To Be Happier, Favor Experiences Over Things

While the stuff we own grows old and obsolete, memories of things we did are often burnished with time.

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What’s on your holiday wish list? Or your shopping list? A bunch of stuff, most likely. But if you really want to make someone happy, skip the sweater and give an experience—concert tickets, maybe, or a dinner out. And if you want to be happier yourself, aim for doing something instead of owning something. Research shows that experiences make people happier than things do, and that has implications not just for the holidays, but for the family budget, the economy and society at large.

Tom Gilovich has been studying the relative merits of doing versus owning for years. The Cornell University psychology professor has found that ex­periences are more satisfying than possessions in part because experiences connect you with other people more than material goods do. You may get a kick out of talking about your new iPhone with another Apple fan. But you feel more kinship with someone with whom you’ve shared a trip or a meal. The feeling of kinship often extends to people in general, not just to those with whom you have experiences in common.

That’s because experiences reflect more of ourselves than do material goods. “I’m not saying that you don’t invest some of your identification in your clothes, house or the car you drive,” says Gilovich. “But however invested you are in material possessions, they remain out there, separate from you. But we are, arguably, the sum total of our experiences.” Experiences are likely to be evaluated on their own terms. By contrast, says Gilovich, we tend to want to keep up with the Joneses when it comes to our stuff.

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It’s also more fun to anticipate an experience in the future than it is to wait for a tangible good. The former usually triggers excitement; the latter, often impatience. And while the stuff we own grows old and obsolete, memories of things we did are often burnished with time. We reflect on the accomplishment and the scenery of the climb up the mountain and dwell less on the mosquito bites or the skinned knee.

Millennials get it. People born in the years leading up to the 21st century are hip to the happiness power of experiences, and their spending reflects it. In 2015, according to J.P. Morgan, 34% of credit card and debit card spending by millennials went toward experiences, categorized as dining (16%), entertainment (12%) and travel (6%); just 28% of spending by other age groups was earmarked for spending on experiences. A 2014 survey by Harris Interactive for Eventbrite, an event promotion and ticketing site, found that 78% of millennials would choose to spend money on a desirable experience over buying a desirable thing. “I definitely prioritize travel, and ex­periences while I am traveling,” says Vanderbilt PhD student Sierra Palumbos, 25. She scrimps on rent by living farther from campus but has toured 18 national parks and recently traveled to Thailand, Malaysia and Cambodia.

The growing experience economy is bad news for department stores, where sales have slumped 5% from a year ago and are down 12% in the past four years. But it bodes well for experience purveyors, such as cruise lines, restaurants and the entertainment industry. Just don’t get the idea that experiences have to be vacation-caliber to matter. “It doesn’t have to be a trip to Rome. If you’re out hiking in your local park and the sunset breaks just right, you’re going to be moved,” says Gilovich. And what holds true for individuals is true for society overall, he says. He applauds urban design that builds in experiential infrastructure, such as hiking and bike trails, libraries and concert halls.

There’s no need to become an ascetic and give up your material goods—and yes, you still have to write a thank-you note for that sweater from the in-laws. But during this holiday season, and as you ponder your budget at the start of the new year, consider tilting your spending toward experiences. It just might make 2017 a little brighter.

Anne Kates Smith
Executive Editor, Kiplinger's Personal Finance

Anne Kates Smith brings Wall Street to Main Street, with decades of experience covering investments and personal finance for real people trying to navigate fast-changing markets, preserve financial security or plan for the future. She oversees the magazine's investing coverage,  authors Kiplinger’s biannual stock-market outlooks and writes the "Your Mind and Your Money" column, a take on behavioral finance and how investors can get out of their own way. Smith began her journalism career as a writer and columnist for USA Today. Prior to joining Kiplinger, she was a senior editor at U.S. News & World Report and a contributing columnist for TheStreet. Smith is a graduate of St. John's College in Annapolis, Md., the third-oldest college in America.