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What Will Make Facebook’s Eduardo Saverin Happier: U.S. Citizenship or $67 Million?

The views expressed are those of the author and are not necessarily those of Scientific American.

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A big stack of $100 bills

Looking at this photo makes you less happy

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?

Image by 401k on Flickr

About the Author: Michael Moyer is the editor in charge of space and physics coverage at Scientific American. Follow on Twitter @mmoyr.

The views expressed are those of the author and are not necessarily those of Scientific American.

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  1. 1. priddseren 6:12 pm 05/25/2012

    I suspect there is far more to the man’s free choice to live where he wants, than money. The oppressive banana republic regulations, laws as well as taxes are likely a factor as well. Every single american is breaking a law at anytime. There are millions of pages of laws on the books ensuring we are breaking the law somewhere. Consider the fact that Saverin chose one of the top 4 most economically free places you can live, with Hong Kong, New Zealand and Australia rounding out the list. America, supposedly the land of freedom has fallen to number 9 and is on the way down specifically because of over taxation and over regulation.

    I know socialists have trouble with this concept but it is not all about money. People in general want to be free, not have their lives proscribed and dictated by a government.

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  2. 2. mggordon 6:33 pm 05/25/2012

    “What Will Make Facebook’s Eduardo Saverin Happier: U.S. Citizenship or $67 Million?”

    We have the answer already: He prefers the $67 million. That’s why it is making news, even in Scientific American where the question does not seem very scientific.

    Let’s look at it the other way round. Would you PAY $67 million to be able to visit the United States? Probably not.

    As to being happy; tell ya what — let’s conduct a scientific experiment. SA can give me $67 million and in a year I’ll report back whether it made me happy!

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  3. 3. Bops 7:31 pm 05/25/2012

    When reality sets in, he will wish he had paid the taxes.
    The “FUN of being a little bit bad” wears off fast.

    I wonder if he’ll find a way around this.

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  4. 4. chiefbailey 7:36 pm 05/25/2012

    More power to him and congradualtions on escaping the money grabbing Democrats in the US.
    The US is not the only place to visit in this wonderful world. That is such a narrow view.
    The rich here are now and will be targets of some politicians, US and state, for a long time to come.

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  5. 5. acs71 7:39 pm 05/25/2012

    “Let’s look at it the other way round. Would you PAY $67 million to be able to visit the United States? Probably not.”

    If I had two plus billion dollars, of course I would.

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  6. 6. gaweiner 7:49 pm 05/25/2012

    what a sad lot of commentary so far. seriously: socialists and overregulation and democrats grabbing your money? quick note of advice to Eduardo: if you want to spend a few bucks on a little vice here and there or you want to write something a little critical of the government of the Business Friendly little duchy of Singapore, be sure to bring some Bactine to disinfect the welts left after the caning is administered. really sad, kids.

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  7. 7. janeq 9:10 pm 05/25/2012

    While I find this man’s tactics despicable, I can’t help but wonder if this indignation will be extended to all the commercial establishments that do the exact same thing. They all do it for the same reason so treat them all the same, whether an individual or a company. Ban them all.

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  8. 8. moggwa 9:45 pm 05/25/2012

    This is all I find. Despicable. He is a turd ball. Rich yes, smart, of course. Will he live in south Philly for more than 170 seconds, doubtful. Douch-nozzles tend to stick out. Chicks that date them have a half life of less than 6 months. I wonder if they know that. Duh. When he looks in a mirror, I wonder if he sees what we see. He probably thinks he’s pretty neat. I wonder how many contracts are out on this nitwit? It’s got to be a winner take all for the first waster. Can’t believe he would do it, but money rules, he just forgot money rules. Dead man walkin”.

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  9. 9. E81ER 10:31 pm 05/25/2012

    the question is an interesting one, but the americentric bias in this article is dissappointing. If someone compiled a list of every valuable ‘experience’ in the world, a billionaire could live to a 150, experience as much as possible and never need to set foot in america out of boredom.
    The NY times article in which he denies that his denunciation is financially motivated, he describes himself as a ‘global citizen.’ That term seems benign, but it illustrates that the ultra-rich increasingly don’t live (or play) by the same rules as everyone else. It’s a small world, but it’s much smaller with a billion-plus dollars. Personally, I take self identifying as a ‘global citizen’ to mean that he’s a hopelessly out of touch egomaniac, but maybe he’s someone like bill gates, planning to give away his billions to support some greater good. The interesting question then becomes; is he avoiding american taxes because of greed, or because he believes he can spend 100 million dollars in a more socially responsible way.

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  10. 10. abhishekgoel80 5:29 am 05/26/2012

    People are getting emotional and nationalist. What ES has done is perfectly rational and legal.

    Businesses have followed this model (i.e. outsourcing shifting base locations) since they are allowed to do so. Successful individuals/high achiever have run away from stifling regime atmosphere.

    What is beyond my conception is why US should disallow him. Do they have any criminal case against him. To cut ties with a talented individual would only cost US more.

    I am from India and on the same note there use to be a great hue and cry on the high merit person moving away to west. There were talks of banning them, huge penalties, etc, thankfully they did n’t materialize now the diaspora is helping in the nations economy (tourism, helping enterprises, remittance advising government).

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  11. 11. JamesDavis 7:23 am 05/26/2012

    There is a lot of people come to America and they cannot wait to get away from it, and that is because of our scumbag government, and that scumbag government was created by its scumbag citizens. America has become greedy and stupid. It is really sad when our conservative Senators speak at a 9th grade level. Saverin is no doubt smart enough to realize how dumbed down America has become since 2005 during the Bush administration and he can’t see himself wasting even one penny of his head earned money on such stupid people and funding their ‘world police’ wars and their constant bickering over the addiction they have for foreign fossil fuel and getting rich off the backs of the poor. I am sure Saverin will spend his money wisely and it will not be in America – the home of the now dumb and stupid.

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  12. 12. sparcboy 10:51 am 05/26/2012

    Agnes Repplier said, “It is not easy to find happiness in ourselves, and it is not possible to find it elsewhere.” Whether or not money makes someone happy has little to do with the money.

    America was founded by people who were not content with their situation in life, so they packed up and moved to a place with greater freedoms and less restrictions imposed by government. That is the kind of people who built America. So now Americans with the same spirit are leaving and somehow that’s wrong?

    The politicians, acting like jealous spoiled brats, who want to punish successful people, are the ones driving these people out of America.

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  13. 13. GG 11:35 am 05/26/2012

    Really a cheapshot, populist article this is.

    If you live abroad, the IRS makes your life a living hell. You have to declare every bank account larger than $10k, and the paperwork of that process is outright oppressive. Not to mention that many foreign banks don’t have the know-how, or the willingness to put up with all that invasive cr@p. In fact, many Americans are turned down by foreign banks, because those banks don’t want to deal with this kind of bureaucratic nightmare.

    Additionally, the US practices the dirty, immoral policy of double taxation.(the vast majority of countries do not double tax).

    Many expat Americans, with no big money like Saverin, also abandon their American citizenship. It is NOT about the money.Hello!

    Instead of blaming people, you should ask some honest questions, as to why a supposedly freedom-loving country has drifted so far from its declared values?

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  14. 14. singing flea 7:08 pm 05/27/2012

    According to Romney and friends, businesses are people too, so of course take the money. It’s the only sensible thing to do when you can get tax breaks and government controlled health care anywhere else too.

    BTW Priddseren, when you said, “I know socialists have trouble with this concept but it is not all about money. People in general want to be free, not have their lives proscribed and dictated by a government.”, apparently you didn’t know all three countries you mention on the top of the list along with Singapore have more socialism and government regulations then America, especially with health care. The problem with living in America is not socialism, it is welfare for the rich. There is a profound difference. In America, small businesses who’s roots are still in The USA are now forced to subsidize the multinationals who abandoned America decades ago. If the loop holes that protect the multinationals were closed, they would have to either pay up or get forced out of the big pie which is still American consumers. If they were forced to pay up, we could easily support social benefits that most other countries in the world offer their citizens. That is the purpose of government, not kow-towing to the rich.

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  15. 15. mszargar 3:12 am 07/16/2012

    Well, one could as well write an article about whether Americans will be happier barring such smart and affluent people from entering US, just because they may want to pay 67M$less in tax. After all this is only a fraction of the tax Saverin is paying in US and 4.46666667 × 10-6 of the American GDP. After all, money is not everything, America. Money is good only when well spent. Spending well means spending on everything except putting poor immigrants in detention centers for extended periods of time, and barring rich immigrants from entering US. For one thing, what America has to offer Saverin (entrepreneurial opportunities) is a commodity in today’d world that he can find anywhere, including in his home country Brazil. On the other hand, what he has to offer to the US, is what US is craving for, and that is the entrepreneurial spirit that can reinvigorate the badly-damaged post-crisis economy. So, I find the logic of this article, as well as the respectable politicians who are advocating anti-Saverin laws very twisted, for it is not US that is in demand here, but it is Saverin (and his likes) who is in position of power. Modesty, seems to be the lost virtue here.

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