September 14, 2009

Happiness for Sale: Do Recreational Purchases Make People Happier Than Material Ones?

Research by Dr. Leonardo Nicolao

When people have disposable income to spend for pleasure, buying a recreational experience provides more happiness than purchasing tangible objects of equivalent price, for example, an exotic vacation rather than a state-of-the-art refrigerator. At least, that's the traditional belief.

New research reveals the matter to be more complex. Among the findings: A recreational experience gone wrong will cause much more unhappiness than would the purchase of poor-quality goods.

  "Our research is intended as a caution. The idea has been widespread since the 1700s that people will be happier if they invest in experiences rather than things," says Dr. Leonardo Nicolao, assistant professor of marketing at the Neeley School of Business at Texas Christian University. "We have shown that's not always the case, and a major reason is that people adapt more slowly to experiences than to objects."

Happiness for Sale: Do Experiential Purchases Make Consumers Happier than Material Purchases?, by Dr. Nicolao and his colleagues Dr. Julie R. Irwin of the University of Texas and Dr. Joseph K. Goodman of Washington University in St. Louis, is the first study to compare the after-effects of experiential and material purchases on the happiness levels of buyers, both when the purchases went well and when they did not. (The full research appears in the August 2009 issue of the Journal of Consumer Research .)

Only one previous study tested whether experiential versus material purchases make people happier, and it focused solely on positive situations.

Dr. Nicolao and his co-authors found that the link holds true when consumers feel the purchases were positive.  Negative outcomes, however, produce very different results.

"If someone invests in a vacation instead of a new kitchen, and the vacation turns out great, they will be happier than if they had spent the same amount on an excellent kitchen," he says. "But if they had a horrible vacation, they will feel much worse than if they had bought a horrible kitchen."

The reason: People adapt more slowly to experiences than to material acquisitions.  It's a process known as hedonic adaptation.

"Hedonic adaptation means that buyers get used to stimuli of a hedonic nature. For instance, when someone buys a car, they may be very happy initially, but soon they get used to driving it. Then it's just a car," he says. Similarly, when people are displeased with a purchase of consumer goods, they soon adapt to the situation.

By contrast, when people buy an experience, they revisit it in their memories long afterward, allowing them to enjoy the experience over and over - or to relive the agony, depending on how the experience went. Those memories keep the experience from quickly passing into the hum-drum.

The researchers conducted three experiments. The first tested how positive/negative experiential and material purchases affected happiness and rated levels of materialism.  The second examined positive/negative memory associations based on purchase type.  The third measured happiness with a small material or experiential purchase immediately after the transaction, then at seven minutes, one day, one week, and two weeks. Participants were several hundred university students.

Analysis revealed that experiential purchases elicited more emotion than did material purchases. They brought more happiness than material goods when outcomes were positive and greater unhappiness when outcomes were negative. This relationship was weaker for participants with high levels of materialism, for whom tangible goods carry greater importance as compared to people with low materialism, Dr. Nicolao says.

The study also confirmed that buyers adapt more slowly to experiential purchases than to material purchases, whether the experience was good or bad.

"Our findings suggest that a lifetime of negative experiential purchases might lead to quite an unhappy life, and furthermore that negative material purchases may not leave as much of a negative mark," the study states.


Elaine Cole
Public Relations Manager
Neeley School of Business at TCU