21ChaseTNextMateroalAcquistion

Invest in experiences

It is not how much we have, but how much we enjoy, that makes happiness.

—Charles Spurgeon

MANY PEOPLE BELIEVE THAT the secret to happiness lies in having the bigger home, the faster car, the newer gadget, the fatter bank account. The advertising industry, by and large, inspires and boosts material worship, promising eternal bliss right after the next acquisition. As it turns out, though, once our basic needs are met, acquiring more possessions—bigger, better, newer, shinier—doesn』t make us any happier. At most, it gives us a temporary high, similar to addicts』 getting their fix.

Lasting happiness comes not from possessing material things but from pursuing positive experiences—playing ball with your child, enjoying a meal with a friend, tasting the salt in the air as you walk by the sea. I can afford these experiences; I cannot afford to live without them. Their price tag is low, and yet they are priceless.

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YOU HAVE JUST RECEIVED your year-end bonus, which was significantly higher than you expected. You worked extremely hard during the year, and you feel that you deserve a reward. And here is the dilemma you face: Do you spend the money on a newer, better car, or do you take your family on a vacation? You figure that a vacation would be nice, but it will be over before you know it, whereas a car will last for years. So you decide to get the car.

It turns out that your reasoning is wrong. Research by marketing professor Leonardo Nicolao and his colleagues shows that once our basic needs have been met, we typically derive greater long-term happiness from acquiring experiences than from acquiring goods. Although the experience may be short-lived and the material good remains with us for much longer, we continue to enjoy the experience—to reexperience it—through our memories and conversations, whereas the novelty of a new object wears off very quickly.

The picture is a bit different if the material good provides us pleasant experiences. If, for example, I enjoy fixing cars, or racing them, then a car can provide me with many positive experiences. Nevertheless, here, too, the criterion by which I ought to evaluate a purchase is the type of experience that I will get.

It is not only when we enjoy a windfall (such as a year-end bonus) that we ought to think about the value of experiences. Our lesser, day-to-day decisions can also be informed by recognizing the advantage of experiences over goods, leading us to prefer an evening at the theater or going bowling with the family over a new gadget or toy.