The Selfish Side of 1% for the Planet

June 16th, 2008

My last post was a wonky one on changes in California law that affect company management’s ability to consider social good as well as shareholder value.  Here is a complementary piece to that, courtesy of Harvard Business School’s Working Knowledge newsletter.

Spending on Happiness — HBS Working Knowledge

The jist of the piece is that we spend our lives trying to accumulate money, but succeeding at that doesn’t make us any happier.  Instead, the researchers found that spending money on other people does increase happiness.

The article talks specifically about personal spending, but I am willing to bet that it holds true for companies as well.  Knowing that your company gives away money to help outside causes increases loyalty toward the business.

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  • I love this notion, but I am skeptical at the science behind it. Does spending on others lead to happiness, or does happiness lead to spending on others? The structure of the experiments didn't seem to extract the causality. On the other hand, it intuitively feels right, doesn't it?

  • Good questions. The idea also reminded me of something I once heard
    about connections between people. I was told that someone doing a
    favor for you causes them to make an investment in you, and hence to
    identify more strongly with you than if you do a favor for them. I
    would have thought the other way around. I believe there is a common
    thread between this idea and HBS's theory that has something to do
    with making a conscious sacrifice for someone else, and feeling better
    about oneself for doing it.

  • Last year, I read a fascinating book by Walter Goldschmidt, Professor Emeritus of Anthropology, Psychiatry, and Sociology at UCLA. The Bridge to Humanity: How Affect Hunger Trumps the Selfish Gene argues that we need–biologically and psychologically–affection from others. He defines “affect hunger” as “the urge to get expressions of affection from others.” According to Goldschmidt, our “affect hunger” trumps the “selfish gene” that Richard Dawkins famously described in his 1989 book.

    Affect hunger might explain the increase in happiness we feel from helping others and observing their or others' expressions of affection or gratitude. It might also help explain why costumers would likely be more loyal to charitable companies than selfish companies, all other things remaining equal.

    But I'd bet there are plenty of other theories that would explain why customers are likely to be more loyal to charitable companies. Economists, behavioral economists, economic sociologists, political scientists, psychiatrists, and social psychologists probably offer a handful of different explanations.

    I'd like to learn more about how the amounts and forms of companies' charitable giving influence increases in the numbers or percentages of their loyal customers. Maybe social capital, marketing, or public relations gurus use some sort of rule of thumb when predicting the customer loyalty ROI for different forms or amounts of companies' charitable contributions.

  • This is quite interesting- the psychological reason “doing well by
    doing good” works. Thanks for posting this note.

  • This is quite interesting- the psychological reason “doing well by
    doing good” works. Thanks for posting this note.