Last month I found myself in a quandary: thanks to my tax return, I finally had some extra money that I didn’t know how to spend. Should I buy a new iPhone, so I can finally enjoy the newer features (and so I can finally get my friends off my back for having the same phone since high school)? Should I buy a ticket to visit my cousin in Puerto Rico, so I can see what island life is like on la isla del encanto as opposed to just on Long Island?
Several possibilities for how to spend this money came to mind, which I soon realized could be divided into two different categories: objects versus experiences — or, in other words, tangible things that I could hold in my hand and possess versus events, whether exciting, indulgent, and/or educational.
I felt myself leaning toward the former because, while an experience would come and go in the blink of an eye, I might enjoy an object for years to come. Still, living in New York City, with an array of activities waiting just outside my door, I couldn’t completely shake the idea of putting my funds toward some kind of adventure. With so much at stake — I mean, I’m only in this situation once a year, if I’m lucky! — I thought I’d get some expert advice to help me make the best purchase possible.
So, I took to the internet, armed with nothing more than a general question:
what makes people happier, spending money on objects or spending money on experiences?
Or, to put it differently, do purchases make people feel better when they are intended to acquire a new life experience or when they are intended to acquire a new tangible material good?
Fortunately for me, psychological researchers have thought about this question for the last two decades (at least!), and have conducted considerable research in pursuit of an answer. Long story short, based on an array of studies conducted on a variety of populations — young and old, Black and White, Democrat and Republican — researchers seem to have arrived at a consensus. The data indicates that virtually across the board, once basic needs are met — such as health, hygiene, and nutritional needs — money spent on experiences usually ends up being better spent than money spent on objects.
More specifically, research participants have indicated that compared to material purchases, experiential purchases provide a greater sense of satisfaction:
- when anticipating the purchase
- after making the purchase
- when prompted to reflect on the purchase
This first point regarding anticipatory happiness made a lot of sense to me. While waiting can be frustrating no matter what, it seems that waiting for experiences is tinged with more excitement, while waiting for items is tinged with more impatience. For instance, when I buy plane tickets online, I always anticipate my future voyage with eagerness and enthusiasm, while when I shop for clothes or electronics online, I just want the items ASAP. I mean, just think about waiting in line at Target versus waiting in line for a concert — one type of waiting is usually more fun.
Even so, I wanted to know more about why experiential purchases bring a greater sense of satisfaction even after buying, when experiences are gone but objects remain. This line of inquiry thus inspired a slightly more specific question: why does money spent on experiences tend to make people happier than money spent on objects? Luckily, researchers investigated this question as well, producing several coinciding explanations:
First of all, although many consumers believe in the temporary benefits of purchased experiences, most still think that material goods will be a better use of money because they last longer. While this is true physically speaking, it doesn’t seem to be the case psychologically. A wide range of research has proven the human capacity for hedonic adaptation, which refers to the phenomenon wherein we lose appreciation for pleasurable things to which we are constantly exposed.
While a new watch or car might spike our happiness in the short-term, we often get used to such items over time, reducing their power to increase well-being in the long-term. In this way, the fleeting nature of purchased experiences prevents us from adapting to them and getting bored of them. However, experiences can still provide joy after the fact in the form of personal memories, storytelling, and now ever-present photos.
It may not come as a surprise, then, that positive attitudes toward money spent on experiences remain far longer than those toward money spent on items. Even though most consumers predict that purchasing material goods will be a better use of money before the fact, they feel differently afterward, attributing higher satisfaction to previous purchases that went toward life experiences rather than objects.
Experiential Purchases Are More Associated with the Self…
Second of all, experiential purchases tend to bring more happiness than material purchases because they are more associated with the self. While consumers may indeed connect their identity with certain items, people still tend to think of themselves more as the sum of their experiences than as the sum of their objects. As such, research indicates that people attribute more importance to their experiences than their possessions in defining themselves, and subsequently tend to rank purchased experiences as having played a greater role in self-development. Because personal growth is one of the greatest sources of prolonged satisfaction, purchased experiences seem to contribute more to positive self-construction than do purchased items.
… But Less Associated with Social Comparison
Because purchased experiences support our sense of self more than material goods do, they are also less susceptible to downward comparison. Human society is often obsessed with comparisons — especially when social media allows us to constantly compare at the click of a button — which can result in a competitive situation wherein we all want to have the best: the most expensive outfit, the fastest car, the newest computer — or at least the version better than our neighbor’s.
This rat race mentality often leaves consumers exhausted. Because purchased experiences are experiential rather than items with concrete features, they are more difficult to compare side-by-side. This transcendence of easy juxtaposition makes them less likely to cause negative emotions, such as the jealousy and anxiety that can come from trying to “keep up with the Joneses” in a material sense.
And, while it may be easy to compare certain aspects of experiences — such as whether one travelled first class or coach — it’s much harder to say that one purchased experience is objectively more fun or meaningful than another. In fact, the decrease in social comparison associated with experiential purchases has been one of the main paths found in research through which such purchases have had a positive effect on well-being.
Experiential Purchases Promote More Connection with Others
This reduced capacity to compare purchased experiences then relates to another reason why they provide more satisfaction than purchased goods; they tend to promote more communication and connection with other people. Because social interaction constitutes one of the most crucial determinants of human happiness, it makes sense that researchers have found it repeatedly referenced in consumer reports on why money spent on experiences ultimately brought more joy than money spent on items.
Experiential purchases are often explicitly social — think of “dining, dancing, and dating” versus “shirts, sweaters, and silverware.” — and they also have greater “social value” in that they can be used more readily in social situations. Talking about purchased experiences, such as trips or dinners, has shown to be more enjoyable for all parties compared to talking about purchased objects — perhaps in part due to their more open-ended nature and their ability to be described in traditional narrative structure with a beginning, middle, and end. Furthermore, people bond more readily over similar experiences they’ve both shared compared to items they both own. As such, purchased experiences promote social connection more than purchased items, both during the experience (if it’s a social one) and afterward (even if it wasn’t).
Experiential Purchases Age like Fine Wine
Lastly, researchers have found that humans have a greater capacity to positively reframe and reimagine past purchased experiences compared to past purchased items. This means that, in terms of memory, purchased experiences seem to age like a fine wine. While the pleasing aspects of a physical object become less appreciated over time because of hedonic adaptation, the unpleasant aspects of an experience often show an oppositetrend and become softened or reframed as “growing experiences”. For instance, a difficult hike beset by bad weather could be interpreted, or reinterpreted later on, as an exciting, strengthening, and/or character-building challenge that proved one’s strength, or as a humorously endearing recollection — even if it was largely unpleasant in the moment. A physical item, on the other hand, like a phone or purse, is more difficult to reframe in a redeeming light if it’s broken or malfunctioning.
So, returning to my original questions of which type of purchase brings more happiness and why, the research indicates that consumers derive more psychological satisfaction from purchased experiences compared to purchased objects. This seems to occur because experiences are:
- less susceptible to adaptive depreciation but
- more associated with the self, and
- less susceptible to social comparison but
- more associated with social interaction, and
- more amenable to positive reinterpretation and recall
Thus, all things considered… Puerto Rico here I come!