Quick Hits…What I’m Reading

• Space: The Commercial Frontier – WSJ…is Captain Kirk showing us the way?

• Meditations – Marcus Aurelius (A New Translation)…still reading through this personal journal of the 2nd century Stoic philosopher and Roman emperor.

• Never Broken: Songs are only half the story – Jewel…Turns out that there is much more to the singer’s life story that I ever knew.  She is a great story teller regardless of whether the format is song or book.

Generous by Design?

I read an article several years ago in The Wall Street Journal called “The Mistakes We Make When Giving to Charity,” written by Dr. Shlomo Benartzi, professor at the UCLA Anderson School of Management, and Dr. Christopher Olivola, assistant professor of marketing at Carnegie Mellon’s Tepper School of Business.  I am linking it here, but if you are unable to read it behind their pay wall, I have a printed version I would be happy to share.  I read many articles, magazines, and books on different topics each week, but most do not catch my attention like this one did.  Perhaps it is the time of year, but I wanted to share a few thoughts with you about it, not as someone who has figured this generosity thing out, but rather as one that is still being shown that there is so much room to improve.

The Grinch vs. St. Nick

I do not think it will come as a surprise to anyone that research has proven many times over that we are much happier and more fulfilled when we give to others rather than when we get something given to us.  But we can also be a selfish lot that inherently looks out for ol’ #1.  Sometimes it seems that there is an ongoing battle between our inner Grinch and inner St. Nicholas (not the man in the red suit, rather the real-life 4^th century bishop…maybe my next writing will delve into his life).  One is content with hoarding at the expense of others, and the other looks for opportunities to help those in need.  How can we be both self-centric and sacrificially generous towards others?  Is it really a zero-sum game where someone has to come out with the short end the stick?  Perhaps not, as the good doctors point out in the article that, “We often assume giving money away is a choice between our happiness and the happiness of others.  But this research is a reminder that generosity is much better than that: We are built so that giving also feels good.  When we donate to a cause we believe in (with money or time or talents…italics are my addition), everybody wins.”

The Generosity Cornerstone

So much of excelling at money management (including giving) is about behavior management.  We must understand our wiring and biases to achieve a decision-making process that creates the best outcome.  That is why I wanted to start with the two points above as cornerstone assumptions…we are wired to do good, and in doing so, we do well for our self.  We can call this the Generosity Cornerstone.  I think most would agree on these two points.  However, the authors point to additional research that shows our wiring and biases can get in the way, even if we believe the Generosity Cornerstone.

Roadblocks to Happiness

Here are three mistakes they point out that can keep us from improving our own happiness by being generous towards others:

1. The Martyrdom Effect – When we are given the choice between different giving trade-offs, we are biased to assume that the more difficult choice (e.g., volunteering in a poor country) is better than the easier choice (e.g., giving money), even when the easier choice is shown to be far more effective in improving people’s lives.  However, I don’t view this totally as a mistake, even if the easier choice of just giving money can have a much larger, immediate impact.  Consider that generosity can change our own lives when we get fully engaged.If taking the ‘less efficient option’ by sacrificing your time and talents personally means that you are changed in such a way that effects the course of the rest of your life, then you will have an exponentially larger impact on the world than if you had just given money.
2. The Others-Nothing Neglect – This one is more difficult to get my arms around, but basically, “We are quick to consider what we stand to lose by being generous but slow to consider what others stand to lose if we choose to be selfish.”  This is a wiring in us that just needs to be recognized.  When presented with an option for generosity, consider that someone else will get nothing if you do not act.It is a way to quiet our selfish side, and engage with our generous side.
3. The Unexpected Joy of Giving – This ties back to my beginning…we tend to assume that giving is a zero-sum exchange.  If I give you something, you have more and I have less.  You are in a better position, but mine is worse.  However, again citing research, the our happiness will be at a higher level when we give our resources as compared to when we spend those resources on ourselves.  Every marketing dollar ever spent would have you believe otherwise, but they are wrong, and we all know it.

 For reasons way beyond my pay grade, there seems to be a wiring in us that can conspire against our own best interests.  This can be overridden, but it starts by recognizing that the bias is there, and then framing the decision in such a way that it is seen as a win-win.  Giving is not a choice between your best interest or mine.  That is a faulty framework and will lead you to a faulty conclusion, which is why the average American gives so little each year ($1,101 per adult per year).  With the global supply chain broken and sluggish (thank you, Covid), perhaps we can give more meaningfully to our family and friends with any excess going to feeding and housing the less fortunate.  In other words, look to increase your generosity if you want to improve your own mood and overall satisfaction.  Part of why I write these words is an effort to continue to remind and convince myself of these truths…it is not an easy task.  In this season of giving, are we going to suppress the Grinch so that the inner St. Nicholas can bring happiness to those around us?  If so, we may find this to be our happiest season yet.

Next Up: A Life Worth Living

We will continue our theme of generosity next month around the holiday season.  In the meantime, please be in touch if you’d like to discuss improving on your own tax-wise financial pursuits.