Subsidize Experiences

Psychologists confirm economist’ findings that experiences like vacations seem less positional than objects like TVs and cameras.:

When it comes to spending disposable income, experiential purchases tend to make people happier than material purchases (Van Boven & Gilovich, 2003). But why are experiences more satisfying? We propose that the evaluation of experiences tends to be less comparative than that of material possessions, such that potentially invidious comparisons have less impact on satisfaction with experiences than with material possessions. Support for this contention was obtained in 8 studies. We found that participants were less satisfied with their material purchases because they were more likely to ruminate about unchosen options (Study 1); that participants tended to maximize when selecting material goods and satisfice when selecting experiences (Study 2); that participants examined unchosen material purchases more than unchosen experiential purchases (Study 3); and that, relative to experiences, participants’ satisfaction with their material possessions was undermined more by comparisons to other available options (Studies 4 and 5A), to the same option at a different price (Studies 5B and 6), and to the purchases of other individuals (Study 5C). Our results suggest that experiential purchase decisions are easier to make and more conducive to well-being.

More here and here.

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  • PeterW

    Clearly the researchers haven’t had enough experience with people pompously bleating about their trips to Europe/Tibet/Africa, and how much it changed them, and how they now hold superior ideas that nobody less well-traveled than themselves could really understand.

    Either that or they’re blind to status signaling among their own kind. Scientists tend to be poorer than their comparably intelligent peers, but more well-traveled.

  • jorge

    Discussion seems very superficial. The authors don’t seem to understand that material goods also provide potential experiences at different levels so it makes it harder to evaluate opportunity cost. E.g. If I buy an expensive TV or car for the first time, how likely is it that this will continue to satisfy me as my tastes and habits evolve? Will saving money by giving up a minor feature now seem like a major issue in a year’s time? Fixed capital goods have long term inertial effects that experiences don’t.

    In contrast, making a mistake on a given trip or cruise won’t obligate suffering through the same problems a year from now. To be comparable you would have to commit (for example) to a package of 4 trips over the next 4 years. That decision would look a lot more like the decision to buy an expensive TV.

  • Curt Adams

    Experiences are personalized. Somebody’s else’s experiences are less likely to overshadow mine just because they will have done things differently, and probably in a way that is less appealing to me. Goods are simpler, and I’m much more likely to see a TV that’s just plain better than mine.

    The lability of memory may also favor positive evaluations of experiences. Once we have a good we will generally come to experience it as commonplace. We will then update our past early experiences as also less interesting as we rework our memories (which fade if not reviewed and reworked). Experiences, if unusual like trips, necessarily can’t become commonplace to us and so the memories will be refreshed as special and new, just as when we first experienced it.

  • http://akinokure.blogspot.com agnostic

    It matters how much the consumer views the experience as a commodity — an experience that isn’t unique and personal, but “one of those things” that anyone can do and get the same results. The SWPL crowd who brag about backpacking through Croatia, for example — they don’t view it as a unique experience, but as the modern-day Grand Tour to signal status. And they’ll dwell more on the opportunity cost — “should we have backpacked through Bulgaria instead? Would that have sounded cooler and more authentic?” That regret kills their joy.

    It’s the same with going to a movie. Everyone watches the same movie; the only difference is what crowd you see it with, but unlike going to a dance club, your interactions with the crowd are zero, so they don’t count. And again, what other movie might you have seen instead?

    And on the other hand, buying material things could be a purely experiential thing. Just buy things that you never intend to use. You won’t worry whether you could’ve gotten more usage from this or that thingie, and you won’t compare your usage to anyone else’s. Provided you’re just stashing these impulse buys away instead of displaying them, of course. That makes the satisfaction come instead from the hunt for the impulse purchase — the experience.

    Isn’t that the way that most shopaholics appear — that for them it’s not about the clothes, but about the shopping? You can always compare the shopping experience to other experiences, but it’s clear that the annoying and clueless anti-consumerist is wrong about these people being materially obsessed. Even better, they’re not bowling alone but joining in the throngs of their fellow shopaholics to enjoy the rush of losing yourself in the teeming crowd.

  • Captain Oblivious

    I tend to prefer “experiential” purchases simply because they leave memories, not piles of crap laying around the house!

    I’ve got more “stuff” than I know what to do with – and I collect more all the time. It’s passed a tipping point, because I often go out and buy another of something I know for a fact I’ve already got, simply because I can’t find it amongst all the other junk!

    So at least experiential purchases don’t add to the clutter.

  • Greg Conen

    So the reason I have less fun on vacation than people I know is that I’m more inclined to draw “invidious comparisons”: I tend to think about other things I could be doing rather than just enjoying it.

  • Constant

    When I buy a book, I am buying both a thing (a book) and an experience (reading the book). Lately I’ve been buying purely Kindle books, because I am primarily interested in reading the books, and only secondarily interested in keeping them (though not entirely uninterested in keeping them for reference – though the searchability of electronic texts makes them far superior to physical books as references).

  • http://www.takeonit.com Ben Albahari

    There’s a Ted talk I saw by Dan Gilbert, where he divides happiness into the synthetic vs. the natural, as a model to help explain our satisfaction (and lack thereof). Being dissatisfied with material possessions because of our tendency to compare what we could have had fits well with what Dan says and Gilovich and Boven says. Here’s the link to the Ted Talk:

    http://www.ted.com/talks/dan_gilbert_asks_why_are_we_happy.html

    • lemmy caution

      That is a good talk. I had read his book, but he is a good speaker.

  • AP

    ^^

    Constant,

    While I would be inclined to agree with you re: books being both a thing and an experience, could that not for the sake of argument be the case with almost anything? A new TV is both a thing (having the TV and the associated status signal) but also an experience (watching things on the new TV is higher definition/better than on the old TV).

    If we decide that the book and the TV are different cases, where do we draw the line? What about a music CD? Or a cup of coffee? Are these things material possessions or experiences, or both? It seems to me that things e.g. holidays that are fairly easy to categorise are the exception; it seems to me that almost any possession could reasonably be argued to be an experience as well.

  • http://robertwiblin.wordpress.com Robert Wiblin

    The negative externality is significantly internalised by the fact that by buying objects now they not only increase the standards for everyone around them but also for their future selves.

  • Unnamed

    They have also written a follow-up paper on the status/signaling implications of material and experiential purchases, pdf.

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  • http://diaryofagolddigger.blogspot.com/ The gold digger

    Experiences are way better than things because you can brag about them more. The rarer the experience, the higher the degree of difficulty, the less money you spend, the weirder the food, the better the brag.

    Anyone with $1,000 can get a fancy TV (or however much it costs), but a trip into the Atlas mountains in Morocco with a Peace Corps volunteer to a little village to talk to the locals who speak only Berber? Backpacking alone across South America, taking trains and buses with the Aymara and Maya, not encountering a flush toilet for a week? Ha. Top that, person who takes a package tour to Cozumel!