For Happiness, Spend Money On Experiences

A few duds under the tree? Return them for cash and go to dinner. Psychologists say people report feeling happier when they spend their money on experiences rather than objects. Study author Ryan Howell, from San Francisco State University, explains the results and speculates on whether the findings extend to gift-giving. Originally broadcast Feb. 13, 2009.

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IRA FLATOW, host:

Well, the presents have all been opened. So, it's not too soon to start thinking about what you wish you had found under the tree instead of that tie or the toaster oven. But before you trade those gifts in for something else, you might want to think about taking the cash and buying an experience - an experience instead. Turns out that dinner or a concert may bring you more happiness than a bigger, better toaster oven, according to my next guest. Rather than getting things, doing things seem to bring more happiness to people.

Joining me to talk more about it is my guest, Ryan Howell, assistant professor of psychology at San Francisco State University. Welcome to Science Friday, Doctor Howell.

Dr. RYAN HOWELL (Assistant Professor, Psychology, San Francisco State University): Thank you for having me.

FLATOW: How did you discover this? You conducted a study?

Dr. HOWELL: I did. We were able to recruit 154 participants. Their ages were between 19 and 50. It's a pretty ethnically diverse community here, so that was pretty cool. And we brought them into our lab, and we gave them a manila envelope, so we didn't know the questions they would be answering. And we told them they'd be answering questions regarding how to use their money and the choices and how that affects their happiness.

And then, we asked them to think about a time in the last three months that they had used their money to make them happier. Half of them were told to think about specifically a life experience - like you said, eating out or going to a concert or traveling. And the other half were told to think about a time that they had tried to make themselves happier when they bought a material item. And then, they spent about 15 minutes writing a short paragraph describing the purchase, their feelings, their environment. And then, they answered a whole series of questions about how the purchase satisfied their psychological needs, how it increased their happiness, other people's happiness.

And then, what we found was - we were able to use mediation modeling, and it showed that participants who were in the experiential condition said that they were more likely to consider their money well-spent at that time but also that currently that their purchase was still making them happier, and it made others happier. And that was because they had an increased sense of vitality, an increased sense of vigor. And they also had a sense of being connected with their social world.

But they also had less social comparison. And what I mean by that is that they - you might buy a pair of shoes and think your shoes are really nice, until you see your friend's shoes and they're nicer. But people's experiences - their vacations and their times out with their friends isn't susceptible to social comparisons.

FLATOW: So, you don't have buyer's remorse...

Dr. HOWELL: Right.

FLATOW: ...when you buy an experience, get an experience? But there's got to be some point where, you know, having money helps, you know, when you're very happy to have that money?

Dr. HOWELL: Right, it's funny that for the last 35 years, we've talked about -and you've probably - I mean, I've seen it in Yahoo News and CNN, maybe even reported on NPR - that money doesn't make people happier. And that's part of the motivated to me to think about this because if it doesn't make us happier, it's odd, because we certainly act like it does. We work really hard to earn a lot of money and we take what appears to be a lot of pleasure in going out and spending it. So, what we hypothesized here in the lab was that it's probably that money makes some people happy at least some of the time when they're spending it on the right things.

FLATOW: Like dinner or something like that?

Dr. HOWELL: Right. The whole theory that's underlying this would be psychological need theory. So, you know, you talk about the fact that when you're really poor, money makes you happy because you're spending it probably on things that you need to fulfill, basic needs like being hungry and having shelter. And we don't adapt to being hungry or shelter. We like to eat every day. We like to have shelter everyday.

And so, theoretically, if you use your money to satisfy psychological needs, like the need to feel alive and invigorated and connected with other individuals, then it, you know, it should make you happier. If the gift that you give to someone allows a person to have those same psychological needs fulfilled, then it should bring the person more happiness. But also, you know, sometimes you give a person a gift - you might give them a gift card or you might give them - you know, my sister and I, we always exchange checks. And so, if you get money and you're able to make your own decision with the purchase, not only should you buy an experience but, you know, you might want to consider giving an experience, too.

FLATOW: Let me see if I can get a quick call in. 1-800-989-8255. James(ph) in Charlotte. Hi, James.

JAMES(Caller): Hey, how you doing?

FLATOW: Hi there. Go ahead.

JAMES: All right. This topic is kind of funny, man. My wife and I, we stopped doing the gift thing a long time ago when we found out that there was just no topping the gifts that we started to get for each other. And so, we started doing the experience thing, taking trips and similar things like that. Yeah, I totally agree with experiences over material goods any day of the week.

FLATOW: Thanks, James. Well, there's proof in your pudding, right?

Dr. HOWELL: Yeah. I've actually - it's interesting, I've had friends email me. I've seen comments on some of the articles and a lot of people say that. I just was actually talking to a friend at our local YMCA here and she said, you know, I just keep telling my family, all I want is experiences now.

FLATOW: Yeah, and you know, and it could be a lot cheaper than a gift and more - as you say, more satisfying and a lot cheaper.

Dr. HOWELL: Yeah, one of the kind of cool findings that we found as we asked people how much money they spent - and two other studies have done similar types of paradigms, and they actually told the people to focus on a certain amount of money, one was $50 and one was 300. And we said, you know, if you're buying an experience or a material item, you can choose, you know, just think about it.

And some of the experiences were as small as $5 going to a coffee shop. You know, the median amount that people spent was $70 - you know, very doable in a tough economy. And it doesn't correlate at all with how happy it makes you feel. Actually, the only thing it correlates with is a sense of envy. So, the more money you spend, the more envious you think people will be of it, which actually isn't good for our well-being.

FLATOW: Well, there's our SCIENCE FRIDAY tip of the holiday week for you.

Dr. HOWELL: Yeah.

FLATOW: Thank you, Ryan. Ryan Howell is assistant professor of psychology at San Francisco State University, and he joined us by phone.

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