Can money really buy happiness?
You’re not sure.
You work hard for your money and don’t want to waste it on trivial things that won’t make you content.
“Is my money well spent?”
“Could spending it in other ways make me happier?”
These are the questions you ask yourself.
And you’re right to do so.
When you put in the hours day after day to earn money you need to spend it wisely. You want maximum bang for your buck. Even if you’re incredibly wealthy, you need to spend your money well.
Sensible spending means less waste and more surplus to help others. It means not wasting it on things that don’t matter.
Every penny counts.
The Trouble with Money
Studies conducted by Dr Thomas Gilovich, a psychology professor at Cornell University, conclude we should spend money on experiences, not things. His work is part of two decades of research that has attempted to answer the Easterlin paradox, which found that money buys happiness but only up to a certain point.
In one study, people self-reported their happiness after major experiential and material purchases. Initially, their joy for both purchases ranked about the same. But over time, people’s satisfaction with the things they bought went down, whereas their satisfaction with their experiences went up.
Here’s what two decades of research have found:
1. Experiences Stop Boredom
The happiness from experiences like a music concert, walk in the park, or a hobby is more sustainable than that found in an object.
Science has consistently shown that human brains adapt to our circumstances.
So while an object we purchase lasts longer than an experience, the happiness it provides quickly wears off.
“One of the enemies of happiness is adaption,” says Dr Gilovich, “We buy things to make us happy, and we succeed. But only for a while. New things are exciting to us at first, but then we get used to them.”
2. Experiences Don’t Fade
Because the happiness from a possession quickly wears off, we begin to look for another. Perhaps we do need a new car or a new computer, and the TV really does look too small?
We often think the happiness we get from a new purchase lasts as long as the purchase itself – that the new BMW on our drive will be as satisfying on day 900 as it is on day three.
It seems natural that owning an object that we can see and touch will make us happy, but that’s not what the studies say.
We always want additional material goods.
That’s why experiences matter. Their feel-good factor lasts longer, so there is less of the craving for more.
3. Experiences Are Without Equal
All of us make social comparisons all the time as that’s the way our brain is built. But because experiences are unique, they are much harder to compare.
There’s always someone with a bigger house, or a better car, or more diamonds in their ring. Compare that to my day with its daily jog, or museum visit. Who can say that it was any less enjoyable than yours?
“Keeping up with the Joneses tends to be more pronounced for material goods than for experiential purchases,” says Gilovich. “It certainly bothers us if we’re on vacation and see people staying in a better hotel or flying first class. But it doesn’t produce as much envy.”
4. Experiences Are a Part of You
Experiences become part of our identity in a way that objects do not. We are the sum of the things we have seen, done, and been, but we are not our possessions
We can like our material goods, we can think they’re part of our identity, but they’re always a step removed. In contrast, our experiences are us; they are what make us who we are.
“Our experiences are a bigger part of ourselves than our material goods,” says Gilovich.
Buying a new phone isn’t going to change who you are; taking a sabbatical and crossing the Gobi Desert for charity certainly will.
5. Experiences Increase Anticipation
The anticipation of an experience causes excitement and enjoyment, while the anticipation of obtaining a possession causes impatience.
Experiences cause enthusiasm from the first day of planning. As we get closer to the event, our eagerness grows. Objects encourage a sense of wanting to have, to own and in the prelude we often get irritated.
Can you remember the last full day out you planned or the last long-vacation, how did this compare to your latest purchase?
6. Experiences Are Fleeting
Because experiences last for such a short time, we tend to cherish them; in fact, their value tends to increase over time.
Objects can often disappoint, though, and we feel unhappy about the money spent. We don’t want to throw out our purchases, if we did, we would suffer a financial loss.
And so, it sits on the shelf unused or stays parked in the garage driven only on weekends, or only comes out on special occasions.
Ironically, the presence of an object works against it. It fades into the background and become the new normal.
7. Experiences Are Social
We consume our experiences directly with other people. After they’re gone, they’re part of the stories we tell each other.
Even if we didn’t experience something together, we often feel happier when we swap experiences with others, or when we find others have experiences similar to ours. Finding you own the same car or also have a Fit-bit doesn’t compare to realising you both volunteer at soup kitchens and have recently been to the local zoo.“We consume experiences directly with other people,” says Gilovich, “it’s that shared experience that counts.”
8. Experiences Build Character
Even if people have experiences that negatively impacted their happiness, once they have the chance to talk about it, their assessment of that experience goes up.
Something that might seem stressful or scary at the time becomes a funny story to tell or part of the process of character building, making us who we are today.
In my youth, I volunteered in Uganda, Africa, taught English in China and worked in a bar in the Netherlands. Without these life experiences, I’m not sure I’d be who I am today.
Get the Most Bang for Your Buck
You work hard, and after expenses, you don’t have much money left.
You want to know how best to spend it. To make sure you’re getting the most bang for your buck.
It may seem counter-intuitive, but although experiences are short and fleeting, they often increase our happiness more than objects do.
Should you buy a bigger house or get another college degree?
Should you purchase a new outfit or go to a local museum?
The choice seems clear.
While objects provide a certain amount of satisfaction - and we need some to survive - there comes a point where more is not good.
Getting the balance right will leave you more content, balanced and in control of your happiness.
Armed with this knowledge, you’ll be better able to make economic decisions, providing beautiful experiences for you and your loved ones.
Don’t hesitate, start planning your next memorable experience today.
- Cornell University: https://news.cornell.edu/stories/2013/01/feel-happier-talk-about-experiences-not-things
- Wikipedia: https://en.wikipedia.org/wiki/Easterlin_paradox