You’ve probably heard the advice that you get more happiness when you spend money on experiences (e.g. vacation), not material possessions (e.g. watch/jewelry). But what about purchases that have aspects of both (e.g. a swimming pool or home remodel)? The study What Makes People Happy? Decoupling the Experiential-Material Continuum (via Klement on Investing) takes data from multiple studies and places hundreds of items along two separate continuums:
- Material happiness qualities. Happiness derived from the primary intention of acquiring a material possession – a tangible object that one obtains and maintains possession.
- Experiential happiness qualities. Happiness derived from the primary intention of acquiring a life experience.
Some items are low on both spectrums, like tax software or insurance (low-low). Some are high on one spectrum and low on the other (high-low, low-high). Finally, some are high on both scales (high-high). The study has found that the happiness derived from the experiential and material sides are additive and not dilutive, so you can get even more total happiness this way.
The chart below takes only the goods that rated in the top 10% of highest anticipated happiness (out of 370 total goods), and then plotted them on two scales of material vs. experiential qualities.
This excerpt summarizes the conclusions well:
Therefore, the experiential advantage advice is correct in that if consumers must choose between material and experiential qualities, they should choose experiential consumption. However, when consumers can seek both qualities, such as when “high-material high-experiential” mixed consumption is available, it can provide as much as or even more happiness than purely experiential consumption.
The benefit of material goods is that they don’t go away after the experience ends (food is eaten, cruise ends, etc). The best material goods are those that keep generating new positive experiences and memories. A swimming pool or kitchen/deck remodel where family and friends can gather for many years. Of course, these things are also quite expensive!? I suppose we could skip a vacation and save up to fix up the deck instead.