The Science Of Why You Should Spend Your Money On Experiences, Not Things

Most people seek happiness, and some economists even argue that happiness is the best measure of a society’s well-being. While money can contribute to happiness, its impact diminishes once basic needs are met. The real question is: How should we spend our money to maximize happiness?

A common assumption is that buying material goods leads to longer-lasting happiness since they endure over time, unlike fleeting experiences such as vacations or concerts. However, research by Dr. Thomas Gilovich, a psychology professor at Cornell University, suggests otherwise – experiences bring more significant and lasting joy.

Why Experiences Bring More Happiness

Gilovich’s research, which builds on the Easterlin paradox, shows that while material and experiential purchases bring initial happiness, the joy from material things fades over time, whereas satisfaction from experiences increases. The reason? Adaptation.

“When we buy things, they make us happy – but only for a while,” says Gilovich. “New things excite us initially, but then we adapt to them.”

In contrast, experiences become part of our identity. A new phone or car remains separate from us, but the memories of traveling, learning new skills, or attending an art exhibit integrate into who we are. Even negative experiences can turn into valuable stories or character-building moments over time.

The Social Benefits of Experiences

Experiences also connect us to others more than material purchases. Sharing an experience – such as hiking the Appalachian Trail or attending the same concert – creates stronger bonds than simply owning the same gadget.

Additionally, experiences spark less comparison-based envy than material goods. Studies show that people are more likely to compare the features and status of material possessions (e.g., “Whose car is faster?”) than their experiences, leading to less dissatisfaction and competition.

Implications for Happiness and Society

Gilovich’s findings suggest that individuals, employers, and policymakers should prioritize experiences. Companies could invest in employee well-being by offering paid vacations, and governments could enhance recreational spaces to encourage meaningful experiences.

“As a society, shouldn’t we be making experiences easier for people?” asks Gilovich. If we genuinely want to cultivate happiness, shifting spending habits and policies toward enriching experiences could be the key.