Buying Things Can Make You Happy

The Experience Economy | Brodeur Partners
Jerry Johnson, December 2015

‘Tis the season of consumption. Can buying things really make you happy? Many believe not. But recent research suggests that it can.

The debate centers around something that has long been known as the Easterlin Paradox. It is named after a USC economics professor Richard Easterlin considered one of the seminal figures in the science of happiness.

Easterlin’s work, conducted back in the 1970s, suggested that wealth and spending were important for happiness only up to a point, specifically, up to about $70k – $75k in income. After that, additional money, wealth and consumption didn’t add that much to happiness.

As someone once explained it to me, up to about $70k-$75k you worry if you have enough money. After $70k-$75k you worry about other people taking your money. So if you want to be truly “happy,” try to have enough money but not too much money.

The hidden role of ‘cool’

But recent work by Steve Quartz and others are questioning both Easterlin’s data and his conclusions. Quartz, a professor of philosophy and neuroscience at the California Institute of Technology is one of many who maintain that Easterlin and others have misunderstood consumerism.

In his recent book, “Cool: How the Brain’s Hidden Quest for Cool Drives our Economy and Shapes Our World,” Quartz suggest that buying things – specifically buying “cool” things– does, in fact, make us happier. How? The key, according to Quartz, is what “cool” does to the social calculator of our medial prefrontal cortex. When we buy cool things we “create the basic motivations that drive us to affiliate with others and ultimately to use our patterns of consumption to help create the social groups.” This, in turn, raises our “feeling of esteem and respect.”

We are happier when we buy cool things because it makes us think better of ourselves, encourages us to form groups, and perhaps most important, helps us believe that others will think better of us, too!

But wait, there’s more.

The limits of stuff

 Some researchers go on to say that buying experiences make us happier than buying stuff. Now you may think this runs counter to logic. Experiences are transitory and ephemeral. After a moment, a day, a week, the experience is gone (along with your money!). Stuff, on the other hand, is tangible. You can hold it, carry it, perhaps even use it for something beneficial.

But it is just the opposite. A car or watch or shoe will eventually break, be lost or stolen, or wear out. In the scheme of things, a product’s life is short. Experiences, however, live forever in the mind. And it gets better. Because experiences are ephemeral and live only in our minds, we can continually improve, enhance and relive them again and again as even better experiences.

In the words of Michel Norton, professor of business administration at Harvard Business School, “because experiences disappear, they let us make up a reality that was amazing and wonderful, and they make us happier” than stuff, Norton said.[1]

So there you have it. Money can buy happiness.

Where I land

 But between you and me, I’m not buying all of it.

First, happiness is a very tricky thing to define, much less measure. Second, consumerism and buying “cool” can certainly give both the mind and the spirit a temporary glow. But at the risk of tautology, the happiness of cool constantly requires consuming the latest in cool. That might be good for business but seems taxing and unsustainable for the average consumer. As for myself, include me out.

On the other hand, I think there’s quite a bit to the idea of the superior value of buying experiences vs. products.

Experiences are eternal. The only way to have them lost or stolen is through our own human frailty. We all have experienced the smile and warm glow of reminiscences surrounding events, activities and experiences that in some way shaped who we are today. It can make us very happy indeed.

So if you’re celebrating gift-giving this Christmas season, consider an experience over a product.

That is, put something on the calendar rather than under the tree.