giving to receive

This couple lives on 6% of their income so they can give $100,000 a year to charity

Julia Wise is a social worker and her husband, Jeff Kaufman, is a software engineer. In 2013, their combined income was just under $245,000, putting them in the top 10% of US households. And yet, excluding taxes and savings, they lived on just $15,280, or 6.25% of their income.

What happened to the rest of their income, just under $100,000? They gave it to charity.

That’s 40% of their pre-tax earnings, and it’s not a one-off: They’ve donated a comparable percentage every year since 2008.

Jeff and Julia are one of the main stories in Larissa MacFarquhar’s new book Strangers Drowning, in which she presents cases of “extreme virtue.” On hearing about their actions, you might assume that they must be pretty miserable; you may even think that they sound like a cautionary example of extreme self-denial. In truth, nothing could be further from the truth. For the last few years, I’ve been lucky enough to count Jeff and Julia as my friends, and I don’t think I’ve ever met a more stable, happy and, well, perfectly normal couple. They prove that you can have a perfectly normal, enjoyable and well-rounded life while making altruism a core part of your identity.

It may seem counterintuitive in our consumerist culture, but “high” levels of giving such as theirs can and do enrich your life, making you happier than you would have been had you spent the same money on yourself. Let’s look at the evidence.

Income is overrated

It’s a truism that money can’t buy happiness. But the saying has become so cliche in recent years people have forgotten exactly what it really means in the first place. Let’s forget for now the issue of donating, and just consider the impact of having a lower income.

Psychologists have done research into the link between money and happiness. They’ve consistently found that for those of us living in affluent countries, additional income simply does not increase your well-being very much past a certain point. On average (pdf), people in the US on an income of $32,000 rate their life satisfaction as 7 out of 10; an income of $64,000 only increases the rating to 7.5. That’s a pretty small difference for a (comparably) large sum of money.

Yet we constantly overestimate the impact income will have on our happiness levels. One study (pdf) found that a representative sample of Americans “vastly underestimated the happiness of people earning lower levels of household income ($55,000 and below).” In fact, this bias isn’t limited to income: in general, we overestimate the degree to which good events improve our happiness and bad events lower our happiness.

 We constantly overestimate the impact income will have on our happiness levels. There are two reasons for this (pdf). First, when thinking about changes to our situation (such as loss of income), we put too little weight on the things that will remain constant over that time (such as the presence of friends and loved ones) which will greatly soften the blow.

Second, we too often fail to realize just how good we are at adapting to new situations, including changed levels of income and standards of living. Though lottery winners experience a surge of happiness immediately after their win, one year later their life satisfaction levels are comparable to how they were before.

Once you appreciate this, it makes sense that taking even a large pay cut would have only a small impact on your happiness in the long run. But as we’ll see, giving a proportion of your income is far, far better than missing out on the income to begin with. Not only does it not involve the loss of status that often accompanies a drop in earnings, but giving to good causes makes you feel better.

Giving makes you feel good

Helping others gives us a “warm glow.” One experiment (pdf) showed that the reward centers in the brain were activated when money was transferred from participants to a local food bank; this was true even where the transfers were mandatory. On average, “donating to charity has a similar relationship to [happiness] as a doubling of household income.”  

Perhaps more surprising is that giving can make you feel better than spending on yourself. In another experiment (pdf), participants were given an envelope containing a small sum of money and told to spend it within 24 hours. Half of them were required to spend the money on themselves (e.g. by paying a bill or buying a treat) and the other half were required to spend it on others (e.g. by buying a present or donating the money to charity). The results were clear: subjects in the second group reported greater happiness than those in the first.

A wide-ranging international study (pdf) has found a positive connection between giving to charity and subjective well-being, even controlling for household income. The astonishing conclusion was that, on average, “donating to charity has a similar relationship to [happiness] as a doubling of household income.”

Getting serious about giving

What this all suggests is that, far from being a great sacrifice, giving to benefit others might be an effective way to enhance your own quality of life.

You don’t need to give 40% like Julia and Jeff, but I encourage everyone to donate a substantial proportion of their income. People who join Giving What We Can, a community I helped to found, pledge to give at least 10% to effective charities; today Giving What We Can has over 1,200 members and growing. And if you’re still worried about the short-term pain of reducing your spending, try this: make a commitment that every time your income goes up in the future, you will donate 50% of your raise. That way you’ll never get used to the increased income, and never really feel its loss.

By giving to the world’s most effective charities, your donated income can make an incredible difference to the lives of the poor and disadvantaged. If it’s possible to do that while at the same time making yourself happier, then surely we should?

We welcome your comments at ideas@qz.com.

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