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So I want to talk today about money and happiness,

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which are two things

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that a lot of us spend a lot of our time thinking about,

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either trying to earn them or trying to increase them.

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And a lot of us resonate with this phrase.

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So we see it in religions and self-help books,

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that money can't buy happiness.

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And I want to suggest today that, in fact, that's wrong.

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(Laughter)

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I'm at a business school, so that's what we do.

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So that's wrong, and, in fact, if you think that,

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you're actually just not spending it right.

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So that instead of spending it the way you usually spend it,

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maybe if you spent it differently,

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that might work a little bit better.

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And before I tell you the ways that you can spend it that will make you happier,

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let's think about the ways we usually spend it

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that don't, in fact, make us happier.

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We had a little natural experiment.

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So CNN, a little while ago, wrote this interesting article

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on what happens to people when they win the lottery.

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It turns out people think when they win the lottery their lives are going to be amazing.

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This article's about how their lives get ruined.

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So what happens when people win the lottery

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is, number one, they spend all the money and go into debt,

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and number two, all of their friends and everyone they've ever met

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find them and bug them for money.

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And it ruins their social relationships, in fact.

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So they have more debt and worse friendships

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than they had before they won the lottery.

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What was interesting about the article

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was people started commenting on the article, readers of the thing.

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And instead of talking about

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how it had made them realize that money doesn't lead to happiness,

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everyone instantly started saying,

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"You know what I would do if I won the lottery ... ?"

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and fantasizing about what they'd do.

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And here's just two of the ones we saw that are just really interesting to think about.

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One person wrote in, "When I win, I'm going to buy my own little mountain

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and have a little house on top."

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(Laughter)

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And another person wrote, "I would fill a big bathtub with money

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and get in the tub while smoking a big fat cigar

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and sipping a glass of champagne."

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This is even worse now: "Then I'd have a picture taken

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and dozens of glossies made.

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Anyone begging for money or trying to extort from me

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would receive a copy of the picture and nothing else."

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(Laughter)

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And so many of the comments were exactly of this type,

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where people got money

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and, in fact, it made them antisocial.

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So I told you that it ruins people's lives and that their friends bug them.

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It also, money often makes us feel very selfish

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and we do things only for ourselves.

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Well maybe the reason that money doesn't make us happy

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is that we're always spending it on the wrong things,

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and in particular, that we're always spending it on ourselves.

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And we thought, I wonder what would happen

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if we made people spend more of their money on other people.

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So instead of being antisocial with your money,

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what if you were a little more prosocial with your money?

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And we thought, let's make people do it and see what happens.

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So let's have some people do what they usually do

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and spend money on themselves,

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and let's make some people give money away,

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and measure their happiness and see if, in fact, they get happier.

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So the first way that we did this.

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On one Vancouver morning, we went out on the campus

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at University of British Columbia

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and we approached people and said, "Do you want to be in an experiment?"

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They said, "Yes."

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We asked them how happy they were, and then we gave them an envelope.

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And one of the envelopes had things in it that said,

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"By 5:00 pm today, spend this money on yourself."

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So we gave some examples of what you could spend it on.

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Other people, in the morning, got a slip of paper that said,

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"By 5:00 pm today, spend this money on somebody else."

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Also inside the envelope was money.

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And we manipulated how much money we gave them.

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So some people got this slip of paper and five dollars.

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Some people got this slip of paper and 20 dollars.

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We let them go about their day. They did whatever they wanted to do.

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We found out that they did in fact spend it in the way that we asked them to.

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We called them up at night and asked them,

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"What'd you spend it on, and how happy do you feel now?"

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What did they spend it on?

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Well these are college undergrads, so a lot of what they spent it on for themselves

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were things like earrings and makeup.

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One woman said she bought a stuffed animal for her niece.

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People gave money to homeless people.

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Huge effect here of Starbucks.

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(Laughter)

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So if you give undergraduates five dollars, it looks like coffee to them

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and they run over to Starbucks and spend it as fast as they can.

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But some people bought a coffee for themselves, the way they usually would,

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but other people said that they bought a coffee for somebody else.

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So the very same purchase,

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just targeted toward yourself

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or targeted toward somebody else.

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What did we find when we called them back at the end of the day?

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People who spent money on other people got happier.

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People who spent money on themselves, nothing happened.

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It didn't make them less happy, it just didn't do much for them.

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And the other thing we saw is the amount of money doesn't matter that much.

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So people thought that 20 dollars would be way better than five dollars.

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In fact, it doesn't matter how much money you spent.

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What really matters is that you spent it on somebody else

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rather than on yourself.

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We see this again and again

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when we give people money to spend on other people instead of on themselves.

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Of course, these are undergraduates in Canada --

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not the world's most representative population.

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They're also fairly wealthy and affluent and all these other sorts of things.

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We wanted to see if this holds true everywhere in the world

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or just among wealthy countries.

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So we went, in fact, to Uganda and ran a very similar experiment.

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So imagine, instead of just people in Canada,

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we said, "Name the last time you spent money on yourself or other people.

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Describe it. How happy did it make you?"

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Or in Uganda, "Name the last time you spent money

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on yourself or other people and describe that."

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And then we asked them how happy they are again.

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And what we see is sort of amazing

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because there's human universals on what you do with your money

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and then real cultural differences on what you do as well.

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So for example,

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one guy from Uganda says this.

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He said, "I called a girl I wished to love."

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They basically went out on a date,

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and he says at the end that he didn't "achieve" her up till now.

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Here's a guy from Canada.

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Very similar thing.

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"I took my girlfriend out for dinner.

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We went to a movie, we left early,

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and then went back to her room for ... " only cake -- just a piece of cake.

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Human universal -- so you spend money on other people,

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you're being nice to them.

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Maybe you have something in mind, maybe not.

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But then we see extraordinary differences.

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So look at these two.

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This is a woman from Canada.

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We say, "Name a time you spent money on somebody else."

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She says, "I bought a present for my mom.

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I drove to the mall in my car, bought a present, gave it to my mom."

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Perfectly nice thing to do.

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It's good to get gifts for people that you know.

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Compare that to this woman from Uganda.

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"I was walking and met a long-time friend

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whose son was sick with malaria.

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They had no money, they went to a clinic and I gave her this money."

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This isn't $10,000, it's the local currency.

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So it's a very small amount of money, in fact.

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But enormously different motivations here.

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This is a real medical need,

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literally a life-saving donation.

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Above, it's just kind of, I bought a gift for my mother.

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What we see again though

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is that the specific way that you spend on other people

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isn't nearly as important

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as the fact that you spend on other people

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in order to make yourself happy,

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which is really quite important.

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So you don't have to do amazing things with your money to make yourself happy.

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You can do small, trivial things and yet still get these benefits from doing this.

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These are only two countries.

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We also wanted to go even broader and look at every country in the world if we could

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to see what the relationship is between money and happiness.

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We got data from the Gallup Organization,

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which you know from all the political polls that have been happening lately.

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They ask people, "Did you donate money to charity recently?"

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and they ask them, "How happy are you with your life in general?"

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And we can see what the relationship is between those two things.

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Are they positively correlated? Giving money makes you happy.

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Or are they negatively correlated?

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On this map, green will mean they're positively correlated

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and red means they're negatively correlated.

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And you can see, the world is crazily green.

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So in almost every country in the world

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where we have this data,

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people who give money to charity are happier people

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that people who don't give money to charity.

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I know you're all looking at that red country in the middle.

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I would be a jerk and not tell you what it is,

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but in fact, it's Central African Republic.

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You can make up stories. Maybe it's different there for some reason or another.

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Just below that to the right is Rwanda though,

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which is amazingly green.

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So almost everywhere we look

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we see that giving money away makes you happier

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than keeping it for yourself.

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What about your work life, which is where we spend all the rest of our time

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when we're not with the people we know.

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We decided to infiltrate some companies and do a very similar thing.

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So these are sales teams in Belgium.

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They work in teams; they go out and sell to doctors

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and try to get them to buy drugs.

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So we can look and see how well they sell things

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as a function of being a member of a team.

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Some teams, we give people on the team some money for themselves

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and say, "Spend it however you want on yourself,"

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just like we did with the undergrads in Canada.

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But other teams we say, "Here's 15 euro.

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Spend it on one of your teammates this week.

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Buy them something as a gift or a present and give it to them.

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And then we can see, well now we've got teams that spend on themselves

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and we've got these prosocial teams

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who we give money to make the team a little bit better.

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The reason I have a ridiculous pinata there

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is one of the teams pooled their money and bought a pinata,

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and they all got around and smashed the pinata and all the candy fell out and things like that.

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A very silly, trivial thing to do,

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but think of the difference on a team that didn't do that at all,

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that got 15 euro, put it in their pocket,

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maybe bought themselves a coffee,

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or teams that had this prosocial experience

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where they all bonded together to buy something and do a group activity.

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What we see is that, in fact, the teams that are prosocial sell more stuff

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than the teams that only got money for themselves.

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And one way to think about it

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is for every 15 euro you give people for themselves,

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they put it in their pocket, they don't do anything different than they did before.

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You don't get any money from that.

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You actually lose money because it doesn't motivate them to perform any better.

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But when you give them 15 euro to spend on their teammates,

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they do so much better on their teams

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that you actually get a huge win on investing this kind of money.

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And I realize that you're probably thinking to yourselves,

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this is all fine,

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but there's a context that's incredibly important for public policy

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and I can't imagine it would work there.

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And basically that if he doesn't show me that it works here,

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I don't believe anything he said.

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And I know what you're all thinking about are dodgeball teams.

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(Laughter)

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This was a huge criticism that we got

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to say, if you can't show it with dodgeball teams, this is all stupid.

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So we went out and found these dodgeball teams

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and infiltrated them.

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And we did the exact same thing as before.

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So some teams, we give people on the team money, they spend it on themselves.

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Other teams, we give them money

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to spend on their dodgeball teammates.

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The teams that spend money on themselves

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are just the same winning percentages as they were before.

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The teams that we give the money to spend on each other,

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they become different teams

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and, in fact, they dominate the league by the time they're done.

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Across all of these different contexts --

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your personal life, you work life,

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even silly things like intramural sports --

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we see spending on other people has a bigger return for you

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than spending on yourself.

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And so I'll just say, I think if you think money can't buy happiness

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you're not spending it right.

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The implication is not you should buy this product instead of that product

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and that's the way to make yourself happier.

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It's in fact, that you should stop thinking

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about which product to buy for yourself

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and try giving some of it to other people instead.

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And we luckily have an opportunity for you.

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DonorsChoose.org is a non-profit

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for mainly public school teachers in low-income schools.

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They post projects,

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so they say, "I want to teach Huckleberry Finn to my class and we don't have the books,"

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or "I want a microscope to teach my students science

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and we don't have a microscope."

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You and I can go on and buy it for them.

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The teacher writes you a thank you note. The kids write you a thank you note.

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Sometimes they send you pictures of them using the microscope.

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It's an extraordinary thing.

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Go to the website and start yourself on the process

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of thinking, again, less about "How can I spend money on myself?"

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and more about "If I've got five dollars or 15 dollars,

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what can I do to benefit other people?"

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Because ultimately when you do that, you'll find that you'll benefit yourself much more.

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Thank you.

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(Applause)