Contrary to expectations, life experiences better use of money than material items

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Despite knowing that buying life experiences will make them happier than buying material items, shoppers might continue to spend money on the latter because they mistakenly believe items are a better value, according to a San Francisco State University study published today. That belief, however, isn't accurate.

Those surveyed after making a purchase rated life experiences both making them happier and as a better use of their money, indicating many are sacrificing their well-being for a sense of value that never materializes. The study is one of the first to shed light on why people buy material items even though years of research has shown experiences provide a greater happiness boost.

"People actually do know, and accurately predict, that life experiences will make them happier," said SF State Associate Professor of Psychology Ryan Howell, a co-author of the study who has extensively researched the link between spending and happiness. "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."

Part of the reason, Howell suggests, is that material items are a tangible reminder of what the item is worth. Life experiences produce only memories, which can be harder to put a price tag on.

"We naturally associate with stuff. I bought this car, it's worth $8,000," he said. "We have a hard time estimating the economic value we would place on our memories."

To conduct the study, Howell and lead author Paulina Pchelin, a student at SF State when the research took place, surveyed individuals both before and after making a purchase. Prior to the purchase, respondents said they believed a would make them happier but a material item would be a better use of their money. After the purchase, however, respondents reported that life experiences not only made them happier but were also the better value.

"There were just huge underestimates in how much value people expected to get from their purchase," Howell said. "It's almost like people feel they will get no economic value from their life experiences and therefore they feel this tension in spending money on them."

Adjusting an individual's priorities, the study showed, can change spending behavior. In an additional experiment, those asked to prioritize value when making a gravitated toward material items, while those asked to prioritize happiness chose experiences.

Determining the best way to encourage the general public to prioritize happiness over value will require additional research, Howell said. The implications, however, extend far beyond the realm of psychology or even retail.

"Happiness is not some fleeting, positive emotion we experience in the moment," he said. "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. We should try to figure out how to help people maximize their happiness because of all the benefits that come from it." As next step, Howell is inviting people to forecast their from consumer items by taking part in studies on his website BeyondThePurchase.Org.

More information: "The Hidden Cost of Value-seeking: People do not Accurately Forecast the Economic Benefits of Experiential Purchases," by Paulina Pchelin and Ryan T. Howell was published online April 2 in the Journal of Positive Psychology.

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3.7 / 5 (3) Apr 02, 2014
Once had an opportunity, a choice: The choice was to enjoy the pleasure of attending a Superbowl and sitting in one of those Super-Atomic-Expensive Private Suites that the wealthy own. Those things are fully catered, immaculately laid-out, and surprisingly spacious (The Georgia Dome - Penthouse Suite I think), OR, actually working the sidelines as part of the field crew that does just field crew stuff....DURING THE GAME! Holy Cow, you have NEVER seen an American Football Game until you have been ON THE FREAKING FIELD! After the game I HONESTLY felt sorry for all those wealthy people inside those private suites.The SPECTACLE, the energy of massed humanity cheering and being happy, and funny and tense.There are just no words for the ENERGY of being at field level in a Play Off Game. I knew it had nothing to do with me, but, it just sweeps you up like nothing for which you could mentally prepare yourself.Emotion is palpable!! If I had to pay to get in-I could never put a price on it.
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mogmich
5 / 5 (3) Apr 02, 2014
Maybe social inequality can explain this? If you live in a society without welfare, and you have to worry about the future for you and your family, it is actually a good idea to buy material goods, because they can be sold if you need money to feed your children. You cannot do that with an experience.

If this is correct, I think it is a very good argument for social equality and welfare. It makes people happier, because they can use more money on life experiences, without worrying about their material needs in the future.
Eikka
1 / 5 (2) Apr 02, 2014
After the purchase, however, respondents reported that life experiences not only made them happier but were also the better value.


I contest whether it actually makes people happier, or whether they just say they're happier because they're suffering from cognitive dissonance after spending thousands of dollars on a beach holiday and all they really got out of it was a t-shirt and a nice photo.

Everyone wants to make the smart choice and feel good that they did. Wasting money on something immaterial and fleeting is not a very smart choice, so the person has to compensate by rationalizing to themselves that it at least made them happy - so it was "worth it". The same cognitive bias is at work with people who buy e.g. hi-fi audio equipment. The more expensive it is, the more definitely it sounds better. The easiest person to lie to is yourself.

Of course it's entirely possible that they actually become happier because otherwise the whole thing would have been a waste.
Milou
1 / 5 (2) Apr 02, 2014
Isn't buying material things also an experience??? After buying do you not experience the participation of its use??? If one buys a Ferrari then drives cross country a few time, is that not an experience??? I am confused!!!!
Zera
1 / 5 (1) Apr 02, 2014
On the contrare, I believe that we as a species have always placed an extraordinarily high value on experience.

Books. Movies. Television. Computer Games. All provide the consumer with the sensation of living and learning new roles within a society.

They provide the biological beast that is Homo Sapiens it's greatest joy - experience/prediction/fulfillment. Or emotional validation that a "feeling" was correct and in line with the survival of the experiencer.

If we have not yet understood the value of a new couch, it is because the consumer constantly feels there is a better couch. A larger one, one more in the taste of the room. While a holiday is accepted as temporary and as such is enjoyed more fully in the mindset of "Present Time". While the couch is an entity moving through space and time with the Human and as such undergoes the same kind of constant refinement present in every aspect of the Humans life.

How much would you sell a memory for? How about share? Virtual Reality?

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