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Lattes for Everyone! The Pay-It-Forward Economy

‘Tis the holiday season -- a time for joy, giving and, of course, crass commercialism and Scrooge-like cynicism. But for now, let’s focus on the giving.

Over the past year, long before Christmas carols were clogging the radio airwaves, stories about drive-through generosity have been reported across North America. From a doughnut shop in Amesbury, Mass., to a bagel seller in Tulsa, Okla., to a Tim Hortons in Winnipeg, Manitoba, and, just last week, a Starbucks in Reno, Nev., customers are employing the “pay it forward” method to provide their comrades-in-automobiles with a gratis meal or beverage.

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Some of these giving chains have, according to witnesses, involved hundreds of cars and lasted for hours. The Reno Starbucks incident reportedly involved 73 cars throughout an hour and a half. While these sporadic bursts of munificence may not be a serious trend, the practice nonetheless has received a good amount of media attention.

Paying it forward is nothing new. Though the concept has been espoused by such giants of history as Benjamin Franklin, the idea really wove its way into pop culture with Catherine Ryan Hyde’s “Pay It Forward” novel and the (some say shamelessly sappy) movie it inspired. It’s a simple idea: When someone does something nice for you, instead of returning the favor, you perform a good deed that will benefit another. So, rather than in a transactional economy, in which you owe debts directly to your lender, the pay-it-forward economy tags a third-party beneficiary who then, ideally, tags another.

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The model has been used to promote ideas including a recent proposal taken up by the Oregon legislature, in which students would go to college for free and then pay it forward to the state through a tax on their future earnings. This October, as Americans were enduring the government shutdown, Starbucks (SBUX) CEO Howard Schultz invoked the concept in his “come together” campaign, in which he called for customers to encourage lawmakers to make a deal. For three days, he said, any customer would get a free tall coffee if they bought another customer their favorite drink.

Whether the pay-it-forward model can help solve some of mankind’s largest woes (including government gridlock) is subject to debate. But the psychological benefits of giving are well-documented.

Dan Ariely, a professor of psychology and behavioral economics at Duke University, says the giving and getting in pay-it-forward are both favorable experiences, but “giving is more beneficial in the long term.” So, yes, it really is more blessed to give than to receive.

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If you're the recipient of a free cup of coffee, Ariely says, it might give you pleasure for a few minutes, but then you're likely to quickly forget about it. But when you are the giver, “it stays in your memory,” he says. “You might say to yourself, ‘Oh, look at me, I’m a wonderful, kind human being. I’m paying for coffee for other people.’ And that will stay with you for a longer time.” This may border on narcissism, but there are worse ways to display our self-aggrandizing tendencies (check your Facebook feed for examples).

Jessica Kelishes, who works in marketing in Banning, Calif., practices pay-it-forward at least a few times a year, and while she has never been the recipient in this type of interaction, she experiences great satisfaction from being on the giving end.

“I enjoy doing it for other people, and I don’t expect anything in return,” she says. “But I do get something in return in the way of that feeling you did something good for another person.”

Because of the anonymity and ease offered by drive-through lines, Kelishes says she sticks to this approach rather than while inside an establishment. “I prefer anonymity,” she says. “I don’t do it for the recognition. I do it so they will be inspired to pay it forward and do the same thing for someone else.”

If you find yourself in a long pay-it-forward chain that you want to ensure keeps going, bear in mind you might be paying several times the amount for the car behind you than the auto in front of you paid for you. For example, you may be the only person in your car, while behind you sits a family of six. When the chain ends there is, of course, one final beneficiary who drives away without laying down a dollar.

But generally, Ariely says, when somebody gives us something, we feel indebted. "This is the need for reciprocity," he says. "We feel we should do something back and, as a consequence, we often do that.”

When are people most likely to put the pay-it-forward model into practice? According to Ariely, it’s not in the worst of economic times, when many are too concerned with their own pocketbooks. Nor is it in times of great prosperity, when it might not occur to someone how much pleasure a simple free latte could bring another person. Instead, it's right in the middle — say, during the slow recovery period following one of the worst economic crises in history.

As wonderful as all this rampant giving can be, the pay-it-forward drive-through chains aren't without critics. Recently the progressive political blog Daily Kos ran a column arguing that, instead of paying for a fellow customer’s coffee or meal, you should pay the price of your meal to the server, who is more likely to need the help.

But Charley Johnson, president of the national Pay It Forward Foundation, stresses that the idea goes well beyond buying physical items for another person. “Everyone’s talking about the drive-through stuff,” he says. But “we just want people to be looking for ways every day to … make someone around them better. Simple things: Drive-through, hold a door, smile. It’s amazing how many people take these things for granted and think these simple things don’t have the power [to help others].”

Well said. Now I’ll take my mocha latte with an extra shot of espresso and a dollop of whipped cream, thanks.

Note: The author of this piece recently had her own pay-it-forward experience. Watch the attached video to find out if she was the giver or receiver.

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