Most experts believe that linking to other high quality and authority websites from your content helps in improving your own rank in search engines.

But how can spreading link love improve your website ? Justilien Gaspard explains it best on SEW:

“When a search engine discovers a page pointing users in the direction of more useful information, that page will be given more credit.

Ask yourself what’s more useful: information that cites other government, education, and medical sites on a particular disease, or a page of copy describing the disease without referencing any authority sites? Not even a citation. That answer is a no-brainer.

Keep in mind that algorithms are designed by scientists, who’ve spent years researching at universities. The act of citing and referencing sources is second nature to them – they know how important this is for credibility. ”