stuff for yourself.
It doesn't make you unhappy really.
It just doesn't do anything for your happiness.
We thought, well, Is there a way to get people
to shift the way they spend their money, to
get them to get more happiness out of their
money.
We thought maybe one of the more radical ways
is if everything we do is pointed toward ourselves
and spending on ourselves, what if instead
we ask people to spend it on somebody else,
just completely shift the direction of the
spending and see if we could get people to
be happier.
We did this in a very first experiment that
we ever ran.
We said, Let's do it.
Let's give people money and let's see if we
can get them to be happier if they spend it
on other people instead of on themselves.
The way we do this is we went out on a campus
at University of British Columbia one morning
with a box filled with envelopes.
We asked people: Will you be in our experiment?
If they said yes, we said, how happy are you
and some other questions and then we gave
them a envelope.
Some people's envelope had a slip of paper
that said, By 5:00 p.m. spend this money on
a bill, an expense or a gift for yourself.
Other people, a slip of paper that said by
5:00 p.m. today spend it on a charitable donation
or a gift for another person.
They go on their way.
We did something else, though.
We gave them cash.
When I gave this talk in America, Americans
start to laugh because they think that's monopoly
money.
That's Canadian money, if you have never seen
it.
[ Laughter ]
>>Michael Norton: Sorry if there are Canadians
there.
It is a real country to the north of the United
States.
It is not a funny experiment where it is fake
money.
So we gave these people real money.
We gave some people $5.
We gave some people $20.
So there is the question: What makes you happier:
Spending more money, $20 versus $5, or does
it matter instead what you spend it on, yourself
or somebody else?
What did people buy?
They buy all sorts of ridiculous things.
These are mainly college students.
So for themselves, they buy stuff as usual,
earrings and makeup.
Many of them are female apparently.
For other people, really, really different
expenditures.
One person said she bought a stuffed animal
for her nephew.
Another person said that they gave money to
a homeless person, street performers, taking
somebody to lunch.
We also see probably because these are undergraduates,
although I think it would be true for this
crowd as well, we give people and they run
to Starbucks.
Like, a $5 bill looks like a cup of coffee
and everyone runs and gets a cup of coffee.
The only difference here is that some people
run and get a coffee for themselves.
Other people run and get a coffee and give
it away to somebody else.
Who is happier?
It turns out the amount of money makes no
difference at all.
So you think $20 is better than 5 and it is,
it is more.
But at the end of the day when we call people
up and say: What did you do and how happy
are you?
$20 is no better than 5 because it is not
really that different.
What matters a lot is if you spent it on somebody
else or if you spent it on yourself.
If you spend it on yourself, nothing happens.
You are not less happy because you had a coffee
that day, but it did nothing for you because
you always have coffee.
Why would it make you any happier?
If you spend it on somebody else and you get
them a coffee, you are happier at the end
of the day.
Then we said, okay, this is Canada.
It is a wealthy country.
What about other countries?
Imagine a very poor country.
Would it be the case when people are struggling
to make their basic needs meet, could you
still, in fact, get happier still from giving
it away instead of spending it on yourself?
We went to Uganda.
This is 10,000 Uganda shilling, which is about
the same purchasing power.
And we did the exact same experiment.
We give some people money to spend on themselves,
some people money to spend on other people.
We asked them what they did, and then we see
how happy they are.
We see some amazing similarities between the
two countries.
These are some reports of what people did
with the money.
This is a guy from Uganda.
He is, I think, 18 or 19 years old.
He says, I called a girl I wished to love.
I think he means romantically, but it is a
little unclear.
We went to a restaurant, and I bought her
dinner, which was about $20.
But I did not achieve this girl up until now.
I think again he means romantically.
[ Laughter ]
>>Michael Norton: But it is ambiguous.
Uganda, country so different from Canada,
income, religion, every other way but similarities,
amazing.
This is a guy from Canada.
I took my girlfriend out for dinner at a local
restaurant for her birthday.
We went to a movie which was so bad we left
halfway through and went back to her room
for... cake.
Just cake.
So he also did not achieve the girl.
[ Laughter ]
>>Michael Norton: Up till now.
We also see amazing differences between the
countries, as you can imagine.
So here is someone from Canada.
Basically, she goes to the mall.
Probably drives the SUV to the mall, eats
in the food court, buys a scarf for her mom,
drives home in the SUV.
It is clearly spending on somebody else instead
of yourself.
We should all buy our presents for our mom.
But compare and contrast that to this example
from Uganda.
This is a woman who says I was walking and
met a friend whose son had malaria.
They had no money, they had no home, and they
needed to go to a clinic.
They used the same amount of money as the
scarf to literally save somebody's life.
And you can think, wow, that's an incredibly
different prosocial behavior than just buying
somebody a scarf.
And it is.
It turns out, in fact, that the amount of
happiness you get doesn't vary that much.
So just as 5 versus $20 doesn't matter, what
matters is spending it on someone else instead
of yourself.
Whether you spend it on a scarf or life saving,
what seems to matter most is again that you're
being generous for making you happy and not
exactly how you are being generous when you
do this.
So two countries, Canada and Uganda.
Then we said, Let's look at more countries.
So we go to a poll conducted by Gallup.
They asked everyone in almost every country
in the world, so thousands and thousands of
people, how happy are you right now on the
ladder?
Zero not happy at all.
10 is happy as I have ever been.
Where are you on the ladder?
They also asked them, did you give money to
charity in the last month?
So now we can see in all of these countries
are people who give to charity happier or
not.
And what I will show you is a map where if
a country is green, it means people who give
are happier people.
If a country is red, it means people who give
are less happy.
We were astonished to see really that the
world is amazingly green.
Almost every country we look at that there
is data for giving makes you happier.
You probably see one country in the middle.
Anybody know what country that is?
(Mumbling.)
It is in the center of Africa and it is a
republic.
Democratic Republic.
That's correct.
Those were very good hints.
So you can imagine, wow, that's a very poor
country.
No wonder it is negative.
Just below and to the right is Rwanda.
Incredibly green.
So when we do these surveys again, we see
almost everywhere -- there are little blips,
but almost everywhere in the world we look
giving is associated with being a happier
person.
Level of individual, lots of evidence for
happiness.
What about at the level of groups?
So we decided to switch and think about not
just how happy does it make me to spend on
somebody else, but what does it do to the
relationship between us when we do that?
So if I spend on myself, the money goes to
me and it is gone.
If I spend on somebody else, maybe something
changes in our relationship and that could
have other factors.
Or maybe in an organization, if we all spend
on each other, imagine what could happen to
our performance as a team as opposed to when
we just give people bonuses as usual for themselves.
We have done a bunch of studies like this.
One that we have done with pharmaceutical
sales reps in Belgium.
Some sort of experiment.
Some members of sales teams get money to spend
on themselves that week.
We give them 15 euro.
They go and spend it.
Other teams, little people get money, 15 euro,
little amounts of money but they have to spend
it on somebody else that week, on their team.
The reason there is a pinata there is not
just random.
We asked them: What to do with their money?
One person wrote in huge letters on the survey
"pinata!"
Grown man.
They were all men on the team.
One of them went and bought a pinata and one
morning, they strung it up and smashed it
and they all got the candy and things like
that.
They could have gotten a pinata any day but
they only did it when we gave them a little
cash and encouraged them to be prosocial and
be nice to each other.
It turns that the teams that e gave money
to spend on each other actually do better
than the teams that we gave money to spend
only on themselves.
And I will show you some numbers on that.
Remember, it was a 15 euro bonus.
When we gave teams 15 euro to spend on themselves,
the firm gets 4 1/2 back.
Why?
Because their behavior doesn't change at all.
So it is just throwing money away.
It doesn't change their behavior.
When we give 15 euro to spend on each other,
the firm gets 78 back, a five times investment
on that sort of thing.
The reason is because people sell more stuff.
They share more information among themselves.
There is a little more mentoring that goes
on on the teams.
It changes the dynamic, and then it changes
the performance of the team.
You are probably thinking, this is fine.
We see it all over the world, and we see it
with companies and sales people.
But what we really need to see to really be
convinced that spending on other people can
make you happy is dodge ball teams.
Is that wrong?
No, dodge ball teams.
We did the exact same thing with dodge ball
teams again.
Anyone know what dodge ball is?
It is the dumbest game invented by humans.
Let me explain it quickly.
I have a ball and I throw it at you and you
dodge the ball.
If I hit you, you're out.
That's it.
We did the exact same thing.
Some of the members of teams in a dodge ball
league, we gave them money for themselves.
Other members of teams we gave them money
to spend on teammates.
Teams that got money for themselves, they
won half their games before.
They won half their games after.
No change in their performance.
Teams we gave money to spend on each other,
they go from winning half their games to winning
80% of their games after the intervention.
The greatest dodge ball team in the history
of the world.
I don't know how you would even measure that.
Let's imagine we could.
Amazing dodge ball team.
Why?
One of the reasons is that actually if you
ever play intramural sports, it is very hard
to get people to show up.
Nobody wants to come.
It is raining out.
I don't feel like walking.
It turns out that teams they spent on each
other, you say you know what?
I don't feel like going, but Dave did that
nice thing for me, I will go this week.
Part of the reason they do better is because
they don't forfeit as much.
So across all of these things, from people
to organizations, to sports teams, we again
see this benefit of spending on other people
instead of on yourself.
So, again, if you think money can't buy happiness,
you really just aren't spending it right.
There are many, many ways to think about shifting
what you usually do and getting more happiness
out of every dollar that you spend.
And so in the end, try to think -- if you
think money can't buy happiness, just try
giving some away.
Thanks.
>>Dan Ariely: So Mike just also ran the same
experiment that was done on the sales team
on my MBA students with the same basic results.
They were in teams and they got better grades
and they enjoyed spending more time with each
other and so on.
And I do -- I do have a question for you,
which is that in those -- in all of those
experiments, people give one time and it's
very salient and I think that if we have try
to encourage people to give time after time
it might not work as well.
What about automatic deductions?
What about if something -- you have an automatic
thing that every month I'm going to give something
to charity?
Would these effects continue and how might
you actually increase them so it's not out
of sight, out of mind?
>>Michael Norton: Yes.
That's a great question.
So in ours, we're always making people really
think a lot about what they're going to do
with the money.
You know, what am I going to buy for Steve
this week with the money I gave him?
And that, in and of itself, is a pretty interesting
process and maybe Steve smiles when we're
done.
Maybe that's why we get happy.
What about kind of more passive giving where
it just comes out of your paycheck every month?
It turns out that people who do deductions
out of their paycheck are happier people and
we're doing some studies now to try to figure
out exactly how to make you get the most happiness
out of that, and one way is to remind you
every month that it's happening.
So if it's really, really passive and it just
goes, you don't get that boost every single
month.
They other way you can do it is there are
some new investment funds where you can set
aside money at the beginning of every year
to give to charity and you feel amazing when
you do that.
And then every month I give you one-twelfth
of that and you have to decide that month
where to spend it.
So it's almost like you're giving the same
money twice to charity and each time you're
giving yourself credit for doing it.
But from our perspective, that's fine because
not only are you getting happier but the money
is still going to charities the way you want
it to.
>>Dan Ariely: Very good.
And last question.
Can you describe a little bit how you're trying
to make this into also getting people to be
happier with paying taxes?
[ Laughter ]
>>Michael Norton: This is sort of the Holy
Grail of this kind of research.
So there's a funny thing about taxes.
Many people all over the world hate taxes
but Americans really hate taxes.
In fact, the word makes them feel pain, literally,
in some sense when they just hear the word
"tax," it sounds so awful.
And we said, "Well, imagine that we reframe
taxes and instead of thinking about them as
something that's being stolen from you, you
think about them as something you are giving
to others."
So one of the problems with taxes in general
is that we don't see where they're going.
They go into some fund and we think about
"I don't know what they're buying so I don't
-- I don't feel like I'm getting anything
out of it, and I don't feel like anyone else
that I care about is getting anything out
of it as well."
So we encourage people, actually, when they
pay their taxes, to try to think -- we literally
prompt them to think about who could this
benefit.
And then you think, "Oh, it's going to benefit
all kinds of people.
Kids will benefit from it.
There will be a better environment for other
people."
And it turns out that when they pay taxes
then, they do get -- they don't incredibly
happy.
We can't get them up that high.
But people do get a little bit happier with
paying their taxes when we have them think
about it as giving instead of as taking.
>>Dan Ariely: Very good.
Thank you.
>>Michael Norton: Thanks, Dan.
[ Applause ]
