Can Giving Make You Rich?

This past year, 2015, is the first one in which Americans will have spent more money dining out than on groceries, notes Chelsea German, in a commentary for the Foundation for Economic Education.

Additionally, cell phone subscription in the U.S. is almost 100 % of the adult population; almost everyone, rich or poor, has a state-of-the-art communication connection. Other surveys cite the near-total prevalence of modern conveniences – such as color TVs, air conditioning, and automobiles – even among those considered to be in poverty.

German concludes:

“In many ways Americans have more today than ever before; more leisure time away from work, more disposable income left after basic expenses, more choice in what they buy, and more advanced technologies at their fingertips.

Perhaps we have become jaded. As comedian Louis C.K. often repeats in his monologues, “Everything’s amazing and nobody’s happy!”

These comments are not meant to minimize the challenges in contemporary life. But there are some indications that we could better handle our discontent, or even reduce it, and improve our material circumstances if we were more appreciative of the good things we have.

In his 2007 book, Thanks! How the New Science of Gratitude Can Make You Happier, Professor Robert Emmons from the University of California Davis summarized multiple studies supporting a connection between gratitude and well-being. An example:

Participants were divided into three groups and asked to make daily journal entries. Group 1 recorded five things for which they were grateful. Group 2 described five daily hassles. Group 3, the control, simply listed five events that had affected them in some way. Those in the gratitude group felt better about their lives overall, were more optimistic about the future, and reported fewer health problems than the other participants.

Skeptics and cynics might process these conclusions about gratitude as little more than a pseudo-scientific infomercial for positive thinking. They could point to other behavioral research which indicates that everyone has a genetically determined “set point” for happiness, which individuals return to shortly after either unusually good or unusually bad events happen to them. Some people (like skeptics and cynics) are just born unhappy, and a “gratitude program” won’t change them.

But Dr. Bruce Campbell, a specialist in self-help responses to chronic illness, asserts that deliberate attempts to reinforce the positives in one’s life, such as keeping a gratitude journal, “suggests that people can move their set point upward to some degree, enough to have a measurable effect on both their outlook and their health.”

If a regular routine of gratitude can have a noticeable positive impact on your health and outlook on life, behavioral economist Arthur C. Brooks says there is hard evidence that giving makes you rich. Brooks, who has authored several books on the individual and social benefits of charitable giving, says he has “crunchy statistics from real data, not the mushy self-help stuff – that supports the contention that giving stimulates prosperity, both for individuals and nations.”

In a September 2012 article (published on bizjournals.com) that draws from his previous work, Brooks uses terms like “instrumental variables” and “vector autoregression” to quantify the extent that giving pushes up income. Using data from the Social Capital Community Benchmark Survey, which covers 30,000 respondents in more than 40 communities, Brooks says $100 of additional giving results in a $375 increase in earnings. And Brooks insists his data shows that “more giving doesn’t just correlate with higher income; it causes higher income.”

How does this happen? In another essay, titled “Why Giving Matters,” Brooks offers this simple answer:

If you want to be a productive person, work on your happiness. Happy people show up for work more, work longer hours, work more joyfully, and are happier with every aspect of their productive lives. Happiness is the secret to success. Charity brings happiness and happiness brings success.

Brooks’ conclusions on contentment and giving are intriguing. Americans regularly cite personal finances as one of their major stresses. The financial media magnifies this stress by finding that most households have too much debt, are ill-prepared for retirement, and generally under-perform financially. These angst-laden comments are perhaps intended to create a sense of urgency (you need to save for retirement!). But Brooks suggests our financial efforts might be more productive if we instead used giving as a catalyst for getting things done and getting ahead.

       The commercialization of gift-giving holidays, like Chanukah, has turned it into a bacchanal of food; grateful reflection and joyful giving don’t get much attention. But when President Lincoln established a national Thanksgiving Day in 1863, the nation was mired in a bitter civil war, with the outcome far from certain. Lincoln wasn’t a behavioral economist, but he apparently understood the value of giving thanks, even when things seemed quite miserable.

A lot of financial advice turns on numbers, products, and strategies. But now might be a good time to inject a little contentment in your financial life, and see if it doesn’t make the results better. Count your blessings, and however you can, give some of those blessings away.

 

Josh Faizzadeh provides practical advice and guidance for success to individuals, families and small businesses. Josh dedicated his professional life to the financial well-being of his clients: josh_faizzadeh@strategiesforwealth.com


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