yes, smiles are contagious in a very, very good way.
Living in a small town & rural area, around here we not only nod & smile whether we know the people or not, but you can't drive down the road without keeping one hand ready for "the wave" ~ which consists of anything from an index finger raised off the steering wheel to a full-handwave each time you approach someone you know or who knows you. Recently a close acquaintance took offence that we did not wave - till he remembered he had just gotten a new vehicle & we probably (indeed) did not recognize him.
It sounds hokey, but it sure makes for an ongoing feeling of belonging to the community.
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Have you ever noticed that if you are walking down the street and someone smiles at you, it makes you feel better? Someone told me this once, and so I started smiling at people as I walked by them on the street, and found out that if you smile at someone, chances are they will smile back.
I tried this trick with yawning. Waaaay more effective.