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Money And Happiness in Adulthood: The Value of Experience

“It’s amazing how many things in life would be better if you just had more money,” a friend of mine once observed. She wasn’t...

“It’s amazing how many things in life would be better if you just had more money,” a friend of mine once observed. She wasn’t particularly sad when she said it, or even particularly wistful. In her view, it was just another of those life lessons you pick up along the way.

I’ve given her comment a lot of thought over the years because – let’s face it – we all give in to the temptation from time to time to imagine what we’d do if a boatload of money suddenly rained down upon us. In my current life stage, I’m quite certain that I’d purchase some additional childcare to help me with the daily schlep around North London between 3 and 5 p.m. Then there’s always that second home in Southern France I’ve coveted (and maybe another one in Hawaii…hey, why not? Live large.) And as a newly card-carrying member of the biking brigade, I’d sure love some of that fancy schwag that goes with the whole cycling thing.

Despite the apparent perspicacity of my friend’s casual remark – the relationship between money and happiness isn’t quite so straightforward after all. According to an article in The New York Times over the weekend, just getting more stuff doesn’t actually make you any happier. What counts is how you spend your money.

It turns out that spending money on experience-related purchases – the article cites things like concert tickets, French lessons, and sushi-rolling classes — produces longer-lasting satisfaction than spending money on plain old stuff. As a scholar interviewed in the article sums it up: “It’s better to go on a vacation than to buy a new couch.”

The article goes on to say that over the past few years, consumers have been gravitating more and more towards experience-rich expenditures. Indeed, one study by Thomas DeLeire of The University of Wisconsin and Ariel Kalil of The University of Chicago showed that the only category of consumption to be positively related to happiness was leisure: vacations, entertainment, sports and equipment like golf clubs and fishing poles. (Full disclosure: DeLeire and Kalil are both former colleagues.)

While much of that shift has been driven by the global economic downturn, many analysts are predicting that these changes are likely to last. Simply put, people have discovered – albeit by circumstance – that they actually prefer their pared down, leisure-oriented purchases to the more lavish consumption patterns of yore.

Which brings us to the staycation. I wrote last week about the rise of the staycation as a lifestyle choice in advanced, industrial countries like the U.S. and the U.K. But what the Times article is suggesting is that part of the staycation’s appeal is precisely that it gibes so well with leisure- (read happiness) oriented purchases like barbeques and movies and board games that enhance the value of experience over mere acquisition. Particularly over at The Huffington Post – where I also blog – commenters noted that their choice to “staycate” (is that a verb?) was driven less by financial squeeze than it was by the fact that were actually happier just staying home and hanging out doing simple things with their families.

I once wrote a post where I asked readers where they drew the line between what counts as a luxury vs. what counts as a necessity in their daily lives. (The post was occasioned by the acquisition of a new rice cooker in our household.) I confessed that for me, at least, a New Yorker subscription constituted a necessity, even though many would probably term it a luxury. But now that I’ve read this article, I’m thinking that the reason that I continue to value The New Yorker so highly is actually that it brings me so much happiness.

So I’m curious. As you narrow your spending to focus on what counts – (if you are, in fact, doing that) – what sorts of things do you find bring you the most happiness?

Image: I.T barbeque by alliance1911 via Flickr under a Creative Commons License

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  1. Deirdre August 10, 2010 at 3:37 pm #

    We are definitely narrowing spending to what counts, as both my partner Alexander and I found ourselves without work around the time of the 2008 recession. Work life is coming back, but our habits seem to have changed. Last week, we went out on “date night”. Usually that would include a movie and dinner, or a fancy meal, or the theater (all great experience-based expenditures, I might add). Last week, instead of focusing on the destination, we decided to pick a neighborhood to explore. We went to Chinatown and the Lower East Side of New York and wandered the streets, checking out the markets, the shops and restaurants and, mostly, people-watching. We stopped in at a few places, found a great dumpling shop and a great bakery. It cost us very little and was rather memorable– it really felt as if we were exploring uncharted territory (absurd in a city with 8 million people– but that’s how we felt). All in all, a great way to spend an evening.

  2. catherine larose August 11, 2010 at 12:09 am #

    Dancing! My extra funds go to dancing lessons – salsa, tango, cha cha…and pretty clothes to wear at the club. There is nothing so joyful than movement set to music.

  3. Paula August 11, 2010 at 10:14 am #

    It would be interesting to find out if there are empirical measurements of stress/happiness in people who live below X-amount of income and those above X + whatever is deemed to be “rich”, or “just having more money”. I think I remember reading such a study once, but I don’t remember the results.

    In any case, my husband and I are slowly getting ready to move from Germany to the U.S. (I’m originally from Wisconsin – that’s where we’re headed) to live a pared down, more self-reliant life. It’s something we had planned even before the economic crisis reduced his hours at work, but it’s gratifying to see that we’re part of the “thrifty is the new chic” trend. The “staycation” is a great example of this movement, but I’d like to push the home vegetable/herb garden as another great, and easier than you’d think, possibility. Somewhere I read that during World War II, 40% of the U.S. produce for family consumption was grown in at home “victory” gardens. Low cost, good food and family time, to boot. And gardening makes me happy.

  4. delialloyd August 11, 2010 at 10:53 am #

    @Deirdre-I love the idea of a “date night” as exploring a new neighborhood-what a great idea. It’s similar to one of the things I suggested last week in my tips for what to do on a staycation.

    @Paula-I think those studies do exist but also haven’t looked at that lit in awhile-there’s some sort of minimum happiness threshold vis income. your idea of a vegetable garden is terrific-good luck with that!

  5. Kelly Aluise August 11, 2010 at 7:05 pm #

    I have two recent purchases that had great emotional return compared to the financial investment. I love to go to yard sales and always have and I recently purchased a pair of jeans that are so comfortable I could probably sleep in them. (But I won’t – my 7 year old would be mortified). They only cost $1.00 but when I when I put them on I feel like a million bucks! The second purchase wasn’t exactly a purchase but a discovory of the wonderful invention of “SKYPE”! My daughter is away for a few weeks and having breakfast with her this morning via my computer and the skype connection was truly a beautiful experience!

    XOXO

    Kelly

    • delialloyd August 11, 2010 at 8:06 pm #

      Kelly-we live abroad so Skype is a must for us-and a free and easy way to stay happy, I agree. Thanks for stopping by!

  6. Daryl Boylan August 24, 2010 at 8:18 pm #

    All of the above sound excellent. If I had to add all the many, many good things in my life together, first & foremost would always be chances to make new friends, which of course can be done anywhere.

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