New research clouds the belief that one kind of spending is better than another.

Spend Your Money on Experiences Not Stuff? New Data Muddies the Waters.

Spend Your Money on Experiences Not Stuff? New Data Muddies the Waters.

The state of the universe.
July 3 2017 5:55 AM

Spend Your Money on Whatever You Want

Yes, the common wisdom suggests that spending on experiences will make you happier, but new data serves as a reminder that these scientific theories might not be as strong as we think.

170628_SCI_Things-Versus-Experiences
Which one would make you happier?

Photo illustration by Slate. Photo by freestocks.org/Unsplash, Steven Coffey/Unsplash.

Perhaps it is unsurprising that in the age of Marie Kondo, we have bought into the idea that we should stop spending our hard-earned money on stuff. There’s a whole slew of social science research (and the news stories that follow) that suggests that to maximize happiness, it’s best to spend your money on activities, not material goods. “Buy Experiences, Not Things,” the Atlantic suggested in 2014. Following that advice could be “the secret to happiness,” says Forbes.

Part of the reason this idea has become so common is that it makes intuitive sense—we want to prize our experiential possessions more than material goods. As Dr. Thomas Gilovich, the Cornell University psychology professor who popularized the concept, puts it: “You can really like your material stuff. 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.”

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It is a widely believed and well-supported theory. But new research from the Hungarian Academy of Sciences, or HAS, adds a wrinkle to the discussion—its new paper suggests that perhaps in embracing this idea, we have been slightly unfair to our stuff.

The research, published by Tamás Hajdu of the Institute of Economics at HAS and Gabor Hajdu of the Institute of Sociology at HAS, differs in methodology from Gilovich’s studies. Those studies typically involved bringing two groups of undergraduate students into a room, asking one group to think of the last experience they spent money on, and asking the other to think of the last material good they spent money on. Both groups were then asked how happy each endeavor made them, and when the researchers compared each group’s responses, the experiences tend to win out.

Instead, Hajdu and Hajdu analyzed 10,000 responses of survey data from a major Hungarian household survey project, the Tárki Household Monitor. The survey contains a score from 0 to 10 that quantifies the respondent’s satisfaction with his or her life, as well as a measure of his or her household spending over the last month, last three months, and last 12 months. Using this survey data, the researchers split the respondent’s spending into “experiential” and “material” purchases, where experiential purchases were purchases in entertainment, sports, and vacation, while material purchases were any purchases of clothing and electronics. After converting the raw spending data into the percentages of each family’s total income, Hajdu and Hajdu analyzed correlations between experiential spending and material spending and life satisfaction, controlling for personal characteristics.

They found that the difference in satisfaction conferred between the different purchase types was both incredibly small and not statistically significant. “Although both experiential and material expenditures were positively associated with life satisfaction, we found no significant evidence supporting the greater return from experiential purchases,” they wrote—in other words, yes, spending money was correlated with greater happiness. But one kind of spending did not seem to result in greater, or less, happiness.

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Does this disprove the research that came before it? Certainly not. It wasn’t even trying to disprove that research—these researchers weren’t attempting to replicate previous findings that do suggest experiential buys cause happiness. They were just looking at the question from another angle. And that angle, of analyzing survey data, has its own limitations: The people in the survey weren’t asked directly about whether they thought spending had affected their happiness. The researchers were just looking to see if they could find correlations between different types of spending habits and happiness. They couldn’t, which is interesting and might suggest that we should revisit those earlier studies to double-check that the effect is as strong as we think. If a relationship is actually strong, it should show up both when you ask undergraduates to report on how they feel about their spending habits and when you investigate how different happy people who spend their money differently are.

Most research still suggests that money makes people happier when it’s spent on activities. In fact, even this research found that to maximize happiness, you should spend a little more on experiences—it just also found that this “gain” in happiness was incredibly, perhaps unnoticeably, small.

What is interesting is that this study, which explicitly states they found no evidence for the experiential spending hypothesis, is being published in a major economics journal and is getting noticed online. The pickup is likely thanks to the increased attention given to the replication crisis—the well-publicized crisis of conscious science has been going through for the last couple years that suggests that even textbook assumptions might not stand up to scrutiny.

Hajdu and Hajdu’s work certainly isn’t flashy. The paper’s abstract contains the line “We found no significant evidence supporting the greater return received when buying experiences.” That’s pretty boring, and it doesn’t really provide a great takeaway for readers at home, either. (For the readers at home, perhaps the strongest takeaway is more simple: Don’t base your life choices around small bits of science that shows up in the news.) But research isn’t meant to be exciting; it’s meant to be true. I suspect Hajdu and Hajdu would be the first to admit their work is merely one study that joins other studies in the subject of happiness and consumption. It doesn’t support the consensus, but that’s fine. That’s science.

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Nick Thieme is Slate’s 2017 American Association for the Advancement of Science Mass Media Fellow.