It is said that money can’t buy happiness. But some researchers believe how you spend it could. Numerous studies show that experiences — like camping in the mountains or meeting friends for coffee — make us happier than owning things. It sounds almost cliché, but is it true? If so, are the effects the same for everyone, or could personality influence how spending affects your happiness?
IS SPENDING ON EXPERIENCES BETTER?
For more than a decade, psychologists have been exploring whether spending money the “right way” can bring more happiness. Studies by Drs. Thomas Gilovich and Travis Carter have shown that buying “life experiences” is better than purchasing material goods. We get excited about both, but over time our happiness increases when we recall our experiences, while our satisfaction with possessions decreases.
One reason is that experiences are unique. “People tend to engage in fewer comparisons when making experiential purchases,” says Carter, an assistant professor of psychology at Roanoke College in Virginia. Products are seen as interchangeable, but experiences are singular events. Also, after we’ve been exposed to something for a while, we stop appreciating it in a process called “hedonic adaptation.” Our smartphones and cameras and old sunglasses become mere objects taking up space in our homes. Experiences are fleeting, and so we treasure them.
But the differences go deeper than that. In a 2012 study in the Journal of Personality and Social Psychology, they found that our happiness grows when we share our experiences later. We’re more likely to enjoy chatting about a trip with someone than about a purchase like a home appliance or rain boots. While others perhaps didn’t participate in the event at the time, we still derive happiness from sharing it with them. Even a negative event can look positive in hindsight.
“Our memories of experiences tend to be a little bit rosier,” says Carter. We risk having buyer’s remorse after buying a camera because we compare how happy the purchase made us to our anticipated happiness. But with experiences it is often the ones we miss out on that we regret.
Perhaps more importantly, life experiences shape our sense of self and identity. The 2012 study showed that people recount their experiences rather than possessions when telling their life stories. “Experiences are more meaningful,” says Carter. “Possessions are more visible, but that doesn’t mean they are better or more meaningful.” Expanding on this, he has been investigating why experiences may be better at representing our identity.
“Experiences are more of an expression of the self,” he says. “You’re learning more about yourself by going skydiving than by purchasing something and that contributes to your sense of self.” In addition, they often occur in social settings. “Experiences often are shared and social connection is a big contributor to well-being and our identity.”
Other psychologists suggest it is the sharing of experiences with others that matters most. Research by Drs. Peter Caprariello and Harry Reis underscores the importance of social connection and bonding with others versus experiencing something alone. They say our identity is shaped by our interactions with other people during those experiences. Yet some material goods, such as a pair of running shoes, also allow you to experience something, so the division between the two is not always clear-cut.
In addition, if anticipating an experience adds to the fun, that may be more enjoyable for an optimist than someone who is more cautious. While one person may revel in adventure, someone else might worry about everything that could go wrong. Some research suggests that a crucial element is whether your spending behavior matches your personality.
LIVE YOUR VALUES
Researchers at University College London (UCL) have studied the link between personality, spending, and happiness. In a 2016 study published in Psychological Science, they tracked 76,863 transactions made by 625 people over six months at a bank in Great Britain. They then grouped the data into 59 categories matching the “Big Five” personality traits such as openness to experience or agreeableness. Participants also completed a survey on how satisfied they were with their life.
Overall, people were happier if buying habits matched their personality. For example, a very outgoing person was content if they spent money on concerts and in pubs while a person who scored high on conscientiousness was happier purchasing gifts for friends or making a donation. The happiness effect was even more important than total income or overall expenses. “It’s about how you’re living your life,” says Dr. Joe Gladstone, an assistant professor of consumer behavior at UCL and a co-author of the study. “We create a more authentic life and are happier if spending matches our personality.”
In a second study, they gave participants a £7 ($10 at the time) voucher to spend either in a bar or bookstore. Again, psychological fit was critical. Extroverts were happier if they were required to use their voucher in a bar, while introverts got more satisfaction out of buying a book. Neither the introverts nor the extroverts experienced as much of a happiness boost when they spent in a way that ran counter to their personality. “We spend to express ourselves, to create an identity, and to bond with other people,” explains Gladstone.