Can money buy happiness? It depends how you spend it. Pouring money into material things turns out to provide little in the way of lasting happiness. But don’t turn down that raise just yet. A decade of research suggests that people can squeeze more happiness from their money by switching from buying the same old stuff and instead using it to buy experiences—from small meals out to dream vacations.
If you’re facing a tight summer budget and have to choose between, say, buying a new car or using your current car to take the family on a road trip to the Grand Canyon, the new science of spending can help you navigate this decision. Here are five reasons—supported by scientific research—to hit the road:
1. You’ll enjoy the trip—even before you leave.
You’ll have that new car for a lot longer than the average road trip lasts, but experiences have a hidden advantage: the pleasure derived from vacations begins long before the actual vacation, as soon as the planning starts. When an appealing event lies in our future, it captures our attention and excites our emotions. In fact, researchers in the Netherlands found that people got the biggest emotional boost from a vacation in the weeks before they left. So, forget about those last minute deals and plan your Labor Day trip now—that way, you get to enjoy the pleasure of anticipation all summer.
2. You’ll re-connect with others.
A big reason why experiences provide more happiness than material things is that experiences are usually shared with others. When it comes to happiness, nothing is more important than connecting with the people we love. Even if it means having to compromise on the destination (Arizona vs. Australia), it’s worth maximizing the social value of vacations by inviting friends or family along—rather than setting off solo.
3. You’ll re-connect with yourself.
When people look back on the experiences and material things they’ve paid for in the past, they see the experiences as being more deeply related to who they really are. A trip to the Grand Canyon will contribute to your life story in a way that your next car probably won’t. It’s not that exciting to see yourself as “the kind of person who sits in traffic.” Seeing yourself as “the kind of person who seeks out new adventures” feels more related to who many of us want to be.
4. You’ll enjoy the memory—even if the trip doesn’t go as planned.
Material things often come with guarantees; vacations, not so much. Amazingly, though, research shows that even if a vacation doesn’t go smoothly (think flight delays and flat tires), it’s likely to be remembered fondly in the years that follow. And no need to worry if a vacation isn’t going perfectly—in the long run, research shows that people are less likely to regret buying experiences than material things.
5. You’ll be liked better.
When you tell other people about your summer, talking about your trip to the Grand Canyon will be much more interesting than describing even the most fabulous high-end speakers in your new vehicle. In a recent study, pairs of strangers were asked to discuss their past purchases. Pairs who discussed experiential purchases enjoyed the conversation more—and liked each other better—than pairs who discussed material purchases. Material goods are conversation killers (have you seen the pictures of my new bathroom I posted on Facebook?); experiences are conversation starters (have you seen the pictures of my trip to Machu Picchu?)
All in all, the scientific evidence is clear: You’re likely to get a bigger happiness bang for your buck by investing in the road trip rather than the roadster this summer. So, spruce up the old family car for one more summer, and start planning your vacation.
Elizabeth Dunn and Michael Norton are co-authors of Happy Money: The Science of Smarter Spending (Simon & Schuster) and professors at the University of British Columbia and Harvard Business School, respectively. For more tips on squeezing the most happiness out of every dollar, check out their book here.