Monday, May 11, 2009

When Money Does Buy Happiness

Which do you think would make you happier—spending $100 on a night out or spending $100 on a personal possession like clothing? The night out is fleeting. It might just be a few hours of a good time. You’d probably wear the clothing quite a few times. So you might think that material purchases outweigh experience spending, but you’d be wrong.

Turns out there have been some curious psychologists who have studied our indulgent spending. Studies by Van Boven and Gilovich (2003) and Leonardo Nicolao have looked at spending to conclude what kinds of purchases make us happy. What they found was that experiential spending made us happier for a longer time.

Experiences tend to:
o Improve with time as we forget about all the boring moments and just recall the highlights.

o Take on symbolic meanings, whereas those clothing is just clothing.
o Be very resistant to unfavorable comparisons: a wonderful moment in a restaurant is personally yours and difficult to compare, but all too soon your clothes are likely to look dated in comparison with the new fashions.
However, none of the studies considered whether free experiences bring more happiness than expensive ones. Though my guess would be that they do just as getting a great bargain makes helps us enjoy the item more.

In conclusion, these studies help me justify purchasing the more expensive seats to the upcoming Leonard Cohen concert at Red Rocks.

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