What is more valuable: $55 given now or $85 given in three months? Obviously, $85 has a higher monetary value than $55, but peoples’ perceptions of value take more into account than the number itself—for instance, people consider the value of getting paid immediately. What’s more, peoples’ emotional states also influence their perceptions of value.
For example, research has shown that people who feel sad tend to act impatiently, so sad people would more often choose the instant $55 over the delayed $85. As it might be in one’s best interest to wait for more money, sadness hinders one’s ability to make wise financial decisions.
So when making financial decisions, one should suppress all emotion! Right?
Not necessarily, argues a new study published in Psychological Science. One emotion, gratitude, actually improves our ability to factor long-term options into decision-making. This study found that people who felt gratitude chose the delayed $85 unless the instant payment was $63, rather than $55. By contrast, people who felt neutral or happy needed only the $55 to choose the instant cash option.
How do these psychological studies relate to philanthropy and emotional responses to global poverty, though?
Ending global poverty requires people to philanthropize, but philanthropy comes in different varieties. Consider two: On the one hand, a person can donate money to, say, have a freshwater well built for people who lack access to clean drinking water. This method of philanthropy—”direct aid,” for lack of a better name—gets real results quickly.
On the other hand, a person can donate money to policy groups that work to mobilize the resources of national governments. This is advocacy, a method of philanthropy that sees results less quickly but often sees bigger results than direct aid. Both methods of philanthropy have been indispensable in the fight against global poverty. Yet, advocacy seems to be a less favored method for givers; for instance, the revenues of the International Rescue Committee were roughly 29 times greater than those of the Center for Global Development, a major policy-shaping organization, in 2013.
Charitable donations are subject to the same time value of money questions that arose in the experiment on emotions and decision-making. “Is it more useful to take the $55 or $85?” becomes “is it more useful to build a well now or to shape policy that secures water for millions of people?” The answer to these questions depends on a number of factors: the desperation of those without the well, or the likelihood that policies will be changed, to name a few.
Philanthropists should probably consider both options, but certain emotions such as sadness seem to inhibit their ability to do so.
People are inundated with images or facts concerning poverty calculated to make them feel sad. To feel less sad, people then donate. However, by nature people want sadness to diminish quickly, which seems best achieved if their donations get quick results. Might this fact then cause them to overlook the potential of advocacy?
In the interest of preserving both direct aid and advocacy philanthropy, perhaps the potential philanthropist must approach global poverty in a certain way. Responding to the grim realities of poverty with gratitude for one’s own fortune might indeed be more useful than responding with sadness—to philanthropists seeking to make the best financial decision, at least.