They say people who think money doesn’t buy happiness just don’t know where to shop. Sorry to have left it so late in your preparations for Christmas and summer, but on this score I have breaking news.
It’s a funny thing that, though economists hold consumption to be the “sole end and purpose” of all economic activity, it’s not a subject that greatly interests them. They’ll help you maximise how much you’ve got to spend, but they’ll give you no help in deciding how to spend it in a way that yields the most happiness – or, as they prefer to say, “satisfaction”.
No, for advice on how to get the biggest bang from your bucks, the experts are social psychologists.
For the past 15 years, their prevailing wisdom has been that spending on experiences – from an overseas holiday to a trip to the movies – yields more happiness than buying more stuff.
The pleasure you get from buying a new CD or pair of shoes or car or even a new home falls off surprisingly quickly, whereas the enjoyment you get from what the US psychologist Tom Gilovich has dubbed “experiential consumption” tends to be longer-lasting.
Subsequent research has found three reasons why experiences provide greater happiness. First, experiential purchases enhance our social relationships more readily and effectively than do material goods.
That is, a lot of the enjoyment comes from our interaction with the people we share the experience with. (This, BTW, gets closer to what I really believe about all this: deep satisfaction comes from our human relationships, not from what we buy.)
Second, experiential purchases form a bigger part of a person’s identity. We are the sum of our life’s experiences – pleasant and otherwise – much more than the sum of our material possessions.
Third, experiential purchases are evaluated more on their own terms and evoke fewer social comparisons than material purchases.
Good point. A lot of our spending goes on keeping up with the Joneses or on buying “positional goods” – goods that demonstrate to the world how well we’re doing in the battle for social status. Trouble is, my delight in my new Volvo is punctured when the chap next door arrives home with his new Beemer.
We make sure our house is as well-appointed as the others in the street, the lawn’s always mown, the car in our driveway is late-model European, and the kids go to private schools. But the one thing the neighbours can never see is how your total debt compares with everyone else’s.
If keeping up with the neighbours has required you to rack up a crippling debt, you’re unlikely to be enjoying a care-free life. Ditto if your financial commitments keep you chained to a well-paying job you hate.
But, as the researchers say, when you’re spending money on experiences, you do it much more for your enjoyment of that experience than to impress the neighbours – unless, of course, you’re into matching their skiing trip to the Snowies with yours to Aspen.
Actually, I think there’s more to it even than those three points. Major experiences such as overseas touring holidays yield pleasure in expectation of them, pleasure while you’re doing it, and pleasure while you’re reliving them and recounting your adventures to family and friends.
And the great beauty of thinking about past holidays is that you remember the highlights, laugh about the bad bits, and forget the boring bits – such as the trouble you had trying to find a public toilet.
Sorry, I promised you breaking news on the experiential front. Research out this year, by Lee, Hall and Wood, finds it’s not as simple as experiences good, stuff bad.
Turns out, which of the two yields the higher happiness count depends on your social class, with class being measured according to income, education or self-assessment.
Dividing people into two categories – higher or lower – the researchers found that “experiential advantage” held for the top half, whereas the bottom half either rated experiences and material purchases equally or rated goods more highly than experiences.
It seems people of higher social class have an abundance of resources, meaning they can afford to focus more on their internal growth and self-development.
In contrast, people who have fewer resources are likely to be more concerned about making wise purchases of the stuff they still needed.
I think it’s probably a gradient: as your material affluence rises you pass through the point where experiences and things deliver roughly equal satisfaction, until eventually your material needs are pretty much satisfied and its experiences that do most to make you happy.