When budgeting for expenses, people may want to consider including a line item for giving, since a growing body of research shows that spending money on others can provide a mental boost.
Harvard Business School Assistant Professor Ashley Whillans recently partnered with Canadian researchers Lara Aknin of Simon Fraser University and Elizabeth Dunn of the University of British Columbia on a research paper that finds so-called “prosocial spending”—spending money on other people— can increase happiness.
“It is important to begin to understand how to create conditions where helping people might feel good for the actor.”
Their review, published in Current Directions in Psychological Science, examines 15 published, pre-registered experiments on prosocial spending and reveals insights about when giving is likely to increase self-reported positive mood.
“Reviewing the literature is important from an academic perspective and an applied perspective,” Whillans says. “From an academic perspective, we show that large sample sizes are needed to detect the emotional rewards of spending on others. From an applied perspective, as policymakers or managers, it is important to begin to understand how to create conditions where helping people might feel good for the actor.” Plus, setting up both corporate and private giving programs properly may lead people to donate their time and money more often, she notes.
At a time when economic uncertainty is driving both consumers and companies to tighten their belts, the team’s review adds valuable new insights into how to prioritize spending in ways that not only help people in need but improve the mood and well-being of the helpers.
Oh, goody!
In one of the experiments included in the review, participants learned that they had earned a small windfall of money that they could use to purchase a goody-bag full of candy or other treats. Participants were randomly assigned to be given the choice to keep the bag of treats for themselves or to donate it to an anonymous sick child at a local hospital.
“To maintain feelings of control over the giving decision, participants who were randomly assigned to the prosocial spending condition were given the option to opt-out of helping someone else. Instead, they could pick up the cash equivalent of the goody bag at a later date,” Whillans says.
“Given that people in this study were donating in private, these types of experiments provide a conservative test of whether giving to other people can increase positive mood.”
After keeping the goody-bag for themselves or giving it away to others, the researchers asked questions to gauge the participant’s mood. The researchers observed a small but “reliable” increase in positive mood among the people who were assigned to give away the goodies as compared to those who were assigned to keep them for themselves, regardless of whether or not the researchers included people who opted out of donating in their analyses.
“Given that people in this study were donating in private, these types of experiments provide a conservative test of whether giving to other people can increase positive mood,” Whillans says.
Based on the review, the researchers identified three circumstances that made people feel a boost of happiness:
1. People felt good during the act of giving
In many of the studies the researchers examined, participants gave money to a person or toward a cause. In one study, however, the researchers asked people to simply remember a time that they were generous to other people versus a time when they spent money on themselves. They found that people did not express as much happiness thinking back on helping people compared to when they had just completed the act of giving.
“If you’ve just finished enacting a helping behavior, that action tends to be associated with greater benefits as opposed to just reflecting on a time that you helped others,” Whillans says. “We tend to see the greatest mood benefits when people are more actively engaged.”
The takeaway for business leaders that create charitable giving programs? People might be more willing to give if they are involved in the charitable process, rather than the company donating a lump sum, and telling employees after that fact. “That’s not likely going to feel as good,” Whillans says.
2. People prefer to have a choice about helping others
People seem to express greater happiness when they have control over where their money goes—or are given the choice of whether to give at all. “In some designs where people were told to do a task and were told that their efforts were going to be donated to a specific charity, that did not feel as good as being given a choice about where or whether to contribute,” Whillans says.
That’s because people didn’t feel the same autonomy as they did when deciding to help someone of their own volition, she says. To make charitable giving more effective, a manager designing a charitable donation drive for employees, for example, could take care to ensure that employees have a choice whether to donate or not—and ideally, a choice between two or more organizations to increase their sense of agency.
“Saying our organization is going to donate X dollars for every person in it, is likely not going to feel as good as a program designed to give employees a choice between different charities,” Whillans says.
3. People want to see the results
Study participants also routinely expressed more happiness when their prosocial spending was tied to a specific outcome that showed the impact that they made, which acted as a sign of success and connection with those they helped.
Thus, a manager might also consider choosing charities that have more direct and relevant impact for employees. Rather than donating to large international organizations, people might feel better donating to a local community nonprofit or aid organization such as Cradles to Crayons that makes a measurable impact in a particular neighborhood.
Creating a cascade of giving
In all of these cases, engendering a good feeling from donating is important because when people do something they like, they are likely to do more of it.
“Research suggests this creates a positive cascade,” Whillans says. “Positive emotions can reinforce positive actions, so you are then more attuned to seek out other similar opportunities across time. If giving has made you feel good in the past, you are more likely to give again, or seek out these opportunities in the future."
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Feedback or ideas to share? Email the Working Knowledge team at hbswk@hbs.edu.
Image: Adobe/SasinParaksa