Can money buy happiness? According to the old adage: No.
But a Harvard Business School professor says yes. But how much happiness you can buy depends on how you spend your money.
“We’re really underspending on the things that make us most happy,” says Michael Norton, a Harvard Business School professor, who has researched the science of spending.
With the holiday shopping season around the corner, Black Friday buyers may want to reconsider their wish list.
It turns out people generally get more happiness spending their money on experiences than on stuff. That’s even though experiences are temporary — dinner with a friend or a vacation — while stuff like TVs, computers and smart phones last longer.
“It seems odd that things that disappear could make you happier than things that stay,” Norton said at the New York Times Dealbook conference earlier in November.
When we spend on things like a TV or a phone, it often leads to activities that are typically done in silence such as watching shows alone or using apps to play solitary games, Norton says.
But on a vacation, people bond with friends and family, see new places, learn new things and create memories. The same holds true with relatively inexpensive experiences like going out for dinner with friends.
Experiences make you happier before they even happen
Even the anticipation for both is different.
Buying a big-ticket item sometimes involves waiting that feels stressful. People may worry about whether they bought the best kind of TV or phone for the price, whether it will arrive on time or will it be damaged when it arrives.
So even before the purchase arrives, it can be filled with anxiety.
After it arrives, there is the stress of configuring the TV or phone, and the fact that it has already lost some of its value.
On the other hand, waiting for an experience — such as a vacation or dinner date — can feel exciting. In fact, the happiest day for people going on vacation is the day before the trip, not the time on the trip itself, Norton says.
“Even before they happen, experiences make us happier than stuff,” Norton says.
He uses honeymooners as an example. Before their honeymoon, couples often say they will be “on the beach with wine, intertwined, looking into each others’ eyes.”
But the experience may not live up to the hype. A plane is delayed, the hotel disappoints, or worse for honeymooners, “maybe you find out about some exes you weren’t aware of.”
But after the experience is over, people often tend to remember the happy moments, creating a rosy recollection of memories. Years later, the ex-girlfriend or -boyfriend that irritated during the honeymoon is long forgotten, says Norton.
“Because experiences disappear, they let us make up a reality that was amazing and wonderful, and they make us happier,” than stuff, Norton said.