Over the Thanksgiving holidays, my husband and I went on a vacation with our children. The trip reminded me how much I prefer spending money on experiences over materials goods. When we returned, the Christmas season was in full swing with its emphasis on shopping and gifts. I decided to investigate what consumer psychologists have to say about the joy of experiences versus material goods.
Thomas Gilovich, a Professor of Psychology at Cornell University, has written extensively on experiential consumption and the pursuit of happiness. He is an engaging writer and speaker, with some practical wisdom for how to increase your overall level of happiness (more on that in a moment).
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Gilovich introduced the distinction between material and experiential purchases in a 2003 paper. He defined the former as ‘spending money with the primary intention of acquiring a material possession – a tangible object that you obtain and keep in your possession,” like a chocolate bar, couch, or iPhone. An experiential purchase is ‘spending money with the primary intention of acquiring a life experience – an event or series of events that you personally encounter or live through,’ such as a restaurant meal, live concert, or vacation hike. The distinction between the two is not always clear cut: hiking shoes are a material possession, but a walk in the Cotswold’s wearing them is experiential. The interesting question, however, is the satisfaction that people derive from spending money on material goods versus experiences and what seems to be behind the differences.
Based upon his research and those of other academics, experiences tend to provide greater and more enduring satisfaction for at least 3 reasons:
Consumption treadmill. Academic research on happiness has shown that people have a remarkable ability to adapt so that their emotional response to a frequent stimulus diminishes over time. When it comes to material goods, this capacity for adaption is the enemy of happiness because it creates the need to acquire more and more to achieve the same emotional benefit of previous purchases. But it turns out that people adapt less for experiential purchases than material purchases. For Gilovich, “… the justification that people sometime give for spending money on material possessions rather than experiences – that ‘at least I’ll always have the possession’ but the experience will ‘come and go in a flash’ – is backwards. Psychologically, it is the experience that lives on and the possession that fades away.”
Regrets. People can regret buying something they now wish they hadn’t (action), or regret not purchasing something that they now wish they had (inaction). Gilovich found that people tend to have far more regrets of inaction for experiences than for possessions. “Not going to a concert with friends can stick in the craw for many years after the fact, but not buying a particular coat, table, or automobile is usually forgotten rather quickly. Indeed, people tend to have far more regrets of action when it comes to possessions than when it comes to experiences. Even those concerts, theatrical performances, or vacations that do not turn out as planned are quickly rationalized and made peace with. Disappointing or faulty material goods, in contrast, continue to disappoint and confront us with their shortcomings for as long as we keep them in our possession.”
Relative position. Psychologists have shown repeatedly that someone’s satisfaction with their own life and circumstances is influenced by comparisons they make between what they have relative to others. But when it comes to experiences, comparisons to other people appear to have far less of an impact on how someone feels. This is largely due to it being harder to make comparisons between experiences than for material goods. The difference between a Mercedes and a Chevy is relatively straightforward, but not so for two different Cotswolds hiking trips.
What advice does Gilovich have for improving our sense of satisfaction and happiness? “These different mechanisms [e.g., consumption treadmill, regrets, and relative position] collude to make experiential purchases more gratifying, on average, than material purchases, a result with a very simple and practical message: tilt one’s spending a bit more in the direction of experiences and a bit less in the direction of material possessions. At least in wealthy societies in which people have a fair amount of disposable income, they can simply choose to spend more on experiences than on material goods. And if they do, the research suggests, they are likely to be significantly happier as a result.”
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