Happy Friday – Happy Money: Invest In Others

This is part 5 in our series on the recently published book, Happy Money: The Science of Smarter Spending, by behavioral scientists Elizabeth Dunn and Michael Norton. Their tagline is:

“If you think money can’t buy happiness, you’re not spending it right.”

According to their research, there are five basic ways in which money can be spent that increase happiness for the average person.

  1. Buy Experiences
  2. Make It A Treat
  3. Buy Time
  4. Pay Now, Consume Later
  5. Invest In Others

And we’re hitting these main points one-by-one. Feel free to start at the beginning (links above) or hop right into this week’s.

Part 5 – Invest In Others

This is Norton and Dunn’s “feel good” stance that they’ve been publicizing widely to sell the book.  Hell, Michael Norton did a whole TEDx talk on it that describes most of the gains that we get from spending on others.  The talk is only about 10 minutes long, but well worth watching if you’ve got the time.

But the main takeaway that I took from this chapter seems to be missing from Norton’s talk are the three criteria that make an investment in “others” truly worthwhile.

Make It A Choice

Coercion does not for happy donors make, no matter how good the cause.  Mandatory donations don’t make people feel nearly as good as those that are made as active choices.  (I wish the authors would have addressed mandatory tithing guidelines that many religions adhere to and how giving in that regard would have impacted happiness.)

Make A Connection

Two groups of students were randomly assigned to either give someone else a $10 Starbucks gift card or take someone out for a treat to spend that same $10 gift card with them.  At the end of the day, the happier group – hands down – was the group that had spent time (as well as a $10 gift card) with someone else.  The simple act of making a connection has a significant impact on how satisfied we are with our giving, which is why people report satisfaction with programs like “Adopt-A-Child” and DonorsChoose.org that enable givers to form more of a connection with the recipients of their generosity.

Make An Impact

We want to know that our donations aren’t disappearing into some void – a generic general revenue fund.  And that’s why charities like Spread the Net specify in their materials that each $10 donation allows them to send one malaria net to Africa.  “1 Net.  10 Bucks.  Saves Lives.”  The impact of that Hamilton in your hand is pretty clear.


Final Result – Combining All 5 Ways For Maximal Happiness?

Buy an experience that’s an unusual treat, that’s able to eliminate an unpleasant time from your life.  Pay for it now, but don’t use it until later.  Oh yeah, and go ahead and buy two so you can share it with someone else.

Sounds like something you can easily accomplish every day, right?


Mr PoP

I like this one, and it explains some of the rituals I see at work. In sales, we love to socialize, and there are complex webs of relationships all over the office. One of the great pleasures that the more senior members have is taking a new sales rep under their wing, spending time with them, splitting a few deals when they are starting out, taking them to lunch and generally investing in them.

If you were ever in a position of weakness, and somebody gave you time or a free lunch, it feels even better to pass the favor on to someobdy after you have “made” it in your current role, and I find myself doing this more and more as the time passes. Investing in others is something you can enjoy even more if somebody invested in you!

Mrs PoP

I think the most interesting part of these findings is that the amount of money given isn’t what matters in terms of the statistical correlation to happiness.  It’s more the act of spending money on others and “making a connection”.  This actually seems to coincide with how we view charitable giving currently.

Most of our giving is in small amounts, usually directly to someone or some group with whom we have an immediate connection and can see an impact.  There’s something incredibly thrilling to helping a young child learn how to sell something – a skill I really believe will help them later on in life.  Or slipping an extra $20 in the donation bin at a nature preserve.  Instances like these are small items on our income statement, and they don’t even show up as charity.  But they connect us to our community and are part of how we invest in others and invest in our relationships.

As a side note, I think it’s very interesting that N&D’s research seems to imply that tithing a larger amount of our income wouldn’t necessarily lead to greater happiness, especially not if that giving did not feel as though it were a choice, as with mandatory tithing requirements.


How are you investing in others?  Do you think it has made you happier?

28 comments to Happy Friday – Happy Money: Invest In Others

  • Good stuff, thanks for the great book review!

    Regarding the tithing issue, I think they were probably wise not to delve too much into that. In my experience churches can vary widely on how they handle this, with some viewing tithing almost as a membership requirement and others (like mine) leaving the issue between you and God. The Biblical view (in my opinion) is that tithing is NOT to be done under compulsion, but only as a “thank you” gift, recognizing that everything we have has been given to us by God anyway. Even the word “tithe” (while it technically means “tenth”) is only a guideline, not a requirement.

    BTW, I’m definitely no authority on tithing, this is just my opinion and experience. Thanks!
    FI Pilgrim recently posted..Curb Impulse Buying By Giving Yourself A ChallengeMy Profile

  • So often the giving of money can be such an detached, emotionless action, with kickers like deductibility and mandates (like tithing 10%), that the true value is lost. I have found it much more rewarding to be more involved that just stroking a check.

    As for giving 2% versus 10%, it is the same as eating donuts. The first one makes you happy, the second adds a little bit of happiness, and after that you aren’t adding value. Giving is subject to the same marginal increases in utility (happiness) that eating donuts experiences. Simply by increasing the size of your check doesn’t provide a proportionate amount of happiness. With that, I think the study is right.

    Personally, I am favor of giving time in conjunction with smaller amounts of money, as time is far more valuable.
    writing2reality recently posted..Lending Club – July 2013 UpdateMy Profile

  • I know investing in others certainly makes me happy when I have the ability to do so. I love giving to a few local animal rescues – even if it’s just $10, I know I’m helping people who desperately need it to continue doing the great work they do. And all it takes is skipping one coffee date for me and my husband to fit it into the budget.
    Kali @ CommonSenseMillennial recently posted..Why Hipsters Should Be Our New Financial Role ModelsMy Profile

  • Don’t get me started on tithing. The other doctor I work with is a member of a church that requires it. Literally, they have a person who sits down with you and your tax returns/income statement and they set up the amount they expect you to give. He would never say it, but I can see how that affects his bottom line and how he feels that he has to make a certain income for the church. That to me is more like a business, and what happened to the gift coming from the heart? Oh well, whatever floats your boat.

    I would totally agree with Mr. Pop about sharing your experience with someone just starting out. I took one of my employees out to lunch this week. She was hoping for some guidance about starting out with investments. She and her husband had met with a financial planner that did not provide great advice. It was certainly a high point of my week. Exercising the inner geek for a good reason certainly brings happiness.
    Kim@Eyesonthedollar recently posted..How to Handle Christmas Gifts When You’re in DebtMy Profile

    • Completely agree that helping others with their investments is a blast! I work in an office with about 175 people in their early-late 20s; I would love to talk to them about investments. The problem is that if I suggested they check out any good blogs they could see my avatar, or even this blog, and my anonymity would be gone…
      Mr PoP recently posted..Happy Friday – Happy Money: Invest In OthersMy Profile

  • It’s interesting how all three of those points hinge on making an authentic connection with someone else. We want to voluntarily make the connection, we want a social aspect to the giving, and we’d like to know that the effort really makes some impact in another person’s life.
    Done by Forty recently posted..Leaving on a Jet Plane…My Profile

  • Making connections make everything more rewarding, especially giving.
    Stefanie @ The Broke and Beautiful Life recently posted..The New Yorker’s Guide to Holiday ShoppingMy Profile

  • I haven’t invested a ton of money in other people at this point, but Mr. Pop’s point really comes down to investing time and that’s something I’ve definitely found to be incredibly rewarding. There are so many time when someone has gone out of their way to help me and it’s made a big difference. If I can pay that forward and do the same for someone else, it’s a great feeling.
    Matt Becker recently posted..Keeping a Budget vs. Tracking Your SpendingMy Profile

  • Debbie M

    This one really shows how our brains don’t make any sense–it doesn’t matter how much money or how important the help is.

    Most of my monetary contributions are exactly the kind that don’t lead to increased happiness–they go into the black hole of charities. But I’ve picked out charities that deal with what I consider to be the worst problems, and the problems are horribly depressing, and I really don’t want to hear about them, let alone interact with them. I want to run away! (At least, as a nonreligious person, I don’t have to deal with tithing. I _voluntarily_ give 10% for causes I pick out myself.)

    I also sign a lot of petitions, which require me to read about horrible and disturbing things. This also does not improve my happiness.

    But the point of those actions is to help others be happy and so I do it and I don’t think it’s fair to wimp out on that just because it doesn’t really increase my happiness. I do get some satisfaction for not being completely selfish, but that’s not really the point. I also get the ability to spend the rest of my money guilt-free, which also increases my happiness slightly.

    I do also invest in others in happiness-increasing ways. One idea I loved adopting was subsidizing my poorer family members when a once-in-a-lifetime(ish) family opportunity comes up. Sadly, I first thought about it after I missed my chance to pay for my sister to join the rest of us at Disney World. But I did think of this plan in time to help my brother join us in visiting my sister when she lived in Belgium.

    Also, if they need something like first-and-last-month’s rent to move closer to work so they can get rid of their car and thus live more cheaply, I’ll give the money. (If they might get foreclosed on because they can’t make their payments because their jobs suck, no, that’s just putting off the inevitable.)

    I think mostly I just pass my understanding of things along to other people. Like when I had to enforce nasty bureaucratic rules, I would soften the blow by explaining things like “someone was caught coming in here trying to change someone else’s name to their own so it would look like they had earned that other person’s degree.” And of course new people at work–I don’t just say, “do this, then do this,” but try to also explain what’s going on so that they can remember better and be able to handle slightly different situations. That doesn’t involve money, though.

    Even better, it’s fun to enthusiastically join my friends when they have good ideas for activities and help build on those. One of my friends once told me that if I hadn’t gotten so into it, her plan to backpack the Grand Canyon probably wouldn’t have happened. Usually it’s just parties, though, and I try to do interesting things with their theme. (This often doesn’t involve money or much money, but I’m pretty sure that doesn’t matter for happiness.) (I used to worry that I was a social parasite, but now I realize that it’s a lot more fun to have great ideas when other people join in and build them up with you.)

    I think the important point is to make sure that you are interacting with others and building a good social life. I don’t think it’s a thing you need to spend money one, but I definitely agree that spending money on silly things like eating out is much more worth it when you’re with friends.

    • I think this chapter got a little sticky because it tried to combine charity and investing in personal relationships under one umbrella, when like you said they can be very different and have very different underlying motivations.

  • I refuse to give money at work. Is that bad? I dont think it is. They do a giving fund for a very, very large charity in which I have zero connections to. I also researched their administration cost and it is insane to me. I’d rather give privately to smaller causes as they strike me. Like, we do the same thing when we visit sites or parks that interest us. We’ll drop extra money for that investment so others can experience what we did.
    Michelle @fitisthenewpoor recently posted..Friday Blog Roundup #3My Profile

  • This reminds me of the emotional difference between merely writing a check to donate to charity and being hands on about volunteering your time. I get far more out of going on Habitat for Humanity trips than I do just writing a check to help fund one.

    Great post and sounds like an interesting read.
    Broke Millennial recently posted..Frugal Find Friday: PodcastsMy Profile

  • I too love the idea of helping others, regardless of the amount that’s actually spent. Great series–I need to catch up one pots in the middle :)
    Jen @ The Happy Homeowner recently posted..How Much Exercise is Too Much Exercise?My Profile

  • I recently gave aid to the typhoon victims in the Philippines, and even though I did it because I truly feel they really need it, I don’t think it makes me as happy as when I directly give money to a teacher friend who is in a disadvantaged school district. I think a part of me is a little cynical that only a small portion of the donations will go to PI victims, whereas I know 100% will go towards the printer or computer that my friend needs. However, I do think something is better than nothing, so that at least gives me peace of mind to donate. Really interesting chapter, I like this one the most!
    anna recently posted..You Know What’s Awesome…My Profile

  • I do like working with smaller organizations because it does feel like you know where your money is going and you feel the impact more directly. But I feel good doing or giving what I can, when I can. It doesn’t matter how big or small.
    Budget and the Beach recently posted..Frugal Fitness FridaysMy Profile

  • Very interesting, I like the thought of investing in others to be happy, I would be interested to hear a bit more about whether tithing (mandatory) makes you happy
    Stu @ Poor Student recently posted..How to Decorate a Dorm on a BudgetMy Profile

  • Liz

    Even if I am not investing directly to a charitable organization but rather treating a friend to a coffee I think I do get a “feel good” rush. I really enjoyed the TED talk too! Nice work

  • I remember seeing this movie sometime back about a guy who tries a hermitic life to find happiness, somehow things don’t go as planned and he ends up dying alone in the mountains. He writes his dying words though on a piece of paper, “Happiness is only real when shared”

    When you invest in others their happiness is also your happiness, you feel pleased to see them succeed out of lending them a hand. teach a man to fish and he’ll forever be grateful to you and thats certainly recipe for happiness.
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