When Friday rolls around and it’s finally payday, its all too common to whip out the plastic and buy that expensive shiny watch you’ve had your eye on the past two weeks… but its been proven money can’t buy you long term happiness; however, investing in experiences can. If you really think about it, ten years from now, you aren’t going to reminisce on the fact that you had the nicest watch out of all your friends; you’ll remember that trip you took to the beach with your best friend and the lasting memories you made you can still look back on.
“One of the enemies of happiness is adaptation,” says Dr. Thomas Gilovich, a psychology professor at Cornell University who has been studying the question of money and happiness for over two decades. “We buy things to make us happy, and we succeed. But only for a while. New things are exciting to us at first, but then we adapt to them.”
Gilovich’s findings are the synthesis of psychological studies conducted by him and others into the Easterlin paradox, which found that money buys happiness, but only up to a point. How adaptation affects happiness, for instance, was measured in a study that asked people to self-report their happiness with major material and experiential purchases. Initially, their happiness with those purchases was ranked about the same. But over time, people’s satisfaction with the things they bought went down, whereas their satisfaction with experiences they spent money on went up.
It’s counterintuitive that something like a physical object that you can keep for a long time doesn’t keep you as happy as long as a once-and-done experience does. Ironically, the fact that a material thing is ever present works against it, making it easier to adapt to. It fades into the background and becomes part of the new normal. But while the happiness from material purchases diminishes over time, experiences become an ingrained part of our identity.
“Our experiences are a bigger part of ourselves than our material goods,” says Gilovich. “You can really like your material stuff. You can even think that part of your identity is connected to those things, but nonetheless they remain separate from you. In contrast, your experiences really are part of you. We are the sum total of our experiences.”
One study conducted by Gilovich even showed that if people have an experience they say negatively impacted their happiness, once they have the chance to talk about it, their assessment of that experience goes up. Gilovich attributes this to the fact that something that might have been stressful or scary in the past can become a funny story to tell at a party or be looked back on as an invaluable character-building experience.