From Elizabeth Dunn’s “Happy Money”
Most people tend do buy material things such as homes, cars, tv’s, gadgets, shoes, bags, and jewelry, over experiences. Is this a good idea?
Studies Show Buying Experiences Yield More Overall Happiness Than Buying Material Things.
- While buying material things does yield immediate happiness, this happiness doesn’t last long. It fades due to adaptation. Experiences on the other hand are not prone to adaptation. Experiences can be relived in your memory over and over again. Also experiences make people happier because they build stronger social connections.
- “Think of purchases you’ve made with the goal of increasing your own happiness. Consider one purchase that was a material thing, a tangible object that you could keep, like a piece of jewelry or furniture, some clothing, or a gadget. Now think about a purchase you made that gave you a life experience—perhaps a trip, a concert, or a special meal. If you’re like most people, remembering the experience brings to mind friends and family, sights and smells. Which of these purchases made you happier?” (p.5)
- Experiences are intrinsic and represent your true inner self. They are not prone to Social Comparisons. Material things on the other hand are prone to Social Comparisons, and this can be toxic. For Example: The author’s husband bought an HTC phone. He couldn’t help it but compare his phone with his friend’s i-phone, and it made him feel bad.
- “Traveling through Budapest or Africa, going to the prom, and seeing a Broadway show—experiences like these are the purchases that reflect who we are. Such defining experiences provide more happiness than designer purses and Swiss watches.” (p. 9)
- The author Michael dined at El Bulli, the no 1 restaurant in the world. People don’t go to El Bulli just for the taste of the food, it’s about the whole experience. It’s about the wait list, the 2 hour drive, the 6 hour meal. The restaurant utilizes all of your senses including humor.
“when he bit into the strawberry, he tasted gin and tonic. And then barbecue sauce. And finally, the strawberry. Adrià designed this culinary experiment to evoke the experience of a summer barbecue, attempting to bring back nostalgic memories by activating what he calls our sixth sense. The renowned chef says his goal is to turn “eating into an experience that supersedes eating.” (p. 18)
Michael gets asked about his experience at El Bulli all the time. He gets to relive his experience over and over again. - “When researchers at Cornell University asked pairs of strangers to discuss purchases made with the intent to increase their happiness, those who talked about experiential purchases enjoyed the conversation more. They even liked their partner more than those who exchanged stories about material purchases. Individuals who prioritize experiential purchases are seen as open-minded, intelligent, and outgoing.” (p. 8)
Buying a Home, or New Nicer Home, Doesn’t Increase Overall Happiness.
- “There is almost no evidence that buying a home, or newer nicer home, increases happiness.” (p. 1) Researchers studied people who moved to a bigger, better, or newer home. After 5 years, they checked on these people’s well being. “while movers’ satisfaction with their houses increased substantially, their satisfaction with their lives- their overall happiness- didn’t improve at all.” (p. 2)
- “Of course, renters can sometimes save money by buying a home, and almost every real estate website offers tools to help consumers calculate the financial benefits of this trade-off. Although these tools are terrific for determining whether buying a house will turn out to be a good financial investment, buying a house often isn’t a good investment in our happiness. If the largest material purchase most of us will ever make provides no detectable benefit for our overall happiness, then it may be time to rethink our fundamental assumptions about how we use money.” (p. 4)
- “One of the largest material purchases people ever make is their home, yet home purchases usually fail to make people any happier. By encouraging people to buy houses, the United States government implicitly encourages people to buy stuff. By reducing incentives for home buying, the Canadian government decreases that temptation.” (p. 144)
- “Harvard students thought they would be much happier if they were assigned to one of the beautiful and nice dorms, instead of the one of the crappier dorms. “Just like the movers in the German study, students who had moved into the desirable houses did report higher housing satisfaction. But their enhanced housing situation failed to impact their overall happiness.” (p. 4)
- “In a carefully controlled study of more than six hundred women in Ohio, homeowners weren’t any happier than renters,” (p. 4)
“How would you alter spending within these categories, or the allocations across them, in line with the five principles of happy money? We ordered spending from most to least. You’ll notice that the two largest categories—housing and transportation—are not particularly good sources of happiness (recall that buying bigger houses and nicer cars doesn’t make us much happier, not to mention spending money on gas for our interminable commutes). And you’ll also notice that the category in which people report spending least, investing in others, is an excellent source of happiness.” (p. 173)
Buying a Nice Car Like a BMW Doesn’t Increase Overall Happiness.
- “Michigan researchers asked car owners to think back on the last time they had driven their car, rating how much they enjoyed that drive.” (p. 29) Some people had nice cars and some people had cheap cars.
Researchers found there was no correlation to people’s enjoyment of the car and the value of the car. Why? When people are actually driving, they aren’t thinking about the quality of the car or how cool it is. They are thinking about traffic, work, groceries, picking up the kids, and other things. - People also adapt to their car. “But once we get used to something—even something as nice as a midnight blue Z4—the spotlight moves on.” (p. 29)
- “Unfortunately, however, owning a fabulous car does little to mitigate the pain of commuting. As the BMW drivers showed us, people typically don’t experience better moods while driving more expensive cars.”
- “Driving to the grocery store in the dead of winter, we think about being stuck in the left lane behind an octogenarian in an Oldsmobile, about whether the store will have any hot rotisserie chickens left, about almost anything other than the make and model of the car we’re driving. Retractable hardtops just aren’t that relevant in subzero temperatures. And this explains why driving a more expensive car doesn’t usually provide more joy than driving an economy model.” (p. 29)
- “So, driving a BMW probably won’t provide you with any more pleasure than driving a Ford Escort—except on those rare occasions when your attention turns to the car itself, whether directed by a question from a researcher or a joy ride on a winding mountain road.” (p. 30)
Other Good Quotes About Experiences:
“One ongoing study has tracked how much money adults over age fifty spend on just about everything, from refrigerators and rent to alcohol and art.8 When researchers link these spending choices to happiness, only one category of spending matters. And it’s not refrigerators, or even alcohol. It’s what the researchers label “leisure”: trips, movies, sporting events, gym memberships, and the like. People who spend more of their money on leisure report significantly greater satisfaction with their lives. Not surprisingly, the amount of money these older adults reported spending on leisure was dwarfed by the amount they spent on housing. But housing again turned out to have zero bearing on their life satisfaction.” (p. 6)
Google rewards their top employees with life experiences instead of cash awards. Example: Google gave their top employees and their spouses, a trip to Costa Rica.
“The experience that they have on the trip—with one another, across the company—is far more powerful and valuable to them than if we’d given them the cash value, or even ten times the cash value,” Laszlo explains. “And it has a much bigger impact on the broader organization.” (p. 22)
Length of vacations don’t matter. Whether it’s 4 days or 14 days, your experience won’t be diminished.
“We are happy with things, until we find out there are better things available.” (p. 17)
“Unfortunately, however, owning a fabulous car does little to mitigate the pain of commuting. As the BMW drivers showed us, people typically don’t experience better moods while driving more expensive cars. Rather than taking a higher-paying job farther from home and using the extra money to buy a nice car, most people would be better off sticking with a job closer to home, even if it pays less. To offset the happiness costs of going from no commute to a twenty-two-minute commute, the average person would need to see their income rise by over a third—and that’s just to break even. Rather than bugging the boss for a raise, you could get a similar happiness boost, research shows, by moving closer to work.” (p.64)