The Science Of Why You Should Spend
Your Money On Experiences, Not Things
You don't have infinite money. Spend it on stuff that research says makes you happy.
Most people are in the pursuit of
happiness. There are economists who think happiness is the best indicator of
the health of a society. We know that money can make you happier, though after
your basic needs are met, it doesn't make you that much happier. But one of the
biggest questions is how to allocate our money, which is (for most of us) a
limited resource.
There's a very logical assumption
that most people make when spending their money: that because a physical object
will last longer, it will make us happier for a longer time than a one-off
experience like a concert or vacation. According to recent research, it turns
out that assumption is completely wrong.
"One
of the enemies of happiness is adaptation," says Dr. Thomas Gilovich, a psychology professor at Cornell University who has been studying the
question of money and happiness for over two decades. "We buy things to
make us happy, and we succeed. But only for a while. New things are exciting to
us at first, but then we adapt to
them."
So rather than buying the latest
iPhone or a new BMW, Gilovich suggests you'll get more happiness spending money
on experiences like going to art exhibits, doing outdoor activities, learning a
new skill, or traveling.
Gilovich's findings are the
synthesis of psychological studies conducted by him and others into the Easterlin paradox, which found that money
buys happiness, but only up to a point. How adaptation affects happiness, for instance, was measured in a study
that asked people to self-report their happiness with major material and
experiential purchases. Initially, their happiness with those purchases was
ranked about the same. But over time, people's satisfaction with the things
they bought went down, whereas their satisfaction with experiences they spent
money on went up.
It's counterintuitive that something
like a physical object that you can keep for a long time doesn't keep you as
happy as long as a once-and-done experience does. Ironically, the fact that a
material thing is ever present works against it, making it easier to adapt to.
It fades into the background and becomes part of the new normal. But while the
happiness from material purchases diminishes over time, experiences become an
ingrained part of our identity.
"Our experiences are a bigger
part of ourselves than our material goods," says Gilovich. "You can
really like your material stuff. You can even think that part of your identity
is connected to those things, but nonetheless they remain separate from you. In
contrast, your experiences really are part of you. We are the sum total of our
experiences."
One study conducted by Gilovich even
showed that if people have an experience they say negatively impacted their
happiness, once they have the chance to talk about it, their assessment of that
experience goes up. Gilovich attributes this to the fact that something that
might have been stressful or scary in the past can become a funny story to tell
at a party or be looked back on as an invaluable character-building experience.
Another reason is that shared
experiences connect us more to other people than shared consumption. You're
much more likely to feel connected to someone you took a vacation with in
Bogotá than someone who also happens to have bought a 4K TV.
"We consume experiences
directly with other people," says Gilovich. "And after they're gone,
they're part of the stories that we tell to one another."
And even if someone wasn't with you
when you had a particular experience, you're much more likely to bond over both
having hiked the Appalachian Trail or seeing the same show than you are over
both owning Fitbits.
You're also much less prone to
negatively compare your own experiences to someone else's than you would with
material purchases. One study conducted by researchers Ryan Howell and Graham
Hill found that it's easier to feature-compare material goods (how many carats
is your ring? how fast is your laptop's CPU?) than experiences. And since it's
easier to compare, people do so.
"The tendency of keeping up
with the Joneses tends to be more pronounced for material goods than for
experiential purchases," says Gilovich. "It certainly bothers us if
we're on a vacation and see people staying in a better hotel or flying first
class. But it doesn't produce as much envy as when we're outgunned on material
goods."
Gilovich's research has implications
for individuals who want to maximize their happiness return on their financial
investments, for employers who want to have a happier workforce, and
policy-makers who want to have a happy citizenry.
"By shifting the investments
that societies make and the policies they pursue, they can steer large
populations to the kinds of experiential pursuits that promote greater
happiness," write Gilovich and his coauthor, Amit Kumar, in their recent
article in the academic journal Experimental Social Psychology.
If society takes their research to
heart, it should mean not only a shift in how individuals spend their
discretionary income, but also place an emphasis on employers giving paid
vacation and governments taking care of recreational spaces.
"As a society, shouldn't we be
making experiences easier for people to have?" asks Gilovich.
http://www.fastcoexist.com/3043858/world-changing-ideas/the-science-of-why-you-should-spend-your-money-on-experiences-not-thing
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