May 5, 2013

Experiences Aren't Necessarily Better than Things

One of the commonly reoccurring themes in personal finance blogs that I've seen is the idea that 'experiences' are more beneficial purchases than 'things'.   The argument is along the lines that you will get more memorable and lasting impact from spending money on an experience than you will get from purchasing a thing.  There seem to be a few studies on this topic and various blog articles about it.  For example theres Happiness for Sale: Do Experiential Purchases Make Consumers Happier than Material Purchases? and  Happiness: No Purchase Necessary, Says Study

I can understand the idea in general that experiences can be better use of money than things if you look at the lasting happiness of the experience or thing versus the cost.   A fun vacation once a year makes me a lot more happy than making my car payment.     But experiences aren't universally better than things and you shouldn't try and look at it as some sort of universal rule.   I was going to title this post "Experiences Are Better than Things (unless you do the experiences too much or the experiences aren't fun or you really like the things)" but that was too long.

Familiarity waters down the value of things in our minds

CNN discusses one of the studies on the topic : Study: Experiences make us happier than possessions
and they point out that experiences seem better " in part because the initial joy of acquiring a new object, such as a new car, fades over time as people become accustomed to seeing it every day, experts said".   I agree with this.

When I was a kid the VHS and Beta VCR's first came out.   My family couldn't afford to buy a VCR (or likely my parents just didn't want to spend the money ).   However the video rental places would rent out VCRs.   So sometimes we would rent a VCR and a couple movies for a weekend.  I remember at the time when I was a child that when we rented a VCR it was a special occasion that made me happy.   The reason it was so exciting was that we didn't own a VCR so renting one to watch movies was special.   Later we bought a VCR (a Betamax of course) and then owning a VCR became our normal state and renting a movie was a routine thing that was no longer special.   As soon as we owned the VCR it wasn't special and we were familiar with it. 

If I took $100 and went and rented a convertible car for a weekend I'd remember the experience.   Driving around in the convertible car would be fun.   I'd look back on it and feel I really got my $100 out of the experience.  But if you spent $400 a month to lease a new convertible then drove it day in an day out for 3 years then you wouldn't have a memorable experience every single weekend you drove it.   The car would be "normal" to you and "nothing special".   You'd become familiar with it to the point of taking it for granted and not getting any special incremental enjoyment for the 87th weekend you drove it compared to the 86th or 85th.

We don't value what we take for granted

I grew in a home with a beautiful view of rolling fields and a snow capped mountain.   Because of that I don't have much appreciation for beautiful snow capped mountain views.   I distinctly remember someone pointing out how beautiful the view was from my home and me thinking at the time that it was "no big deal".   I'm sure other people would love to buy that same property and live there with the beautiful view but I spent the first 18 years of my life looking at it and so I didn't appreciate it.

You become familiar with the stuff you buy gradually over time.  They are not new and unique but are instead parts of your routine life.

Unique Experiences are Better than Repeat ones

People don't usually go on a vacation to Hawaii every day.    Many of us might only go to Hawaii once in our  lives if we go at all.   So if you look back at your life and think about all the things you did then that single vacation to Hawaii may stick out as a very memorable "once in a lifetime" experience.   On the other hand if you live in Hawaii, then a vacation to Hawaii is called "going home" and its not so unique or memorable.   

I've been to Las Vegas at least a dozen times.   I've lost count of exactly how many times I've been there but I'm sure its over a dozen.   When I go to Vegas its not new to me and each additional experience is not very memorable.   I've spent in the range of $1,000 to $2,000 on each vacation to Vegas.    I don't even remember some of those individual vacations and therefore didn't get much value out of them.   I've become so familiar with Vegas as a vacation destination that going there has less and less value.   The first trip to Vegas was very memorable and fun experience initially.   If I had gone once and not returned then I'd likely remember that one vacation very fondly and it would have a much higher value to me as an experience.   But now that I've been there enough times that all the trips blend together and are not very memorable.   I can hardly remember my first Vegas vacation and its value as an experience has declined considerably.   Now don't get me wrong I still enjoy a vacation in Vegas and don't think my time and money spent there is wasted, but it doesn't stick out in my mind as a particularly memorable experience.

 If you live in the city and take a nice drive in the country then this might be a fun and memorable experience to you.   People who live in a rural area may take that exact same drive every day of the week and see nothing special about it at all.   What you consider "a lovely drive in the country" they might consider their commute to work.

If your experiences are things you do frequently then they are not especially enjoyable or memorable and are not of high value to you.  

Some Experiences Suck

I can't say that I've ever had a horrible vacation story, but there are many vacation horror stories out there.   The closest I recall having a bad vacation was when a friend and I stayed overnight in another city to watch our football team lose miserably to a crappy team while it rained on us.   I probably spent a couple hundred dollars on that experience.   I could have stayed at home and watched my team get beat in the rain-free warmth of my home for free and had a much better experience.   I could have taken that couple hundred bucks and bought a football video game, an official team jersey, watched my team lose on TV sitting on my comfy couch and been tons happier.   OK now I'm just depressing myself. 

Of course people don't set out to pay money for experiences that suck.    You only find out that an experience sucks after the fact.  But there is always a risk that if you put your money into experiences that you'll end up with an unsatisfactory experience.   If we assume that experiences are better than things this really only holds true for the experiences that actually turn out as positive and fun experiences as we hoped they would.   An unhappy experience can stick in our memory as well as a happy experience.  You don't hear a lot of personal finance bloggers talking about their awful vacations when they were sick in bed half the trip, and it rained the whole time, and then they got stuck overnight at the airport during a blizzard, and their sullen teenager was mad the whole trip for no reason etc. when they're saying how much better experiences are than stuff.

Some of Us Like Certain Things a Lot

I have certain things in my life that I get a very good happiness / cost return on.  

Spending $2000 on a set of fancy rims for your SUV may bring you little long term joy.    Unless of course you really appreciate and enjoy having fancy rims on your vehicle.    I don't have any interest in fancy rims for my car.   But some people seem to really enjoy that kind of thing.   If spending $2000 on fancy rims brings them significant enjoyment then more power to them.   To each their own.   Each of us has our own stuff that we enjoy whether its a collection of comic books, some nice clothes, a motorcycle, what have you.

I do agree with the idea that experiences can be a better use of money than buying more stuff.   I'd rather go to Italy for the first time than buy a slightly newer car at this point or have a giant collection of DVD movies that I never watch.   On the other hand stuff isn't all bad and its certainly not generally worse than any experiences.   I wouldn't trade my big screen TV for another trip to Vegas.

I'm not sure what the goal of the message is

When people say that experiences are better than stuff, I'm not entirely sure what they expect us to do.   Do they want me to sell my car and use the money to go on vacation?  

Is the message simply that you should get rid of some of your junk?   Americans generally do have too much stuff and I think most of us can benefit by getting rid of some of our stuff.   But mostly what I'm talking about is junk and clutter.   My closet may have a bunch of old shirts that I don't wear anymore and that I ought to donate to the charity.   But that doesn't mean that I shouldn't buy any new clothes or that the experience of going out to the movies is better than a new pair of pants.

I expect the idea is that people ought to change their spending behavior and stop buying so much stuff.    I think that message can stand on its own without trying to justify it by claiming experiences are better.   There are many things in life better than excessive materialism.

To be clear I'm not saying you ought to go out and buy a whole pile of 'stuff'.    I just don't really agree with the whole 'experiences are better than stuff' thesis.


Blog Widget by LinkWithin