Why investing in Experiences over Material Possessions makes cents (typo intended)
Would you rather dilemma + Scientific Research Article + Takeaways
A recent conversation with my son sparked the inspiration for this post… he started the conversation with this impossible question…
Son: “Dad, would you RATHER have a new car or tickets to the World Cup final?”
Me: “Well, it depends - what kind of car?”
Son: “It’s a Tesla”
Me: “Can I sell the car to pay for World Cup tickets?” (See below for model pricing1)
Son: “No, you have to choose one or the other” (He caught what I was trying to do!)
Me: “Okay, who’s playing in the World Cup Final?”
Son: “You get to choose, and you can choose any seats” (me thinking *wow if only I could see the USA win their first World Cup from the front row!*)
Me: “I’d go with the World Cup Final tickets, what about you?”
Kid: “Same, World Cup Final tickets”
Without realizing the complexity (or maybe he did!), my son was highlighting an important psychological concept involving the value comparison between an experience and a physical possession. Let’s shift from anecdote to scientific research (but before you dip out here is a picture of my Christmas gift from my wife… you guessed right, it was an experience).
I have often been encouraged to invest in experiences over physical possessions and I’m sure you have too. At first glance, this rule of thumb seems logical as we have been taught that more possessions will not make us meaningfully happier. I was curious about the “Why?” though, what’s the psychology behind this generally accepted phrase?
First, the value of experiences is best understood by considering the overvaluing of material possessions a.k.a. materialism2. Materialism can be described as:
A personality trait comprised of envy, lack of generosity, and possessiveness, with materialists valuing financial security over other life goals3
Furthermore, Materialism has a direct link to well-being:
Well-being is negatively correlated with materialistic personality, materialistic values, materialistic aspirations and materialistic buying when compared to experiential buying4
In basic terms, the higher someone scores in the materialism category their happiness trends downward by a corresponding amount. Ok, I know what you’re thinking… Birthdays in your house must be terrible just handing out 3x5 notecards with “I Owe Yous” for experiences5, but hang with me…
Research suggests there are 2 main reasons why experiential purchases lead to greater well-being than physical purchases:
Experiential purchases satisfy our need for relatedness6. When we value creating experiences with others, we are creating life experiences and memories that can be shared with loved ones and reflected on. This is likely why incredible food is even better when shared with others, and why experiences like movies and sports have even stronger memories when shared with others. With 30% of Americans saying they have experienced loneliness at least once per week over the past year7, we could probably all be more intentional valuing experiences with others.
Experiential purchases do not easily lead to social comparisons8. This was an interesting point that I never would have guessed. We are less likely to compare and feel negatively about an experience then a physical possession. If you buy an expensive new watch, you will probably feel good as you signal to others your buying power and style choice. However, that feeling only lasts until you see someone with a more expensive watch. We are less likely to feel envy and compare when it comes to experiences though, we rarely hear anyone say “Wow, that sports game was phenomenal, but… I absolutely hated my seats compared to those jerks in the front row”.
In better understanding the psychology behind this, here are my personal takeaways:
1. Intentionally prioritize experiences. Make a list of the top 3-5 events over the next year, and then invite others to join you. Even better, buy the tickets to the events so you have to find someone to join and then invite them!
2. Increase your experience budget. Find ways to cut costs in other areas of your life in order to free up more flexibility for spending on experiences with others.
Thank you so much for reading and let me know your takeaways in the comments.
Go Catch a Game (it’s good for you),
Zach
New Tesla Model X priced at $77,990 for Colorado- Tesla Website
Caveat, if someone enjoys receiving a gift that is obviously not a red flag for materialism and people have different ways they prefer to receive love including receiving gifts (For example, 5 Love Languages Website)
For the record, we do give each other physical gifts in our home, but sometimes I’ll ask for sports tickets as a gift