The New York Times published a great article on the 7th August 2010 which explored the link between consumer spending and happiness. At the time this blog post was published it was the #1 most popular article on the New York Times website. It presented recent research that find consumers are happier when they spend money on experiences rather than physical objects. We wholeheartedly agree with the findings!
Here is an excerpt:
One major finding is that spending money for an experience — concert tickets, French lessons, sushi-rolling classes, a hotel room in Monaco — produces longer-lasting satisfaction than spending money on plain old stuff.
“It’s better to go on a vacation than buy a new couch’ is basically the idea,” says Professor Dunn, summing up research by two fellow psychologists, Leaf Van Boven and Thomas Gilovich. Her own take on the subject is in a paper she wrote with colleagues at Harvard and the University of Virginia: “If Money Doesn’t Make You Happy Then You Probably Aren’t Spending It Right.” (The Journal of Consumer Psychology plans to publish it in a coming issue.)
Thomas DeLeire, an associate professor of public affairs, population, health and economics at the University of Wisconsin in Madison, recently published research examining nine major categories of consumption. He discovered that the only category to be positively related to happiness was leisure: vacations, entertainment, sports and equipment like golf clubs and fishing poles.
It goes on to explore how this change in consumer behaviour has been reflected in businesses:
According to retailers and analysts, consumers have gravitated more toward experiences than possessions over the last couple of years, opting to use their extra cash for nights at home with family, watching movies and playing games — or for “staycations” in the backyard. Many retailing professionals think this is not a fad, but rather “the new normal.”
“I think many of these changes are permanent changes,” says Jennifer Black, president of the retailing research company Jennifer Black & Associates and a member of the Governor’s Council of Economic Advisors in Oregon. “I think people are realizing they don’t need what they had. They’re more interested in creating memories.”
Psychology experts then explain the reasons behind these findings:
One reason that paying for experiences gives us longer-lasting happiness is that we can reminisce about them, researchers say. That’s true for even the most middling of experiences. That trip to Rome during which you waited in endless lines, broke your camera and argued with your spouse will typically be airbrushed with “rosy recollection,” says Sonja Lyubomirsky, a psychology professor at the University of California, Riverside.
Professor Lyubomirsky has a grant from the National Institute of Mental Health to conduct research on the possibility of permanently increasing happiness. “Trips aren’t all perfect,” she notes, “but we remember them as perfect.”
To read the full article from the New York Times, follow this link.