In a study conducted in the 1970’s psychologists interviewed some lucky people who had won between fifty thousand and one million dollars in the Illinois State Lottery. Strikingly, less than a year after receiving the potentially life changing news of winning the lottery, they reported being no more happy than regular folks who had not experienced the sudden windfall. This led to a belief that happiness came from within. You were internally peaceful and happy or not, and changing your financial status would not affect your happiness.
Obviously that is not the case for people with severely limited resources. They worry more about satisfying basic needs such as food, shelter, and clothing with little concern for life happiness. But it has been proven that once you have attained a level of income above poverty level, increases in money does not translate directly to increase in happiness. Therefore, for many of us, deciding how to invest our resources to maximize happiness is a challenge.
In his book Luxury Fever Robert Frank wrote about this challenge. He wondered why, as nations rise in wealth, their citizens become no happier. He examined why we are devoted to spending money on luxuries and other goods, which we take for granted quickly, rather than on things that would make us lastingly happier.
For Frank it is a question of how you spend your money. Whether you spend it on “Conspicuous or inconspicuous consumption”. Conspicuous consumption refers to things that are visible to others and that can be used as markers of a person’s relative success, where their value comes not so much from the objective value as from the statement they make about their owner.
Conspicuous consumption means the consumption has an objective tangible value. It is the difference between driving a Chevy Alero, Ford Focus, Honda Accord, Lexus 350, BMW 740 or a Porsche Targa. The differences are tangible, measurable, and conspicuous to all.
Inconspicuous consumption on the other hand, refers to activates that are valued for themselves. They are usually consumed more privately and are not bought for the purpose of achieving status because they are much more difficult to compare their value to those of others.
Two examples of conspicuous versus inconspicuous consumption relate to our salary and vacation at work. Which job would you rather have, one in which you earned $90,000 a year and your coworkers earned an average of $70,000 or one in which you earned “$100, 000 and your coworkers earned on average $110,000? Many people chose the first job, thereby revealing that relative position is worth at least $10,000 to them.
Another question is whether you would rather work for a company that gave you two weeks of vacation year, but other employees were given, on average, only one; or would you prefer a company that gave you a four-week vacation a year but other employees were given, on average, six? The great majority of people choose the longer absolute time. Time off is primarily an inconspicuous consumption.
Frank’s conclusions are bolstered by recent research by the psychologists van Boven and Gilowc, who identified the benefits of “doing versus having”. Their primary conclusion suggests that people derive more enjoyment when they use their discretionary income on experiential purchases than from discretionary material purchases.
They gave some interesting reasons why experiential purchases make people happier.
Experiences are more open to positive reinterpretations to the fact that they are more open than material possessions to increasingly favorable interpretations with the passage of time. People are not limited by reality in their evaluations of past experiences as they are with material possessions. We forget incidental annoyances and distractions that detract from the experience. It allows the “great storyteller” the opportunity to embellish and reconfigure to create a much rosier retrospective view than the event enjoyed originally. Even if we don’t verbalize it, or do to consciously work on it, our memory naturally is included to it for us.
With the material purchases, its value and perception to us remains constant or even detracts over time.
Experiences are happy because they have great social value and are more pleasurable to pleasurable to talk about. Social relationships which are closely associate with happiness … Furthermore, experiences are more likely to have a typical story narrative structure with a beginning, middle, and end. People like listening to and telling stories. Both listeners and storytellers may enjoy talking about experiences more than about possessions
Experiences are also more central to our identity. A person’s life is quite literally the sum of his or her experiences. The accumulation of rich experiences thus creates a richer life. That is why in working with parents if there is a choice between buying something for a child or panning a fun entertaining experience together the experience wins out all the time. It is a positive investment in relationships that enrich our lives.
When you invest your money remember that “doing” beats “having” all the time. Money can buy more happiness when you make the right decisions.
“Money is only a tool, it will take you wherever you wish, but it will not replace the driver.” Ayn Rand”
Morris N. Mann, Ph.D.
Authentic Happiness Coach
Moving Forward to Happiness and Success