Money is Better Spent on Experiences than Items, Study Says
Frequent travelers and adventure junkies instinctively know that spending money on experiences, rather than material goods, will make them happier. Even knowing this, though, many continue buying material items, because they consider those items a greater value. A study from San Francisco State University explores this thought process—and why it’s counterintuitive to our happiness.
"People actually do know, and accurately predict, that life experiences will make them happier," said San Francisco State Associate Professor of Psychology Ryan Howell, a co-author of the study. "What they really underestimate is how much monetary value they will get out of a life experience. Even though they're told experiences will make them happier and they know experiences will make them happier, they still perceive material items as being a better value."
This discrepancy, Howell said, is largely due to the fact that it’s hard to place economic value on experiences and memories. Anyone could tell you what their new computer is worth, but it’s tougher to assign economic value to the memories of your trip to Spain.
Another factor seems to be that items are always there after we buy them, while experiences are fleeting, making it seem like we would get more value from items in the long-run. But in reality, past research indicates that new items are exciting, but with time we get used to them and they don’t contribute as much to our happiness. Experiences that produce memories, however, can be enjoyed when you remember them and when you share stories with others—particularly those who were with you or had a similar experience.
This particular study was done by asking people, before and after they made a purchase, about their expectations and then the results. The major consensus was that people expected an experience to make them happier, but considered an item a better use of money. After their purchase, though, people noted that experiences both made them happier and were a better use of money.
From the study, it’s clear that people underestimated the value of experiences, Howell said. Because people typically didn’t recognize monetary value in experiences, it seems that people feel “tension” spending money on them.
There is more research to be done on the topic, especially when it comes to adjusting our priorities. Howell notes that happiness is not just a good feeling, but something that makes us more productive and healthier.
"There are tremendous benefits to happiness. Companies want their employers to be happier because they are more productive. Doctors want their patients to be happier because they will be healthier,” Howell said. “We should try to figure out how to help people maximize their happiness because of all the benefits that come from it."