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I have heard it said that meditation is "the greatest good deed". Is this considered to be true in Buddhism? If so, how is meditation superior to all other good deeds? It seems self serving compared to other good deeds, such as generosity.

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Because generosity alone can only get you so far. One's hindrances, defilements, ignorance, etc. are still there. Meditation and moral virtues are required to get one further on the Path. Matter of fact, through meditation, one becomes a more virtuous person and that itself is a superior kind of generosity. As taught by the Buddha in AN 8.39:

“Here, a noble disciple, having abandoned the destruction of life, abstains from the destruction of life. By abstaining from the destruction of life, the noble disciple gives to an immeasurable number of beings freedom from fear, enmity, and affliction. He himself in turn enjoys immeasurable freedom from fear, enmity, and affliction. This is the first gift, a great gift, primal, of long standing, traditional, ancient, unadulterated and never before adulterated, which is not being adulterated and will not be adulterated, not repudiated by wise ascetics and brahmins. This is the fourth stream of merit … that leads to what is wished for, desired, and agreeable, to one’s welfare and happiness."

“Again, a noble disciple, having abandoned the taking of what is not given, abstains from taking what is not given … abstains from sexual misconduct … abstains from false speech … abstains from liquor, wine, and intoxicants, the basis for heedlessness. By abstaining from liquor, wine, and intoxicants, the basis for heedlessness, the noble disciple gives to an immeasurable number of beings freedom from fear, enmity, and affliction. He himself in turn enjoys immeasurable freedom from fear, enmity, and affliction. This is the fifth gift, a great gift, primal, of long standing, traditional, ancient, unadulterated and never before adulterated, which is not being adulterated and will not be adulterated, not repudiated by wise ascetics and brahmins. This is the eighth stream of merit … that leads to what is wished for, desired, and agreeable, to one’s welfare and happiness."

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Yes, meditation is the 'greatest good deed' in Buddhism, specially contemplation on anicca, dukkha, anatta or the meditation types that are conducive to the cessation of suffering i.e. Vipassana. Generosity (dana) and other meritorious acts can be beneficial for a better birth in future lives but they are subject to impermanence. But results gained through meditation - nirvana is not subject to decay.

Following is what Buddha said in Velāma Sutta, how heart of good will (metta meditation) is greater than dana, taking refuge or being virtuous and perception on inconstancy (vipassana) is greater than all the other good acts.

"If one were to feed one person consummate in view, that would be more fruitful than the gift, the great gift, that Velāma the brahman gave.

"If one were to feed one once-returner, that would be more fruitful than the gift, the great gift, that Velāma the brahman gave, and if [in addition to that] one were to feed one person consummate in view, and to feed 100 people consummate in view.

"If one were to feed one non-returner, that would be more fruitful than... if one were to feed 100 once-returners.

"If one were to feed one arahant, that would be more fruitful than... if one were to feed 100 non-returners.

"If one were to feed one Private Buddha, that would be more fruitful than... if one were to feed 100 arahants.

"If one were to feed one Tathagata — a worthy one, rightly self-awakened — that would be more fruitful than... if one were to feed 100 Private Buddhas.

"If one were to feed a community of monks headed by the Buddha, that would be more fruitful than... if one were to feed a Tathagata — a worthy one, rightly self-awakened.

"If one were to have a dwelling built and dedicated to the Community of the four directions, that would be more fruitful than... if one were to feed a community of monks headed by the Buddha.

"If one with a confident mind were to go to the Buddha, Dhamma, & Sangha for refuge, that would be more fruitful than... if one were to have a dwelling built and dedicated to the Community of the four directions.

"If one with a confident mind were to undertake the training rules — refraining from taking life, refraining from taking what is not given, refraining from illicit sex, refraining from lying, refraining from distilled & fermented drinks that cause heedlessness — that would be more fruitful than... if one with a confident mind were to go to the Buddha, Dhamma, & Sangha for refuge.

"If one were to develop even just one whiff of a heart of good will, that would be more fruitful than... if one with a confident mind were to undertake the training rules...

"If one were to develop even for just a finger-snap the perception of inconstancy, that would be more fruitful than the gift, the great gift that Velāma the brahman gave, -and all above-. http://www.accesstoinsight.org/tipitaka/an/an09/an09.020.than.html

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Meditation lessens the practitioners suffering and the suffering of all those around the practitioner.

If you meditate then you are being the change that you would like to see in this world.

When you meditate you are learning to be selfless. You learn to help yourself by helping others.

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It seems self serving compared to other good deeds, such as generosity.

Here's a personal opinion (it's not an expert or referenced or Theravada answer).

In swimming lessons they try to teach you how to rescue drowning people. An important consideration in the lesson is how to rescue someone, without the person desperately grabbing and drowning you. It sounds selfish but it's not just selfish: if you were drowned or drowning then you couldn't rescue them.

There's a maybe-analogous situation (and lesson) if you want to help someone who, for example, is an addict: if their life is chaotic and so on, you can't help them to escape (e.g. with good advice, a good example, maybe some selflessness to spare) if your life is deep in chaos too.

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