Researchers have been saying for years that if you want to extract more happiness from your purchases, you’re better off buying experiences that you’ll savor — such as dinner at a favorite restaurant or a memorable family vacation. Yet according to a new study in the Journal of Consumer Research, people living on a budget are more likely to take the opposite approach and buy material possessions they mistakenly assume will have a more lasting impact.
“Feelings of financial constraint tend to shift consumers’ preferences toward material goods and away from experiences,” write study authors Stephanie M. Tully, Hal E. Hershfield and Tom Meyvis in the report.
When people have just enough money to choose one type of purchase over the other, they often choose the material object because they expect to get more enjoyment or utility from it over the long run.
“Material goods tend to physically persist over time, whereas experiences are fleeting by nature,” write the authors. By opting for something more tangible, people may feel as if they’re squeezing more value out of their purchase — especially if they’re trying to stretch their limited resources.
“Choosing such purchases enables consumers to build an inventory of resources, guaranteeing that — even if they cannot make a later purchase — they will still have something,” write the authors. For example, for the same price as a weekend vacation, they can buy a brand-new TV and enjoy it for an extended period without buying it again.
The problem is the boost in happiness that people experience when they buy something new — such as a fancier TV or a swanky outfit — tends to decline quickly once they become accustomed to it. Experiential purchases, by contrast, tend to have a more lasting impact — in part because people savor and remember them.
Better bang for the buck
According to happiness researchers Michael Norton and Elizabeth Dunn, experiences tend to make people happier over the long run because they give people a chance to revel in the things they enjoy and reminisce about them later.
“In study after study, people are in a better mood when they reflect on their experiential purchases, which they describe as ‘money well spent,'” write Norton and Dunn in their 2013 book, “Happy Money: The Science of Happier Spending.” “People who spend more of their money on leisure report significantly greater satisfaction with their lives.” In addition, when they share their experiences with others, their happiness often multiplies.
It doesn’t take a ton of money to reap the benefits either. “Studies show that even when people spend only a few dollars, they get more lasting pleasure from buying an experience, such as playing a video game or listening to a song than from buying a material thing like a key chain or a picture frame,” write Dunn and Norton.
The next time you have some extra cash on hand, try spending it on a one-time experience, such as a movie or a weekend trip. You may find that the satisfaction that you reap from the experience sticks with you for longer than you’d expect.