You don't have infinite money. Spend it on stuff that research says makes you happy.
Most people are in the pursuit of happiness. There are
economists who think happiness is the best indicator of the health of a
society. We know that money can make you happier, though after your
basic needs are met, it doesn't make you that much happier. But one of
the biggest questions is how to allocate our money, which is (for most
of us) a limited resource.
There's a very logical assumption that most people make when spending
their money: that because a physical object will last longer, it will
make us happier for a longer time than a one-off experience like a
concert or vacation. According to recent research, it turns out that
assumption is completely wrong.
"One of the enemies of happiness is adaptation," says Dr. Thomas Gilovich,
a psychology professor at Cornell University who has been studying the
question of money and happiness for over two decades. "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 adapt to them."
So rather than buying the latest iPhone or a new BMW, Gilovich
suggests you'll get more happiness spending money on experiences like
going to art exhibits, doing outdoor activities, learning a new skill,
or traveling.
Gilovich's findings are the synthesis of psychological studies conducted by him and others into the Easterlin paradox,
which found that money buys happiness, but only up to a point. How
adaptation affects happiness, for instance, was measured in a study that
asked people to self-report their happiness with major material and
experiential purchases. Initially, their happiness with those purchases
was ranked about the same. But over time, people's satisfaction with the
things they bought went down, whereas their satisfaction with
experiences they spent money on went up.
It's counterintuitive that something like a physical object that you
can keep for a long time doesn't keep you as happy as long as a
once-and-done experience does. Ironically, the fact that a material
thing is ever present works against it, making it easier to adapt to. It
fades into the background and becomes part of the new normal. But while
the happiness from material purchases diminishes over time, experiences
become an ingrained part of our identity.
"Our experiences are a bigger part of ourselves than our material
goods," says Gilovich. "You can really like your material stuff. You can
even think that part of your identity is connected to those things, but
nonetheless they remain separate from you. In contrast, your
experiences really are part of you. We are the sum total of our
experiences."
One study conducted by Gilovich even showed that if people have an
experience they say negatively impacted their happiness, once they have
the chance to talk about it, their assessment of that experience goes
up. Gilovich attributes this to the fact that something that might have
been stressful or scary in the past can become a funny story to tell at a
party or be looked back on as an invaluable character-building
experience.
Another reason is that shared experiences connect us more to other
people than shared consumption. You're much more likely to feel
connected to someone you took a vacation with in Bogotá than someone who
also happens to have bought a 4K TV.
"We consume experiences directly with other people," says Gilovich.
"And after they're gone, they're part of the stories that we tell to one
another."
And even if someone wasn't with you when you had a particular
experience, you're much more likely to bond over both having hiked the
Appalachian Trail or seeing the same show than you are over both owning
Fitbits.
You're also much less prone to negatively compare your own
experiences to someone else's than you would with material purchases.
One study conducted by researchers Ryan Howell and Graham Hill found
that it's easier to feature-compare material goods (how many carats is
your ring? how fast is your laptop's CPU?) than experiences. And since
it's easier to compare, people do so.
"The tendency of 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 a vacation and see people
staying in a better hotel or flying first class. But it doesn't produce
as much envy as when we're outgunned on material goods."
Gilovich's research has implications for individuals who want to
maximize their happiness return on their financial investments, for
employers who want to have a happier workforce, and policy-makers who
want to have a happy citizenry.
"By shifting the investments that societies make and the policies
they pursue, they can steer large populations to the kinds of
experiential pursuits that promote greater happiness," write Gilovich
and his coauthor, Amit Kumar, in their recent article in the academic
journal Experimental Social Psychology.
If society takes their research to heart, it should mean not only a
shift in how individuals spend their discretionary income, but also
place an emphasis on employers giving paid vacation and governments
taking care of recreational spaces.
"As a society, shouldn't we be making experiences easier for people to have?" asks Gilovich.
