Just in time for the holiday season, here are some words on giving.

Here’s my Q&A column from the WSJ this week — and if you have any questions for me, you can tweet them to @danariely with the hashtag #askariely, post a comment on my Ask Ariely Facebook page, or email them to AskAriely@wsj.com.

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Dear Dan,

A strange thing happened to me a few days ago. One of my employees came into my office holding a few lottery tickets and asked, “You in? It’s 45 bucks.” I never play the lottery, but I felt an inexplicable urge to say yes–and I did. Was I being grossly irrational?

—Itay 

You were indeed irrational, but in a very common way. Usually, when you are considering whether or not to buy a lottery ticket, you take into account how your life would change if you won and contrast this with the cost of the ticket and the slim chance of winning. After making this quick computation, you decide not to buy a ticket.

But when another person asks you to “go half” with them on a tickets that they’ve already purchased, another factor comes into play: regret. Now you can’t help thinking how you would feel if that other person won. You quickly conclude that it would make you feel terrible and you also realize that you would keep on thinking about this forgone fortune for a very long time.

I think that too many people are currently losing too much money on various lotteries (often state sponsored), and I wouldn’t want more people to keep losing money this way. But if I were looking for a way to get more people to gamble, I would certainly try to play on our capacity for regret.

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Dear Dan,

On a recent flight, the attendants declared it was “Breast Cancer Awareness” month and asked for donations from the passengers for this worthwhile cause. I give to a multitude of breast-cancer organizations, but this approach offended me. Maybe if the airline had offered to match my contribution dollar for dollar it would have made me feel we were partnering in this effort, but the way it was handled just annoyed me. Is it just me or were they doing this the wrong way and actually hurting the cause they are trying to help?

—Rob 

I suspect that many companies trying this approach to corporate responsibility don’t get much of a boost from it in terms of internal morale or customer loyalty. It turns out that companies get the most credit for donating to charity in two cases: One is when they give first and then tell the customers, “Look, we’ve already given on your behalf, now you can contribute as well.” The second is when they empower their customers to give themselves (“here is a $5 voucher for you to give to any organization you value”). The approach you describe, where the company simply says, “We have a charity that we like and want you to give to it,” is ineffective in every way.

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Dear Dan,

It seems to me that any reading of social science research implies that we are all less capable in making our own decisions and that as a consequence we need help. Yet, it seems that Americans are emotionally against any hint of paternalism. Any idea how we can overcome this barrier?

—Tom

I agree with your general position. I think that part of the problem is that, while we see irrationalities and bad decision-making in those around us, we don’t see these mistakes as readily in our own behavior. Because of this partial blindness, we are not as interested in limiting our freedom to make our own stupid decisions. I’m not sure what we can do to fix this part of the problem. But perhaps we can think about how to market paternalism in a better way. As a first step, I would change the term and call it maternalism. After all, who could object to listening to a mother figure?

See the original article in the Wall Street Journal here.

(All the rights of this illustration belong to our talented lab member M.R.Trower)

Before writing personal bonus checks to your employees this December, have a look at our paper — hot off the press! If you are hoping that a bonus would allow them to buy whatever they wish and as a result be happier at work and more productive, we have a better idea! Rather than giving your employees more personal bonuses, make a minor adjustment and offer them prosocial bonuses, a novel type of bonus to be spent on others.

Across three field experiments, we tested the efficacy of prosocial bonuses against the standard model of personal bonuses. We found that when companies gave their employees money to spend on charities or on their colleagues (as opposed to themselves), employees 1) reported increased job satisfaction and 2) performed notably better.

In one experiment, an Australian Bank gave some of their employees a charity voucher and encouraged them to spend it on a cause they personally cared about. Compared to their coworkers who didn’t receive a charity vouchers, bankers who redeemed the prosocial bonuses reported increased job satisfaction and were happier overall.

Next, we examined whether prosocial bonuses were still effective if they were spent on others people personally knew rather than on charities. We ran experiments in two very different settings – one with recreational dodge ball teams in Canada and another one with pharmaceutical sales teams in Belgium – where we encouraged spending on co-workers and teammates. In both cases, we gave cash to some members of each team to either spend on themselves (personal bonuses) or spend on their teammates (prosocial bonuses). We found that teams that received prosocial bonuses performed better than teams that received money to spend on themselves.

It is difficult to measure the return on investment of corporate social responsibility. With prosocial bonuses, however, we were able to measure the dollar impact on the bottom line. On sports teams, every $10 spent prosocially led to an 11% increase in winning percentage, whereas it led to a 2% decrease in winning when team members received personal bonuses. For the sales teams, every $10 spent prosocially earned an extra $52 for the firm.

Our results come at an important time. Job satisfaction is at a 20-year low in the U.S., and people are spending more and more time at work. If you do what you have always done, you will get what you have always gotten. So, we suggest that you try something new this year: Shift the focus of the bonuses from the self to others and create a more altruistic, satisfying and productive workplace!

~Lalin Anik~

P.S. If you are interested in testing prosocial bonuses, please feel free to send a gift to lalin.anik@duke.edu

Here’s my Q&A column from the WSJ this week — and if you have any questions for me, just email them to AskAriely@wsj.com.

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Dear Dan,

I’ve struggled with a few major “I wish I could change this” type behaviors for years. Back when I worked in downtown Manhattan, colleagues would religiously bring their own lunch, thermos of coffee, or whatever, and save money on eating out. I often mused that I could probably fund my retirement or at least a few good vacations with all the money I spent on decent but forgettable food.

Well, recently I started a new job at a big company where the only real food option is its own cafeteria—which serves awful food at market prices.

Lo and behold: This cafeteria so insults and annoys me that I’ve been able to fix my long-standing bad habit. Every night before bed, I simply fill up some Tupperware with dinner leftovers. Or I grab a yogurt, make a PB&J—whatever it takes. What lesson can I take from this?

P.S. I’ve been following your podcast, Arming the Donkeys, for years, but I have to tell you the sound could sometimes be better.

—Jennifer

This is a classic case where having all the right information was simply not enough to drive your desired behavior. We know, for example, that telling people about the caloric content of fast food has almost no effect on eating, and that knowing the dangers of texting at the wheel hasn’t exactly moved the needle on safe driving.

We also know that emotions are often much more effective in getting people to behave differently. In your case, disgust and indignation—which can be extremely powerful and motivating.

The good news is that once your emotions instigated this change, you found it easy to change your behavior, and with time this change may even become a habit. At that point, even if you stop being angry at the cafeteria (or you switch jobs), the habit and joy of bringing your own lunch will persist.

P.S. With regard to my podcast, I’ve been thinking about getting a higher quality recorder for a while. Knowing that you’re motivated by anger and revenge, I will get right on it. Thank you.

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Dear Dan,

As a recent college grad, I often find myself coming up with off-the-wall, out-of-the-box, borderline idiotic ideas of what to do with the rest of my life. One day I’ll be thinking of how much I enjoy my job; the next I’ll be considering dropping everything and running off to another country, starting my own business, launching a singing career or pursing higher education in something unrelated to my field, like behavioral economics. I’ll often stew on these ideas before setting them aside, only to revisit them every few months. How can I tell when my ideas are actually legitimate notions or nothing but half-baked schemes?

—Josh G.

First, I am impressed that you’re considering so many different types of jobs. (And I may be biased, but I agree that a career in behavioral economics would be pretty interesting.) In general it amazes me how few possible career paths people consider before picking one to stick to indefinitely.

As for your question: It’s useful to think about two aspects of your job choices: What will make you happy (which is the only aspect people usually consider) and what jobs will be able to teach you something important. If I were you, I would make a list of possible jobs and rate each one on both measures. Next, figure out what your goal is right now (as a recent college grad, you may want to focus more on what you can learn) and then pick the job from the list that best satisfies this goal. Finally, commit to that job for at least a year without looking back.

What you shouldn’t do is stay in one job and think about how different your life would be if you took another. This is a bit like dating one person but constantly checking Match.com to see what other options you might have. It takes away from the enjoyment of your current relationship or job and your commitment to it. So, whatever you do, sticking to your chosen path of action is key.

And if you do end up switching jobs, please don’t tell your parents that you did it on account of my advice.

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Dear Dan,

As we get closer to Valentine’s Day, I am wondering, why do women like jewelry and flowers? Wouldn’t it be better if they liked the kind of things that men liked to shop for?

—Jon

One way to view this discrepancy is that women like these things exactly because men hate shopping for them. If you purchased something for your loved one that you enjoyed shopping for, this would be nice, but having to overcome your aversion to shopping for these items is a much stronger signal of your love and care. So this year, when you are shopping for jewelry or flowers for your soul mate, remind her what a pain it was for you.

And Happy Valentine’s Day.

See the original article in the Wall Street Journal here.

Here’s my Q&A column from the WSJ this week — and if you have any questions for me, just email them to AskAriely@wsj.com.

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Dear Dan,

My best buddies and I have a tradition of going on a one-week ski trip once a year. We’ve been doing it for most of the past decade. The idea is that it’s just us guys on the mountain, enjoying the good company and snow. We cherish these moments and can’t wait for the week to arrive every year.

The problem is that once we land at our ski destination, time seems to go by at light speed. The week ends amazingly quickly and when we look back at our time together it seems even shorter. I know that “time flies when you are having fun,” but is there a way to perceive the week as longer?

—Avi

Given the way you phrased the question, the answer is simple: Take your wives with you. (Sorry, I couldn’t resist.)

But more to the point: I suspect that one of the reasons that your vacations seem so short, both in the experience and in your memory after the fact, is because the days of skiing are so similar to each other that they blend together in your memory into one very long day rather than a weeklong vacation.

On your next trip, try to make the days more differentiated from one another. Try snowboarding one day, take a lesson on another day, or just change your ski equipment from time to time. You could take a day off from skiing and go sledding or meet the locals. The point is that even if some days wind up with activities that you enjoy less at the moment (like bowling, for example), the ability to differentiate that day from the other days will help you categorize the vacation as a series of distinct experiences instead of one big glob of skiing. This way, you will get more joy from the memory of these experiences.

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Dear Dan,

A few weeks ago in your column you suggested spinning a penny as a way to make decisions between two similar options. You argued that having to face the moment of truth makes us realize what we really want as the outcome.

This approach might be useful when deep down inside it is clear which way you want the penny to fall, but what about decisions where what you desire is not good for you? For example, when the decision is between chocolate cake and fruit. In this case, you know very well how you want the coin to fall, and flipping the coin doesn’t seem to be very useful.

Any advice on how to deal with such conflicts between the head and the heart?

—Gavin

You’re right. The coin trick is indeed only useful for cases where the two options are of the same type (two cameras, two movies, etc). In your example, one option is more tempting in the short term (chocolate cake) while the other is better in the long term (fruit). In such cases we should not trust our gut feelings to drive us to the best decisions.

Looking around, it is easy to see that we often succumb to temptation and take the option that has short-term benefits and long-term downsides (in your example, this is the chocolate cake). The basic problem is that when we make such decisions we are often “under the influence” of the chocolate cake. Its closeness blinds us to the comparative long-term benefits of a piece of fruit (or, simply not eating the cake). So what can we do? Every time you face such decisions, pretend that it is not about what to do now but what you would like to do a week from now. For example, think of the choice between chocolate cake and fruit for dessert as a decision that you are making for exactly one week from today. When the choice is framed this way, you might be more able to override the influence of your current emotional state and pick the option with long-term benefits.

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Dear Dan,

I just bought a pair of basketball tickets and I plan to treat my friend to an afternoon of slack-jawed wonder as Kevin Durant dismantles our hometown Raptors. Here’s the thing: My friend is very generous and semiwealthy. If I tell him the tickets are on me, he’ll insist on paying…but if I tell him the tickets were free (the only way he’ll let me off the hook about the price), I’ll lose that weird cachet that comes from giving an expensive gift. What to do?

—Gil

Here is what I would do: Take your income per month (for simplicity, say $10,000) and divide it by the cost of the two tickets (again for simplicity, say $200). Now multiply this number by the number of hours you work per month (let’s say 160), and you get the numbers of hours that you need to work to pay for the tickets (3.2 hours in this case). Now, tell your friend “it took me more than 3 hours of hard labor to get these tickets.” (After all, you might not want to tell your friend exactly how much you make.) With this kind of framing, not only will your friend not be able to pay for the tickets, but he will also appreciate your investment in him and your friendship to a higher degree.

See the original article in the Wall Street Journal here.

Here’s my Q&A column from the WSJ this week — and if you have any questions for me, just email them to AskAriely@wsj.com.

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Hi, Dan!

Every year it’s the same problem: My husband and I struggle to get his dad a few perfect gifts, only to see them sit unused for eternity. These are good things, too, expensive and high quality—specialty tools for his car, toolboxes, super-handy gadgets, etc. But years later, the tools sit there unopened and the toolbox has dust on it. He still carries his broken wrenches and stripped screwdrivers around in a ripped plastic sack!

OK, an old story, I know. But would it be so wrong if we just took the gifts back? He doesn’t want them. We could use them ourselves. Since the objects were “ours” at one point, we feel that we still retain some residual interest in what happens to them. Is it because we invested so much thought and effort in acquiring them?

Thanks for all your good works, and happy holidays!

—Veronica

No, you may not take the gifts back. (Note that I didn’t write “your gifts,” because I don’t think you should picture them as yours.)

The sad thing is that you and your husband feel unappreciated because your thoughtful and expensive gifts are not bringing the dear old man the happiness that you hoped to give him. Instead of taking the gifts back, I would try to increase the likelihood that the tools will get used. First, I would take them out of their packaging and replace the old tools in his plastic sack with the new ones—thereby making the act of using them more likely. As for the old tools, just put them in the attic for now.

If your father-in-law protests, I would restore his old tool kit and suggest spring cleaning and the donation of unused household goods to a local charity. He might be willing to give the new tools up for a good cause. And if that doesn’t work, stage a robbery and steal them, leaving cash and other valuables untouched. The added benefit of this approach is that it might also show your father-in-law how valuable your gifts are.

As for this year, buy him something that gets better over time, such as good whiskey or wine. That way, if he doesn’t use it, it will at least grow in value and not bother you as much.

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Dear Dan,

I bought two bottles of wine at a wine store that was running a “Buy one, get another for five cents” deal. The first bottle was priced at $16.99. I bought the second one, a different wine but listed for the same price, for five cents.

If I’m going to take one of the bottles for a holiday dinner at a close friend’s house, which wine should I take? Will the fact that I paid only five cents make me take that one over the full-priced bottle?

—Rags

We’ve known for a long time that there’s a correlation between what you pay for a wine and how good it tastes to you, but this correlation only exists, of course, when people know the price. As Robin Goldstein from www.fearlesscritic.com has shown, when people don’t know how much a wine costs, there’s no correlation between the price and how good they think it is.

Taking this into account, the first question you should ask yourself is whether to tell your friends about the cost of the wine or not. If you don’t tell them, then there’s no problem—just take the cheap one. It is true that by knowing the price that you paid for it, you will enjoy it less, but everyone else will be just fine. On the other hand, if you decide to tell them the price, I would suggest bringing the $16.99 Bottle, and maybe even include the cost of driving to the wine store.

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Dear Dan

Do you believe in New Year’s resolutions?

—Janet

Yes. Every year for about a week: for about five days before New Year’s Day and for about two days after.

See the original article in the Wall Street Journal here.

Here’s my Q&A column from the WSJ this week — and if you have any questions for me, just email them to AskAriely@wsj.com.

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Dear Dan,

I am an avid football fan. When the team I am supporting is leading by, say, seven points, it doesn’t seem like a lot (we are leading by JUST one touchdown). On the other hand, when we are trailing by seven points, it seems like a lot (we are trailing by ONE touchdown). The same thing happens with runs in baseball and points in basketball. As a result, I’m always nervous while watching close games! Why do I feel this way? Is it just me?

—Jaydeep

I must admit that I don’t follow sports, but as luck would have it, I recently had a chat with Mark Cuban, the owner of the Dallas Mavericks. We talked about various links between behavioral science and basketball, including the idea of loss aversion. Loss aversion means that our emotional reaction to a loss is about twice as intense as our joy at a comparable gain: Finding $100 feels pretty good, whereas losing $100 is absolutely miserable.

When your team is ahead, you think that the game is yours, so you largely focus on dreading that it might be taken away from you. On the other hand, when you are behind, all you can do is look forward to a positive change in the lead.

As this suggests, we might benefit in other areas of life, beyond sports, by adopting the perspective of being behind and looking for the upside.

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Dear Dan,

Several years ago I gave my 90-year-old mother $5,000 to pay off the bank loan for her 2007 Honda Civic. She recently decided she didn’t want to drive anymore and would sell the car, for which she should receive $6,000 to $8,000. She had originally planned to give the car to my nephew (her grandson), but since he can’t afford the upkeep, she was going to sell the car and give him the proceeds. My finances have improved significantly since the time I gave her the $5,000, but she also offered to give me back $5,000 from the sale, which would leave my nephew with very little money. What should I do?

—Anastasia 

When we face such questions, we usually engage in what is called a cross-personal utility comparison. We ask ourselves how much we would benefit from this amount of money and compare this to how much the other person (your nephew, in this case) would benefit. When we carry out this comparison we naturally have a somewhat egocentric view of the world, which means that we usually over-weigh our own benefits and under-weigh the benefits of the other person.

However, recent research by Elizabeth Dunn and Mike Norton (their forthcoming book is called “Happy Money: The Science of Smarter Spending”) shows that giving money away has tremendous benefits for the giver. In their studies, whether people buy a cup of coffee for a friend or give up their yearly bonus to help a nonprofit, the givers experience happiness beyond their expectations, and it remains high for longer than they anticipate.

In your case, the giving would be particularly powerful because both you and your mother are involved. You would feel happiness because you facilitated the gift, your mother would feel happy because she is helping her grandson, and you would feel further happiness for making your mother feel good. With all of this good feeling around, is there any doubt that you should help your nephew?

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Dear Dan,

I just paid for yoga classes for the next six months, but the studio mistakenly credited me for a year. They have made many past billing errors in their favor. Should I correct the mistake or just see it as the universe making things more even?

—Random fan

Of course, it is the world restoring karma—but why did it take so long?

See the original article in the Wall Street Journal here.

At a coffee shop in Bluffton, South Carolina, people have been spontaneously paying forfuture customers’ drinks on a fairly consistent basis. Sometimes, those who are not even looking to buy coffee for themselves will come in and donate money for future (anonymous) customers.

While certainly unique, this may not be too surprising when viewed under the lens of behavioral economics — and could suggest an interesting business model. Let’s consider a hypothetical coffee shop that chooses to employ a strictly “pay-what-you-want-for-other-customers” pricing strategy, in which customers can only leave money to be used by other customers, and are allowed to leave as much (or as little) as they would like. In turn, their drinks are paid for by previous donations.

First, there are a number of examples in the scientific literature (and in the real-world) of the benefits of pay-what-you-want pricing systems. Allowing people to pay the price they want can sometimes result in people paying more money than they would if a standard price was requested for any particular product or service.

Second, recent research by Elizabeth Dunn, Lara Aknin, and Mike Norton shows that spending money on others can have a more positive impact on one’s happiness than spending money on oneself. So this may mean return visits by customers who wish to get that extra boost in happiness that they do not get from places where they buy their own selected product(s).

Third, Dan Ariely has studied how powerful the idea of “free” can be; in short, people love free things. Receiving a “free” drink in our hypothetical coffee shop (paid for by another customer) should be more desirable than directly paying for the drink.

At this hypothetical coffee shop with a “pay-what-you-want-for-other-customers” pricing strategy, customers may have an experience in which they get to enjoy a “free” product (good for that customer), get a boost of happiness from buying something for others (good for that customer…and the customer(s) who get to spend that money), and may wind up spending more money overall than they would have under a traditional pricing scheme (good for the coffee shop). Thus, allowing people to pay what they want for other customers may potentially lead to a lot of good all around.

There are certainly many risks that come along with a “pay-what-you-want-for-other-customers” pricing system. But if the events of the coffee shop in South Carolina are any indication, such a pricing strategy may just be irrational enough to work.

~Jared Wolfe~

One of my long time friends just wrote me earlier today.  Not seeing her for a long time I was looking forward to seeing her, and I invited her to join us for dinner on Friday night.

She was very happy to accept the invitation, and asked what she could bring.  I asked her not to bring anything and just come.  She wrote back insisting that she wants to bring something.

Here is my email to her ……

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Many of my economist friends have a problem with gift-giving. They view the holidays not as an occasion for joy but as a festival of irrationality, an orgy of wealth-destruction.

Rational economists fixate on a situation in which, say, your Aunt Bertha spends $50 on a shirt for you, and you end up wearing it just once (when she visits). Her hard-earned cash has evaporated, and you don’t even like the present! One much-cited study estimated that as much as a third of the money spent on Christmas is wasted, because recipients assign a value lower than the retail price to the gifts they receive. Rational economists thus make a simple suggestion: Give cash or give nothing.

But behavioral economics, which draws on psychology as well as on economic theory, is much more appreciative of gift giving. Behavioral economics better understands why people (rightly, in my view) don’t want to give up the mystery, excitement and joy of gift giving. In this view, gifts aren’t irrational. It’s just that rational economists have failed to account for their genuine social utility. So let’s examine the rational and irrational reasons to give gifts.

Some gifts, of course, are basically straightforward economic exchanges. This is the case when we buy a nephew a package of socks because his mother says he needs them. It is the least exciting kind of gift but also the one that any economist can understand.

A second important kind of gift is one that tries to create or strengthen a social connection. The classic example is when somebody invites us for dinner and we bring something for the host. It’s not about economic efficiency. It’s a way to express our gratitude and to create a social bond with the host.

Another category of gift, which I like a lot, is what I call “paternalistic” gifts—things you think somebody else should have. I like a certain Green Day album or Julian Barnes novel or the book “Predictably Irrational,” and I think that you should like it, too. Or I think that singing lessons or yoga classes will expand your horizons—and so I buy them for you.

A paternalistic gift ignores the preferences of the person getting the gift, which tends to drive economists crazy, but it may actually change those preferences for the better. Of course, you might mess up by giving a paternalistic gift that someone hates, but that doesn’t mean you shouldn’t try.

A holiday gift can straddle these categories. Instead of picking a book from your sister’s Amazon wish list, or giving her what you think she should read, go to a bookstore and try to think like her. It’s a serious social investment.

The great challenge lies in making the leap into someone else’s mind. Psychological research affirms that we are all partial prisoners of our own preferences and have a hard time seeing the world from a different perspective. But whether or not your sister likes the book, it may give her joy to think about you thinking of her.

My final category of gift is one that somebody really wants but would feel guilty buying for themselves. This category shouldn’t exist, according to standard economic theory: If you really liked it and could afford it, you’d buy it.

For me, fancy pens meet this description. I don’t use pens that much, but I’d be pleased to get a really nifty one (a Porsche 911 would be OK, too). When my students defend their dissertations, I ask everyone on the Ph.D. committee to sign the required forms with an expensive pen, and then I give the pen to the student. It’s a prototypical good gift, because it’s something that they would probably feel guilty about buying for themselves, plus it has positive associations as a memento of the day.

Behavioral economics has one more lesson for gift givers: If your goal is to maximize a social connection, don’t give a perishable gift like flowers or chocolates. True, people enjoy them, and you don’t want to impose by giving something more permanent. But what are you trying to maximize? Is your goal to avoid imposing on them or for them to remember you?

For a durable impression, better to give a vase or a painting. Even if your friends don’t like it that much, they’ll think about you more often (though maybe not in the most positive terms).

Better yet, give a gift that gets used intermittently. A painting often just fades into the attentional background. An electric mixer, when used, gets noticed.

I like to buy people high-end headphones. They get used intermittently, so I can imagine that every time you put them on, you will think of me. Also, they’re a luxury—the kind of thing that people have a hard time buying for themselves. Best of all perhaps, they’re intimate: When I give someone headphones, I can think of myself whispering in their ears.

And maybe, when they use the headphones, they’ll remember you whispering to them or even kissing their ears. Has anyone ever thought of a kiss after you hand them cash?

Happy holidays — Dan

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This post first appeared on WSJ.com