Just in Time for the Holidays, Harvard Scientists Confirm That Spending Money on Others Makes You Happy — but Not Always

Kindness is a romantic idea. Its self-effacing nature is a refreshing change of pace from the daily, dog-eat-dog struggle for survival. 

Right?

It turns out, kindness-induced cooperation is actually more important for survival than stereotypical brute force. And playing to this instinctual bias is a lifeline for charities.

Latest research confirms what years of work on the psychology of prosocial giving has been telling us: Spending money on other people makes us happier. And when something makes us happy, our brain’s dopaminergic reward centers motivate us to do it more often. This is good news for charities. And for the world.

But there’s a catch. 

This happiness rests on two things. First, we need to be able to choose where the money is going and what it is used for. Second, we need to see the impact of our generosity.

Charities should take note of this for the following three reasons, backed by science. 

Choice overload

There’s a lot of suffering in the world. Too much, in fact, for our limited brains to compute and make sense of.

When we’re presented with all the things that are going wrong, we experience choice paralysis. We have no idea where to start. Our cognitive systems become so overwhelmed, our brains shut down. The result is inaction.

The way around this is a choice sweet spot. Limit the range of choices, but give people control within that range. 

For example, one study gave people the option to choose to donate to one of two charities. This simultaneously played into participants’ human need to exert control over their surroundings, whilst avoiding engaging in something too mentally taxing.

The result? Happiness! (and donations)

A single death is a tragedy, a million deaths is a statistic

We’re emotion-driven folk. This affect heuristic means that, despite how rational we might like to think we are, our decisions are heavily informed by emotional shortcuts. Enter: the identifiable victim effect.

Research shows that we’re willing to give up personal resources to save clearer targets (vs. a large, vague group of sufferers) because it’s easier to empathize with them. And beyond this empathy, picturing exactly who our cash is helping biases us into thinking we’ve actually helped them. 

The result? We feel like we did something good for the world. Which we feel happy about. So we keep doing it.  

Endowment and Effort

A one-time donation is one thing. But it is a different ballgame to secure consistent donations — which is how charities actually achieve their objectives. 

How can an organization go about this?

Part of the kindness-happiness deal, according to the above studies, is that we must see the impact of our generosity. Framing the charitable cause as a process, rather than as a discrete item, means that donors are more likely to engage in multiple payments.

Why? Two reasons. 

First, donors need to justify their efforts. When they’ve sacrificed hard-earned money for a cause, effort justification tells us they’ll rationalize the cause into being more important than it otherwise would be. This motivates even more prosocial giving until the goal is reached. And because they’re seeing the impact of their money, they’re happy. A win-win situation.

At the same time, they’re feeling increasing ownership over the cause — thanks to the endowment effect. This is an emotional bias that makes us place more value on things we own or invest in, like causes to which we give our time and money.

Add that to the cocktail of psychological biases above, and you’ve got yourself a pretty sustainable business plan.