Can Money Buy Happiness? Research Suggests It Depends on How You Spend It

Can money buy happiness
(Last Updated On: August 3, 2017)

Can money buy happiness? Have you ever bought something only to find that it did not make you as happy as you thought it would? We’ve probably all had that experience of purchasing something only to be disappointed later, something that happens with surprising frequency with purchases both large and small.

But can the things you buy really make you happy? Researchers suggest that the answer is yes, but that it might really depend on how you spend your money and what you buy. Much of this research comes down to two basic types of purchases: experiences versus possessions.

Conventional wisdom has long suggested that people are happier when they buy experiences than they are when they buy possessions, but just how true is this? What factors might influence happiness and satisfaction with the purchases you make?

Can Money Buy Happiness: What Brings the Greatest Happiness?

When looking at the question of can money buy happiness, researchers also consider which types of spending lead to the greatest happiness payoff. One interesting study published in the Journal of Consumer Research looked at whether experiences, such as going on a vacation, bring greater happiness than material acquisitions, such as purchasing a new car.

“Dating as early as David Hume and through Tibor Scitovsky and many others, the sentiment has been that individuals will be happier if they spend their money on experiences (theatre, concerts, and vacations) as opposed to material purchases (fancy cars, bigger houses, and gadgets),” the study’s authors explained.

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In one survey of more than 12,000 Americans, psychologist Leaf Van Boven found that people reported greater happiness from investing in life experiences rather than purchasing material goods. Van Boven suggests that the reason for this is that experiences are easier to interpret positively, contribute more to social relationships and are a more meaningful part of personal identity.

While it is generally believed that experiences trump possessions, the results of this study suggest that this isn’t the case for everyone.

The study indicated that for positive purchases, the conventional wisdom that experiences have a higher happiness payoff is probably accurate. For purchases that turn out negatively, such as a low quality product or horrible vacation, experiences appear to decrease happiness more than material items. Essentially, having a terrible time on your Caribbean cruise is going to make you unhappier than buying a disappointing digital tablet.

While the authors caution consumers to make wise choices when making experiential purchases, they also agree with the standard belief that experiences result in greater happiness than material items.

“Given a good probability of a positive experience, our research echoes past research in suggesting that money is well spent on vacations, concerts, amusement parks, and restaurants over comparably priced objects and trinkets,” they suggest.

Buying Life Experiences? Make Sure You’re Doing it for the Right Reasons

While previous studies have found that spending money on life experiences leads to greater happiness than buying possessions, some research suggest that the reasons for making these experiential purchases may play an important role in overall satisfaction. In one study, researchers discovered that the “happiness boost” does not occur when people are only buying those experiences to impress others.

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“Why you buy is just as important as what you buy,” suggested Ryan Howell, one of the study’s authors and an assistant psychology professor at San Francisco State University. “When people buy life experiences to impress others, it wipes out the well-being they receive from the purchase. That extrinsic motivation appears to undermine how the experiential purchase meets their key psychological needs.”

The study involved surveying 241 participants about their motivations for making purchases. What they discovered was that the motivations for making these purchases could be used to predict whether the individual’s needs would be met. People who spent money on life experiences that appealed to their interests reported feeling more fulfilled by the experience. Those who made such purchases out of a desire to impress others or to gain attention reported feeling less competent and connected to others.

So go ahead and take that exotic vacation or purchase those tickets to a Broadway show, just make sure that you’re doing it for the right reasons.

“The biggest question you have to ask yourself is why you are buying something,” Howell explained. “Motivation appears to amplify or eliminate the happiness effect of a purchase.”

So can money buy happiness? It depends upon a wide variety of factors, but it is in your interest to choose wisely.

Want to learn more about your own spending habits and values? The study’s authors have set up a website to collect data for their academic research and for members to discover more about their spending choices. You can visit the site at http://www.beyondthepurchase.org

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References

Jia Wei Zhang, Ryan T. Howell, Peter A. Caprariello. Buying Life Experiences for the “Right” Reasons: A Validation of the Motivations for Experiential Buying Scale. Journal of Happiness Studies, 2012; DOI: 10.1007/s10902-012-9357-z

 Nicolao, L., Irwin, J. R., & Goodman, J. K. (2009). Happiness for sale: Do experiential purchases make consumers happier than material purchases?  Journal of Consumer Research, 36(2), 188-198.

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