May 25, 2012 | 15
Facebook co-founder Eduardo Saverin has renounced his U.S. citizenship, reportedly to save an estimated $67 million on his tax bill (Saverin denies that the decision was based on financial considerations). The move has drawn the ire of Senators, academics and (especially) newspaper columnists, who view it as a cynical attempt to avoid paying his fair share. Senator Jack Reed of Rhode Island has called for the U.S. Department of Homeland Security to ban Saverin from re-entering the country, and a new bill with bipartisan support would explicitly bar those like Saverin from returning.
Saverin, 30, now lives in Singapore. Even after Facebook’s post-IPO stumbles, his estimated net worth is around $2 to $3 billion. He has said that his greatest worry is to “make sure that despite everything, I’ll be happy and make the ones I love happy.”
Here’s my question: assuming that Saverin is not allowed back into the U.S., what is likely to make him happier: the ability to travel freely, or $67 million? Let us look to science for answers.
Researchers have long examined the links between money and happiness, which are best summed up by the title of the charming 2011 paper “If money doesn’t make you happy, then you probably aren’t spending it right” [PDF]. The authors [1 , 2, 3] note that “the correlation between income and happiness is positive but modest, and this fact should puzzle us more than it does.” Of course, numbers on a bank statement don’t shouldn’t in an of themselves make us happy. It’s all the things that all those zeroes can buy. And yet “most people don’t know the basic scientific facts about happiness—about what brings it and what sustains it—and so they don’t know how to use their money to acquire it.”
The authors list a number of principles to maximize the happiness that money can buy. Number one: Buy experiences instead of things. In the days and weeks before a fun new experience we enjoy the anticipation. We are happier during the experience itself because it keeps us focused on the present—as the authors note, “a wandering mind is an unhappy mind.” And since our sense of identity is closely linked to our past experiences, we tend to fondly revisit them after they are done. By contrast, people don’t anticipate how quickly we adapt to new stuff. “Homebuyers find their once beloved Brazilian cherry floors quickly become nothing more than the unnoticed ground beneath their feet,” the authors write. “In contrast, their memory of seeing a baby cheetah at dawn on an African safari continues to provide delight.”
Here already we anticipate a challenge for Saverin’s happiness strategy. While it is true that $67 million can buy a lot of time on the savannah, think of all the weddings he will be forced to miss, the road trips left untaken. The only glimpse he’ll get over the edge of the Grand Canyon will be on his next flight from Vancouver to Mexico City.
You might suggest that an experience like a trip to the Grand Canyon might provide insufficient joy for a multi-billionaire. Perhaps, but this is part of the problem. Wealthy people are not very good at savoring the mundane joys of daily life—an ability closely linked to overall happiness. (One theory posits that because the rich have unfettered access to “peak” experiences, the little things bore them.) In one experiment, people given a piece of chocolate spent less time eating it and derived significantly less pleasure from it if they were first shown a photograph of money. Wealth makes people lose their appetite for everyday pleasure.
Perhaps most importantly, Saverin would be wise to spend his fortune on others. The authors review a number of studies that conclude that charitable actions significantly increase levels of happiness, well-being and personal satisfaction. When people spend money on others, they tend to spend it on those around them—friends, spouses, and charities and churches in the community. Supporting your own social network shows others that you care, and affirms your own sense of self-worth. It deepens social ties. ”Given how deeply and profoundly social we are,” the authors write, “it isn’t any wonder that the quality of our social relationships is a strong determinant of our happiness?”
Unfortunately, “simply thinking about money has been shown to undermine prosocial impulses, making people less likely to donate to charity or help acquaintances,” the authors report. Those with money are less likely to give it away. Their happiness suffers as a result.
Saverin is an active investor in the Singapore startup community, but having cleaved himself off from the U.S., he won’t be serving on the board of directors of many Silicon Valley startups. We can not discount the amount of joy that comes from these social relationships—relationships which a lifetime ban from the U.S. will inexorably damage.
I admit that if I were offered $67 million—the only catch being I could never return to the U.S.—I may very well take the money and run. But in my defense, my net worth is many, many orders of magnitude less than $2 billion. I’d try to spend that $67 million on a lot of experiences, and do my best to build a strong social network wherever I landed. For Saverin, $67 million represents about 3 percent of his fortune. Is that worth shutting yourself out of the country where you grew up?
In this tumultuous week after the IPO, Saverin isn’t the only one who might be wise to take a step back and consider the most important thing Facebook has created. Is it the money, or the social network?