Can Money Buy You Happiness?

Source: Pixabay

The other weekend I went to the mall in search of a new pair of tennis shoes and while I was there, I continued my never-ending quest to find the perfect pair of boots (just ask my husband – I’ve been on this quest for years). When I arrived at the mall, the parking lot was so full that I had to circle around before I could find a spot. The stores were equally crowded inside. Apparently, none of these shoppers had read Leaf Van Boven’s 2005 review article highlighting the benefits of spending money on experiences over material goods. Or maybe, like me, they still have a bit of trouble accepting the findings, particularly when on a quest for a material good that I’m sure will change my life. (Spoiler alert: I did buy a pair of boots and then returned them.)

When surveying various cultures to determine what makes people happy, researchers kept stumbling upon the finding that having more didn’t equate to being happier. And people who aspire to have more are, in fact, less satisfied. For example, the more that people endorse the statement “Buying things gives me pleasure,” the less satisfied they are with their lives. But it seems this is only true if you are spending your money to buy “things” rather than “memories.” Whether people are asked to directly compare experiential versus material purchases or to simply write about or reflect on a specific recent purchase, they report that the experiential purchase made them happier, contributed more to their overall happiness, and was “money better spent.” In the moment, recalling their most recent vacation seems to put people in a better mood than recalling their last shoe purchase.

Why is money spent to create memories better spent?

Given the mounting evidence that people get more out of their experiences than material goods, researchers have turned to the question of why we get more bang for our buck when we spend our money on memories. In his review article, Van Boven suggests three different reasons why experiential purchases make us happier:

1. Soaking up the experience.

With experiences, we can put a positive spin on our memories. A few years ago I spent a quick week vacationing in Costa Rica. Prior to leaving, I bought a couple of shirts that I wore throughout the trip. In the moment the trip didn't seem so magical — I was often hungry, sweaty, tired, and looking forward to getting home. Now, a month later, I’m even remembering those really sweaty moments fondly, thinking about the fun I had, the new things I got to see. My shirts? They’re hanging in my closet a little worse for the wear and no amount of spin can take away the inexplicable grease stains. Van Boven argues that we can put a positive spin on even our less picturesque experiences as we recall them down the line. Material purchases, on the other hand, get worn and no amount of spinning will change that fact. So, if you like food analogies — while experiences age like a fine wine, material possessions age like a fine fruit (spoiling with time).

2. Experiences are less subject to social comparison.

You got a raise, your coworker got a bigger one. You bought a new house, your neighbor built a bigger one. On the other hand, Van Boven suggests that experiences are more personal and unique, and thus harder to compare. When people are asked whether they’d prefer to live in a world where they earned $50,000 a year while others earned $25,000 or a world where they earned $100,000 while others earned $200,000, about half of the people prefer to earn $50,000 if it means they earn more than everyone else. But when asked whether they’d prefer two weeks of vacation while everyone else got one, or four weeks while everyone else got eight, 85 percent of people preferred the four weeks even if other people got more.

3. Experiences help us create relationships.

People are generally engaging in experiences with others, whereas purchasing a new pair of boots is more likely to be a solitary affair. There is also a stigma associated with being materialistic and researchers have found that people tend to prefer to interact with other people who are “experiential” than those who are “materialistic.” Engaging in an experience together can also help people create shared memories and bond, solidifying relationships.

The good news for those of us who really want those new boots: It's all about your intentions. Although people seem to have a pretty consistent sense of what counts as an experiential purchase (dining, travel, admission fees) or a material purchase (jewelry, clothing, electronics), the researchers generally leave it up to you to decide by asking you about a recent purchase made with the primary intention of acquiring a life experience (experiential) or of acquiring a material possession (material). So those new tennis shoes I bought could be an experience or a material purchase, depending on my outlook. If I bought them thinking about the longer runs I could go on now that my feet won't hurt, I’ll probably get more out of it than if I bought them thinking about how good they'll look with their hot pink highlights that match my running shorts. And my boots? It’s a bit hard to spin them as a life experience, but I’m working on it.

And as you select gifts for your family and friends this holiday season, don't be afraid to make them experiential. Those types of gifts might not be as satisfying to give in the moment since they can't be used immediately, but recipients like them a lot since they generate more satisfaction down the road.