Buying Happiness: Buy Experiences Instead of Things

You’ve heard that money can’t buy happiness, but as it turns out, that’s not entirely true. Money can buy happiness, just less than we might think, and only if we spend our money the right way. Unfortunately, humans are horrible at predicting what will make them happy!

How money buys happiness

Those are the findings of researchers Dunn, Gilbert, and Wilson in their paper, “If Money Doesn’t Make You Happy Then You’re Probably Not Spending It Right” [PDF]. According to the paper, numerous studies have shown different ways that money equals happiness. Money gives people more control over their day-to-day lives, more free time to spend with friends and family, longer lives and better health overall, and a buffer against stress.

Each of those benefits have been shown to increase a person’s level of happiness. But here’s the thing: research also has shown that the filthy rich aren’t proportionately happier than, say, the middle class.

One reason argued by the researchers is that people spend their money in ways that they think will make them happy, but they are bad at accurately predicting what will make them happy. Our predictions lack important details, we underestimate how well we can adapt to our circumstances, and the context in which we make our predictions is not the context in which we’ll have the future experience.

So rather than relying on our awful predictions, the researchers found eight ways that spending can increase happiness. We’ll cover each in a series of posts on the Pageonce blog. First up: buy experiences, not things.

Experiences make us happier than things

This isn’t anything new if you read personal finance blogs or ‘zines, but do you know why experiences generally make us happier than shiny, new things? The researchers found the following benefits to experiences:

• They keep us in the present.
• We recall them fondly. Sometimes the frustrating experience of getting lost on a trip becomes a great story later, and gets funnier with each retelling.
• It’s less easy to adapt to an experience because the moment is fleeting, whereas with things, we see them each day and witness as they get worn down, break, and need repairs.
• Experiences are difficult to compare, and comparison has been shown to reduce our levels of happiness.
• They are usually enjoyed with others, and studies have shown that even for introverts, shared experiences are a great source of happiness.

The researchers also note that there is a blurry line between experiences and things. For example, some things allow you to have an experience: surfboards are a thing you need in order to experience riding the waves. It also might be the case that a thing allows you time for other experiences. For example, if you have a large yard, a riding mower might mean an extra two hours to play with your kids on the weekend. There are certainly exceptions, but by and large if you keep the experience in mind over the thing itself, you’ll end up happier.

Next up is part two in our eight-part series. Stay tuned and subscribe to the blog if you haven’t already!