The Science Behind Happiness and Gift Giving

Do you want to ♪♪ ‘Have Yourself a Merry Little Christmas’ ♪♪ ?  

Give gifts.  

It may come as no surprise to you that giving gifts provides us greater levels of happiness than buying things for ourselves.  But why? When we give gifts to others, we have to go shopping, wait in line, wrap it, and then sit there awkwardly taking in every cue to see if they truly like it or not.  Whereas when we get things for ourselves, doesn’t it mean we get exactly what we want? Let’s dig into this a little further.    

This summer I watched the best personal finance series (in my opinion) called ‘Mind over Money.’  It only has 3 reviews (one being from me), but it is fabulous!  Each episode has all of these fun and innovative ways to measure how humans actually handle money.  Because truth be told, we are quite irrational with our decisions. One of the episodes had folks take $20 to spend at the mall however their little hearts desired.  Afterwards, they asked them to rank their level of happiness. Those that spent the money on behalf of someone else ranked a higher level of satisfaction. A simple experiment with powerful results. 



There is plenty of research to back up these findings.  A social psychologist, Lizz Dunn, found that regardless of how much money you spend and what your own personal income level is, individuals reported greater happiness when they spent money on others rather than themselves.  

Researchers call this the “warm glow” when someone opens up a gift you gave them.  The “warm glow” comes from brain scans taken of people doing something generous, and their brain literally lights up.(1)

But just like most things that bring us happiness, can we get bored or even unsatisfied with gift giving?  Research on sustaining happiness tells us to take a break on what we are currently consuming and try something new.  However, Ed O’Brien from the University of Chicago Booth School of Business and Samantha Kassirer of Northwestern University’s Kellogg School of Management found that “repeated giving, even in identical ways to identical others, may continue to feel relatively fresh and relatively pleasurable the more that we do it.”  AKA – we don’t get sick of gift giving!  Our happiness is still alive and kickin’!

There are societal benefits that come from the act of giving.  It enhances our “prosocial reputation,” which is simply acting with the intent to benefit others.  This creates that sense of community and belonging in our social circles. As Winston Churchill said, “We make a living by what we get.  We make a life by what we give.”

Ok, so clearly we know that giving to others provides us a greater sense of satisfaction and happiness.  Does that mean that the more money you spend on gifting the greater level of happiness you’ll feel?  

Absolutely not.

“On the recipient side, all they care about is that somebody put any thought into the decision,” says Jeff Galak, who studies the psychology of gift giving. In other words, the receiver will feel special no matter how big or small the gift is as long as it shows even a small amount of consideration.  

For example, right after I graduated college, my family decided to forgo gifts for each other and go to the movies instead.  I broke the rules and got my mom a gift. She was upset at first when I showed up with a present for her. However, when she opened it, she was smiling and laughing.  What was it? Laundry soap. I had just spent the last 4 years bringing home my laundry on a monthly basis until finally I could afford a place with an in-home laundry unit.  It was my simple way of saying, I made it, and thanks for all of your help. She loved it. And it cost me about $10.  

As I mentioned in my last blog post, don’t ever underestimate the value of gifting your time.  That may mean time at a local charity event, time with your grandparents, or time with your children.  Whether your gift is time or money, the receiver is very likely to feel loved and appreciated that you thought of them, which in return provides you the best gift of them all –  happiness. 

Written by: Natalie Slagle, CFP® with Fyooz Financial Planning

 (1) Scholastic Scope. Dec2018/Jan2019, Vol. 67 Issue 4, p15-15. 1p.

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