Psychologists Say That This Is How People Who Are Much Happier Choose To Spend Their Money

It is no secret that many consumers are motivated to focus their spending on material possessions. In fact, materialism affects more young people today than ever before. According to a 2013 study by researchers at San Diego State University, 48 percent of high-school students in 1976-78 said that it was important to have lots of money. By 2005-07, some 62 percent agreed on the same point.

But such a materialistic outlook can have a negative effect on a person’s well-being. Indeed, when they are stressed, materially focussed people may turn to spending as an outlet – and when money runs tight, this behavior can only exacerbate the issue. “In other words, materialism has a multiplier effect,” Aric Rindfleisch, a business professor at the University of Illinois, told Huffington Post in February 2013 in response to the San Diego study.

And, of course, that effect extends to the compulsive habits many people have developed around the act of shopping. After all, there is no cut-off point, as Ed Diener, psychology professor at the University of Utah, told The New York Times newspaper in 2006. “It is open-ended and goes on forever,” Diener declared. “We can always want more, which is usually not true of other goals such as friendship.”

For years, then, psychologists have been exploring the issue to try to understand what really makes people happy. Could it be physical possessions, in which case desirable objects should be what we spend all our hard-earned extra money on. Or could it be something else entirely? Well, a handful of psychologists in San Francisco believe that they have found the solution.

So what should you spend your cash on if you really want to be happy? According to a 2009 study by researchers at San Francisco State University, it is experiences not valuable items that make people feel the happiest. Yes, whether it be a dream vacation, learning a new skill or even just visiting a museum, it is the intangible memories we create that make us happiest – not buying a 4K TV or the latest iPhone.

Indeed, the team of psychologists at San Francisco State University discovered that people derive greater happiness from experiences, rather than material possessions. Over the course of their study, the results of which they published in February 2009, the researchers conducted several experiments to better ascertain and understand the reasons for this.

One of these trials involved surveying 154 of the university’s students who had bought something in the past three months – whether material or experiential – with the specific aim of bringing happiness into their lives. And the researchers found that a lot of these purchasing decisions were tied to the concept of value.

Indeed, while the respondents were apparently aware deep-down that positive experiences would make them happier, they still placed more value on a physical possession. However, after they had bought their consumer item, they would often change their minds. After a cooling-off period, many decided that not only would an experience have made them happier, it would also have represented better value.

Another test conducted in the San Francisco study involved the psychologists asking participants to prioritize either value or happiness while making a purchase. And, much as in the first experiment, those who prioritized value tended to opt for a physical item, while those aiming for happiness were more likely to select an experience.

The results of these trials led researchers to conclude that consumers do not just consider their happiness when spending their money, but the bang they are going to get for their buck. The leader of the study, Ryan Howell, associate professor of psychology at San Francisco State University, summed it up in a statement supporting the publication of the team’s findings. “We naturally associate economic value with stuff. ‘I bought this car, it’s worth $8,000,’” he wrote. “We have a hard time estimating the economic value we would place on our memories.”

Conversely, it appears that people often underestimate how much value they are going to derive from a life experience. As Howell explained, “Even though they’re told experiences will make them happier, and they know experiences will make them happier, they still perceive material items as being a better value.”

But the problem with attaching this notional value to material things is that the feeling is often only temporary. Indeed, after a while, we get used to whatever we have spent our money on, and the previously cherished item no longer brings us the same level of joy or satisfaction. It becomes the new normal, and by this point it is not adding to our happiness, as Thomas Gilovich, psychology professor at New York’s Cornell University, told business affairs magazine Fast Company in 2015.

However, according to the academic, this same phenomenon does not apply to experiences. In fact, Gilovich argues that they become a very important component of a consumer’s character. “You can really like your material stuff,” the professor explained. “You can even think that part of your identity is connected to those things, but nonetheless they remain separate from you. In contrast, your experiences really are part of you. We are the sum total of our experiences.”

And apparently it is not just positive experiences that are good for us. Indeed, Gilovich discovered through a study that even if an experience makes us sad in the moment, that feeling can wasily change later on. This can be because we come to see it as a funny story in hindsight, or even as a great opportunity to learn from to develop ourselves as a person.

In that vein, paid-for experiences are much better at giving us a greater sense of vitality than material possessions. As San Francisco State University’s Howell said, “As nice as your new computer is, it’s not going to make you feel alive.” And while the immediate satisfaction of possessing that high-end piece of hi-technology might fade away in just a few months, the feeling of reflection from an experience will stick around much longer.

Of course, the long-term benefits experiences yield are not the only reason that people find more happiness in active fun than material goods. After all, we are naturally driven to compare our personal possessions, such as our highly desirable computer, with our friends’. And if their items are perceived to be in some way better, we are more likely to feel upset than if we feel our buddies had a slightly better vacation.

Meanwhile, how other people come into play when you are choosing how to flash your cash can also affect your happiness. Howell maintained, “When people spend money on life experiences, whether they also take someone with them or buy an extra ticket or whatever, most of our life experiences involve other individuals.”

Indeed, Gilovich told Fast Company, “We consume experiences directly with other people. And after they’re gone, they’re part of the stories that we tell to one another.” Yes, standing in line with someone who also happens to be buying a PlayStation can never be quite the same thing as queueing to board a flight to South East Asia with them.

All of this points to the unarguable conclusion that it is actually experiences which can offer us the greatest route to happiness. So, next time you are weighing up whether to spend that windfall on a shiny new watch or a weekend away to Europe to visit the picturesque place where they make the timepieces, you should probably opt for the latter for your emotional wellbeing.