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Julian Hazell

"Even in a purely self-interested sense, giving can be one of the best uses of our money. Effective philanthropy offers serious bang for our personally-satisfying buck. I do not make this claim spuriously, as there is evidence to support this idea."

How to buy happiness

Take a second to think of the things you've spent your money on this past year, ranked from most to least important. Let's refer to this as a 'priority list'. What are some things that come to mind?

You probably started with the obvious things, like food, water, shelter, warm clothes, and a bed to sleep in. That's a good start, but keep going. Now you might be thinking of the money you spent to buy gifts for your family members on their birthdays, or perhaps the money you invested in your education. Of course, you wouldn't last long without food and water, so those were likely meaningful purchases. Similarly, you love and care about your family, so buying them nice things is likely important to you, as well. Keep asking yourself how important each purchase was to you as you make your way down the list.

As you approach the end of the list, however, you might notice something intuitive happens: because each subsequent item is less important to you, you will eventually reach a point where you probably wouldn't be that much worse off if you hadn't acquired the remaining items on the list. For example, those boredom-fueled quarantine purchases you made here and there this past April may not mean much to you now. It's okay though, I'm also guilty of making mindless quarantine purchases.

Neoclassical microeconomic theory agrees with your intuition. Consumer choice theory claims, among many other things, that we make decisions that aim to maximize our total satisfaction (or 'utility' in econ-speak) by spending each additional dollar on things that bring us the greatest satisfaction, and that buying the same thing repeatedly gives us lower satisfaction with each subsequent purchase. These two ideas make practical sense: you probably spend most of your money on things that are important to you. But while the first mattress you buy gives you a comfortable place to spend a third of your life, the seventh mattress begins to annoy your roommates as it clutters up the hallways.

The idea of becoming increasingly less satisfied with each additional mattress can be extended to the list as a whole. As you go down the list, the amount of utility you get for each purchase (or the 'marginal utility' of each additional dollar spent) likely goes down as well, as each subsequent item is increasingly less important to you --- if this wasn't true, you would've purchased the item near the top of the list!

over $58,000 USD per year puts one in the top 1%

 globally), the ends of our lists make increasingly little sense. This is even more apparent when we consider the fact that nearly 

700 million people live on less than $700 USD a year

, an amount you may have spent on at least one thing that wasn't very meaningful in the grand scheme of things.

If a Rolex doesn't make sense, what does? Consider giving to 

 instead. These charities are often significantly better than ones that are merely good or adequate --- sometimes as much as 100 or even 1,000 times more effective. For most of us, the artisanal craftsmanship of a $10,000 watch couldn't bring greater utility than the personal satisfaction gained from 

providing 3 years of protection from malaria to 10,000 people

 --- keep in mind that number is half the seating capacity of Madison Square Garden --- via donating to the 

Even in a purely self-interested sense, giving can be one of the best uses of our money. Effective philanthropy offers serious bang for our buck. I do not make this claim spuriously, as there is evidence to support this idea.

According to the theory of pure altruism, donors do not care where a charity receives a given amount of money from personally, so long as the charity receives the amount of funding the donor wants it to receive. So, if the government taxes someone and hands those funds over to charity, the individual will reduce what they usually would have donated by an equal amount, resulting in a gain of zero for the charity. The implication from this is that there is no personal utility to be gained from altruistic acts --- all we care about is the outcome that the charity creates, regardless of who funds it.

The theory of perfect altruism does not always hold in practice, however. 

 by James Andreoni, an economist who researches altruism, found that the "crowding-out" effect was not observed to be as substantial as the theory claims. This suggests that individuals do indeed derive some personal utility from the act of donating, sometimes referred to as a "warm glow". Interestingly, 

 show that donating causes the brain's reward centres to activate, according to a study from the University of Oregon.

The important conclusion from this is that there is a self-interested component of charity, one that I argue we should aim to pursue with a non-trivial portion of our spending money.

The warm glow feeling is fundamentally different from the utility we get from spending our money on consumable goods or experiences. You can be confident that each additional dollar you donate is being used to change someone's life for the better, especially if you donate to evidence-based charities with ample room for funding. As well, the stark wealth differences between developing and developed countries mean your money can likely bring 

 than an equal amount of money would have brought you.

Yes, money can buy happiness, and it can buy far more if we spend some of it on others instead of ourselves. To explain, I'll introduce the concept of the hedonic treadmill, which describes how we return to relatively stable levels of happiness in light of major positive or negative events. Money clearly plays an important role in our wellbeing to a degree --- it's hard to be happy without a bed to sleep in or food to eat. Yet as our wealth rises, so do our expectations and desires, resulting in a hamster wheel-like situation in which we pursue a higher social status or endless material goods in perpetuity. Altruism can help us step off this wheel to the benefit of ourselves and others.

A question still lingers, however: At what point should we step off the wheel? To study the relationship between wealth and happiness, Daniel Kahneman and Angus Deaton, both Nobel laureate economists from Princeton University, 

 the effects of income on emotional well-being peak at an income level of roughly $75,000 USD. The pair ultimately conclude that "high income buys life satisfaction but not happiness." to which I would like to add some additional nuance. Money alone doesn't make us happy, especially after we attain a comfortable level of income. But we can generate that coveted warm feeling of purpose by donating to highly effective charities, and there isn't a limit on how much warmth we can feel.

Nor should we forget the real purpose of donating: helping others. Effective donations can lift others out of poverty and allow them to move closer to the basic standard of living that we in high-income countries take for granted. Donations can generate more total happiness in the world than most of the things we in high-income countries buy ourselves.

"I guess basically one wants to feel that one's life has amounted to more than just consuming products and generating garbage. I think that one likes to look back and say that one's done the best one can to make this a better place for others. You can look at it from this point of view: 

what greater motivation can there be than doing whatever one possibly can to reduce pain and suffering?

At risk of allowing the hamster wheel metaphor to overstay its welcome, I will conclude by introducing a more appealing alternative: a wheel that generates happiness via altruism. 

 by researchers from the University of British Columbia and Harvard University found that the well-established correlation between happiness and giving may in fact be causal. In other words, it appears that giving causes us to feel happy, not just that happy people tend to donate more. The researchers wrote that "Happier people give more and giving makes people happier, such that happiness and giving may operate in a positive feedback loop (with happier people giving more, getting happier, and giving even more)."

My purpose in writing this was not to make moral prescriptions to you if you don’t donate a significant portion of your income to effective charities. I recognize that this is a deeply personal decision that requires moral considerations that only you can weigh. But I do hope you will ask whether there is a chance that the feeling you would get from profoundly changing the lives of strangers in need would dwarf the pleasure you would get from buying more things for yourself that aren't guaranteed to make you happy.

A few months ago, I asked myself this question. I chose to take the 

, and this choice has made me feel happier and more fulfilled than ever before in my life. I believe that the vast majority of people --- especially you who made it this far into the article --- are generous, altruistic, and eager to sacrifice for others. I encourage you to 

 to see how good it can make you feel. In the words of 

"I recommend that instead of worrying about how much you would have to do in order to live a fully ethical life, you do something that is significantly more than you have been doing so far. Then see how that feels. You may find it more rewarding than you imagined possible."

If you liked this article, you might also want to check out:

Can money buy happiness? A review of the new data

Why take a giving pledge when you could just donate?

Related videos, books, podcasts and articles

new paper by Matthew A. Killingsworth was published in PNAS

 which expands on this research on income and happiness.

excellent Twitter thread from Michael Plant

In a nutshell, this study takes advantage of some interesting methodological tools to improve upon Kahneman & Deaton's study from 2010. The author used a smartphone app to periodically ask a large sample of people how they felt throughout the day with a continuous scale (as opposed to a binary yes/no), whereas the previous study asked people to recall how they felt in the past (do keep in mind that our memory can be finicky).

While the headline claims that happiness and life satisfaction increase past $75,000 (and indeed this is shown in the data), there are a few important things to note.

First, the increases in happiness from increased income are quite negligible: doubling one's income is associated with only a 0.1 standard deviation increase in happiness (read: a very small increase).

Second, money has a much larger effect on one's happiness only if one thinks that money is important. For those that don't, the same effect was not seen. Lastly, and perhaps most importantly, earning additional money was found to be less important the richer an individual was (so the increase in happiness from increasing one's earnings from $35,000 to $70,000 is roughly the same as going from $250,000 to $500,000). The author notes that "When interpreting these results, it bears repeating that well-being rose approximately linearly with log(income), not raw income. This means that two households earning $20,000 and $60,000, respectively, would be expected to exhibit the same difference in well-being as two households earning $60,000 and $180,000, respectively."

Overall, this study advances the state of the happiness-income literature, but doesn't necessarily arrive at a drastically different conclusion than its predecessor(s). Those of us who live in high-income countries can still create a whole lot more happiness with our income for others in low-income countries than we can for ourselves (hence why finding effective opportunities to do so is so important).

Luke Freeman

I'm motivated to give because there really are some cost-effective ways to improve the lives of those people and animals, now and into the future.
...
This ability to improve lives makes giving feel to me both like a responsibility (with great power comes great responsibility) and like an exciting opportunity (which helps me perk myself up).
...
I took The Pledge because I want to increase the chance that I actually follow-through on my beliefs. Making a public pledge seems like a good way to do that. I hope it might cause some other people to also consider giving effectively.

Member Profile: Michael Aird

Tell us about your effective giving journey.

When I was a teenager, I started doing late-night Wikipedia philosophy article binges. This led to me feeling struck both by how privileged I am, and also by how much more joy and less suffering the world could have. I wanted to do something about this.

During those years, I learned about the philosophy of 

. I started to think that, even as just an ordinary person, I could have a big impact if I donated a significant amount to those charities.

At that point, my plan was to first get a job and a house and then donate everything I earned above around 20,000AUD to GiveWell-recommended charities.

In 2018, I got my first full-time job. I chose that job because I thought it'd be a good way to 

. Halfway through the year, I started wondering whether I was really having much of an impact. So I started looking more closely into 

, basically just to get warm fuzzies from thinking about all the impact I'd later have via donating (even if my job itself wasn't doing much). I also found myself on the 

 website, learning more about how I could make the world better through my career itself.

 movement, which I was so excited to discover. It turned out there was this whole community of fantastic people thinking hard about how to do the most good, and then working hard to 

This scenic route led me back to Giving What We Can, and I decided to finally actually take 

, after years of just planning to take it later.

During this process, I learned a lot more about some important ways to make a difference that I'd never properly thought about before. One of these ways was to help ensure the long-term survival and flourishing of humanity -- this the cause I've now switched my career and donations to focus on.

There are ways in which my life is far easier than the lives of many others (including the lives of nonhuman animals). This imbalance is through no fault of those others, and no particular good deeds of mine. And there may even be future generations who never get to exist due to our actions this century, which would of course also be no fault of theirs.

I'm motivated to give because there really are some cost-effective ways to improve the lives of those people and animals, now and into the future. It's not "$5 a day will totally fix the world's problems", but rather, "a bunch of people who care a decent amount can genuinely change things".

This ability to improve lives makes giving feel to me both like a responsibility (

"with great power comes great responsibility"

) and like an exciting opportunity (which helps me perk myself up).

Also, I'm quite a happy guy in general, but sometimes I get a feeling of aimlessness or wonder what I'm doing with my life. That's become far less common since I learned about effective altruism, took the Giving What We Can Pledge, and better aimed my career at making a difference.

Why did you take the Giving What We Can Pledge?

 because I want to increase the chance that I actually follow-through on my beliefs. Making a public pledge seems like a good way to do that. I hope it might cause some other people to also consider giving effectively.

Alliance to Feed the Earth in Disasters (ALLFED)

To be honest, not really. I think this partly reflects how privileged I've been. But I think it's also because I'd been planning to give a large share of my income since before I actually had an income, and I took the pledge within a year of starting my first full-time job. So I never really became accustomed to the idea of earning a lot of money 

 using a substantial portion of it to benefit others. And it therefore doesn't feel like giving is "costing" me some of what I'd come to expect.

Do you try to effect change in any other way?

After learning about the effective altruism movement, I decided to switch my career path. I now do research aimed at increasing the chance of a flourishing long-term future, including by reducing risks of extreme catastrophes. I also do some volunteering (e.g. helping run events for my local effective altruism group) and some common-sense do-goody things (e.g. donating blood).

What effective giving tips would you like to share?

I think it probably makes sense for many people to save or invest a decent amount of money that can be given later (when you've earned interest or learned more about where to donate), or that can provide you with the security needed to make "riskier" career decisions in order to have more impact. So if someone ultimately wants to give 10%, it could still make sense to take the 

 first. If someone ultimately wants to give more than 10%, it could make sense to stick to 10% first, and then aim to give a lot of savings later (that's the approach I'm currently taking).

By the way, here are two sources that influenced my thinking on that:

Why everyone should save enough to live for 6-24 months

For one thing, it'd be wonderful if more people cared more about reducing suffering and increasing flourishing for all beings - including people far away, people in the future, and animals - and about using clever, cost-effective approaches for doing that. This might look like far more people taking the Giving What We Can pledge, or adopting some of the principles of effective altruism. But if they get there some other way, that's great, too!

Have you found anything helpful in talking to people about effective giving?

I generally try to share my story, my reasons for giving, and my reasons for trying to be effective in my giving. I think that might work better than directly trying to convince people of what they should do.

" series which profiles a selection of the Giving What We Can community. The Giving What We Can is a community of people from all walks of life, with different perspectives and motivations for giving – all united by their desire to make a significant commitment to use their income to effectively helping others. Read more 

 to help inspire others to give more, and more effectively.

For more information about Giving What We Can we recommend you check out our 

I'm motivated to give because there really are some cost-effective ways to improve the lives of those people and animals, now and into the future. ... This ability to improve lives makes giving feel to me both like a responsibility (with great power comes great responsibility) and like an exciting opportunity (which helps me perk myself up). ... I took The Pledge because I want to increase the chance that I actually follow-through on my beliefs. Making a public pledge seems like a good way to do that. I hope it might cause some other people to also consider giving effectively.

October 2020 Newsletter

This edition of our newsletter includes information about our November meetups; updates from Giving What We Can; relevant updates for effective giving; a selection of interesting articles; upcoming events you can join; and some ways you can help!

This is the online edition of our October 2020 email newsletter (

Next weekend (November 7-8) we invite you to meet up with people in the Giving What We Can community from around the world, hear what's going on, and discuss a range of topics.


Special Guest: Catherine Low, Centre for Effective Altruism


Special Guest: Arden Koehler, 80,000 Hours

Want to advocate for effective giving but don’t know how? Sign up and we’ll email you with an action you can take each day to make a difference this giving season!

We have soft-launched our Company Pledge with four companies including Australian trade services provider 

, and Australian technology research & venture builder 

. These companies will donate at least 10% of their profits to effective charities.

Hey you. Yes, you. You can make a difference.

“It is common to think that our ability to help the needy is inadequate when we compare ourselves to the ultra-rich, especially when we consider issues that seem too big to solve… Thankfully, that isn’t the case. Let me show you the how, and then the why.”

“I like the idea that people will give together. I hope the pledge will start to build that social norm toward redistribution, specifically for basic needs and effective charities… I appreciate that there's this mechanism that facilitates the giving process really easily. It makes me feel more whole — less divided — as an individual because it aligns my values with my actions.”

Do you have a burning question about effective giving, pledging to give, Giving What We Can, or effective altruism? Want to make a suggestion or discuss an idea? Just keen to meet others interested in effective giving? Join us for Giving What We Can's Open Forum hosted on the third Thursday/Wednesday of each month.

released updates from their Movement Grants recipients

five new EA charities with high potential for impact

, thousands of applications considered, and a two-month intensive 

recommended a $198,320 grant to the Centre for Pesticide Suicide Prevention

psychedelic-assisted mental health treatment

disbursed $23.3 million in flexible funding to their top charities this year and recently granted $15.3 million to the Against Malaria Foundation

 recently with a total value of $7,004,000.

 to effective altruism. You give to any charity that is important to you and to a highly effective charity—and Giving Multiplier adds to both of your donations.

 is back with donor-matching this December 1st. Facebook’s $7 million Giving Tuesday donation matching opportunity has been announced! 

 for updates and instructions on how to maximize the chance of getting your donations doubled.

 has launched an initiative to connect professionals who leverage employer donor-matching opportunities towards effective charities. 

The Life You Can Save audiobook is available for free on 

 Giving What We Can is featured in Chapter 5 (read by Stephen Fry).

What actually is the argument for effective altruism?

 show the 10 products that could have the greatest impact for animals in the U.S. if they were replaced with plant-based or cultivated alternatives.

cash transfers help recipients more than job training

COVID vaccine human trials may be held in the UK (

Pneumonia vaccine price has dropped by 43%

Blog

How to buy happiness

Member Profile: Michael Aird

October 2020 Newsletter

Introducing our 'Open Forum' online events

You can make a difference (yes, you!)

Companies pledge at least 10% of profits to effective charities

Member Profile: Catherine Thomas

September 2020 Newsletter

5,000 people have pledged to give at least 10% of their lifetime incomes to effective charities

Member Profile: Pablo Ollier