Are People Fundamentally Greedy or Generous with Money?

Do you believe that most people are greedy or generous? It is easy to come up with examples of stories that could support either conclusion if we are relying on our memories or on our gut. But this is a scientific question that can be answered. While there is some research that has examined this question specifically, it has often been conducted at university labs or online studies when the stakes are quite low ($10 or less).

From a greedy and more rational perspective, one would expect the average participant in an experiment to donate $0 of their $10 to a stranger or another participant whom they had just met. On the other hand, from a generosity perspective, one might expect the participant to split the payment 50-50 (or even more generously), handing the other participant $5 or more. The average person gives $2.80 away in this scenario, but it is hard to make heads or tails of this finding given that most of us would consider $10 to be chump change.

Recently, a team of researchers sought to investigate this question in partnership with the TED organization.¹ TED generously gave away $10,000 each to 200 lucky individuals (yes, you read that correctly), which essentially means these participants won a lottery with zero strings attached (besides being asked to spend all the money in three months rather than save it). These participants were from three low-income countries (Indonesia, Brazil, Kenya) and four high-income countries (Australia, Canada, UK, USA). Over the next three months, participants were asked to track their spending to examine how generously versus selfishly this money was spent. They reported their spending to the researchers a few months later. What happened when researchers gave away $10,000 to every participant, making the stakes sky-high?

Finding 1: People Are Very Generous!

After reading about the setup for this study, I’ll admit that I expected people to be selfish with the money. If you were thinking like me, prepare to be surprised. Of the $10,000 participants received, they spent $6,431 on other people. To be clear, this also included certain behaviors in which the participants themselves benefitted personally (such as taking their friends out to dinner or paying for a family vacation). But still, people are very generous. Participants gave away $1,697 strictly to charity or nonprofit organizations. Score one for people being generous when the stakes are high.

Finding 2: The Question of Impression Management

In addition to the question of whether people are generous or selfish when the stakes are high, the researchers wanted to investigate how reputational concerns impact whether we choose to spend selfishly or selflessly. To accomplish this, they had participants either keep their spending to themselves (low reputational concern) or share their spending decisions on Twitter (high reputational concern).

Surprisingly, the impression management variable had no impact. The mini lottery winners were no more or less generous depending on whether they posted their spending on Twitter versus kept it to themselves. The authors admitted they expected the Twitter group to spend more generously, but this prediction was not supported by the data. People did not need to have their spending shown publicly to behave generously.

Take Home Point

What can we learn from this experiment? First, quit buying lottery tickets and start signing up for TED experiments. In all seriousness, TED finds good news for humanity. People appear to be generous with money, regardless of whether they are managing their impression on social media or not. We like to spend money on or with our family members and friends, and we even donate a substantial amount (16-17 percent) to charity. Although this scenario of $10,000 just landing in your lap is quite unconventional, it gives us a glimpse of whether people are fundamentally greedy or generous. And we are quite generous.