Thursday, May 4, 2017

Gilovich and Kumar (2015) on Experiences versus Material Goods

Thomas Gilovich and Amit Kumar, “We’ll Always Have Paris: The Hedonic Payoff from Experiential and Material Investments.” Advances in Experimental Social Psychology 51: 147-187, 2015. [The version outlined below has different page numbers (and perhaps other discrepancies) from the version available here.]

• Experiences provide long-lasting memories, at least relative to material goods; experiences are gifts that keep on giving. Perhaps subjective well-being (SWB) and income would be more closely related if people shifted their spending from material goods to experiential goods. 

• Vacations, concerts, dining out: these are examples of experiential goods. Electronic gadgetry and clothing fall into the material goods category. People consistently report higher happiness from experiential goods relative to material goods. 

• Experiences are better for SWB for a variety of reasons. First, they are less subject to the adaptation which, over times, erodes the pleasure boost given by a material acquisition. Experiences are more pleasurable (and interesting) to talk about, and can become embedded in our identity, our story. 

• Adaptation is helpful in allowing people to come to terms with negative events, so if bad experiences are not subject to adaptation, we could suffer long-term from unpleasant moments. But experiences tend to be malleable, so that bad experiences – the vacation where it rained the whole time – tend to be looked at more favorably, through rose-tinted glasses, over time. Indeed, the negative features of experiences can become, in retrospect, their chief virtues. 

• Even in anticipation of consumption, experiences bring more pleasure than material goods. Waiting in line is less unpleasant when it is to see a play than to buy a gadget. And after the fact, people tend to think of money spent on experiences as having been better spent than that expended on material objects. 

• The social element that is attached to many experiences is one of the sources of their SWB advantages. And talking about experiences after the fact is one of their social elements. Talking about material possessions is a bit of a snooze fest. 

• The endowment effect is connected to an unwillingness to part with something that we “own”; people tend to show larger endowment effects, greater attachments, to potential experiences than to material goods. 

• Material possessions like cars are relatively easy to compare along quality dimensions – your neighbor’s Ferrari is probably better than your Ford. But who had a better vacation, or a better time at the concert? These are harder to compare, and hence, experiences to some extent protect us against unfavorable social comparisons. And if we enjoy our concert, we are not much concerned about opportunity costs, those potentially better concerts we sacrificed to go to “ours”. 

• If you buy a bad car, you regret it, you have buyer’s remorse. But the more frequent regret in the experiential realm concerns foregone opportunities, not buyer’s remorse. And it is easy to find the good in a bad experience, but not so easy to find the upside of a malfunctioning computer. “Surprises” tend to be positive when they arise during experiences, but negative when they are connected to material goods! 

• Some material goods are purchased with the intention of using them to enhance experiences, such as watching movies with your friends and family in a home video center. But perhaps the actual consumption of these goods is less social and less experiential and even less common than anticipated. If people have the experiences in mind when they make the purchases, they may be systematically fooled, as it were, into overspending on what turn out to be merely material goods. 

• Perhaps connoisseurs are able to convert material goods (collectibles, say) into experiential goods, by harnessing the same social, identity, and even narrative advantages that other types of experiences present. 

• Can we design cities, and our lives, to maximize experience?

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