Consumers are happier when they spend on experiential purchases versus material ones

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Certain purchases are better than others at sparking people’s in-the-moment happiness, according to new research from the McCombs School of Business at The University of Texas at Austin.

Lead author Amit Kumar, assistant professor of marketing, and his research team found that consumers are happier when they spend on experiential purchases versus material ones.

The paper, “Spending on Doing Promotes More Moment-to-Moment Happiness than Spending on Having,” is published in the May 2020 issue of the Journal of Experimental Social Psychology.

“One issue that hasn’t really been examined much is what happens in the here and now — are we happier spending our money on an experience or on a material item?” Kumar said.

“The basic finding from a lot of experiments is that people derive more happiness from their experiences than from their possessions.”

Kumar and his co-authors, Matthew Killingsworth from the University of Pennsylvania, and Thomas Gilovich from Cornell University, recruited 2,635 adults who were randomly assigned to a material or experiential group.

The participants were sent random texts during the day to monitor their emotions and their purchasing behavior.

Material purchasers bought things such as jewelry, clothing or furniture, while experiential shoppers attended sporting events, dined at restaurants, or engaged in other experiences.

The results: Happiness was higher for participants who consumed experiential purchases versus material ones in every category, regardless of the cost of the item.

“It would be unfair to compare a shirt to a trip, but when we account for price, we still see this result where experiences are associated with more happiness,” Kumar said.

To address possible differences in types of consumers, the researchers conducted a second study in which they asked more than 5,000 participants to first rate their happiness and then report whether they had used, enjoyed, or consumed either a material or experiential purchase within the past hour.

If they responded “yes,” participants were asked a series of questions and details about their purchase.

“We still observed the same effect,” Kumar said.

“When the very same person was consuming an experience, that was associated with more happiness.”

The researchers concluded that people are happier with experiential purchases over material ones irrespective of when you measure happiness: before, during or after consumption. Experiences also provoke more satisfaction even though people typically spend more time using their material possessions.

The researchers said a possible explanation is the endurance of experiences in people’s memories, while the perceived value of material goods weakens over time.

“If you want to be happier, it might be wise to shift some of your consumption away from material goods and a bit more toward experiences,” Kumar said. “That would likely lead to greater well-being.”


DEFINING EXPERIENTIAL PURCHASES

Research in this area generally starts with the definition originally offered by Van Boven and Gilovich (2003), who maintained that material purchases entail “spending money with the primary intention of acquiring a material possession – a tangible object that you obtain and keep in your possession.”

Experiential purchases, in contrast, involve “spending money with the primary intention of acquiring a life experience – an event or series of events that you personally encounter or live through” (p. 1194). As noted many times in this field of research, the material–experiential distinction is not always clear‐cut (Gilovich, Kumar, & Jampol, 2015; Guevarra & Howell, 2015).

Nearly everyone agrees that a day on the slopes, a night out at a restaurant, or a workout at a gym are inherently experiential, whereas a piece of jewelry, a designer handbag, or a coffee table are squarely in the material category.

But everyone can also think of purchases that do not belong unambiguously in one category or the other.

Things such as a bicycle, a wine collection, or a set of scented candles are all physical objects, but their main value lies in the experiences they provide.

As depicted in Figure 3, categories of experiential and material purchases overlap.

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Figure 3Open in figure viewerPowerPointSchematic typology of material and experiential purchases

We do not consider this overlap to be a problem. For one thing, the same can be said about other useful constructs in the field of marketing, such as hedonic versus utilitarian goods, high versus low involvement products, or informational versus transformational advertising styles.

The fact that some goods, some involvement levels, and some advertisements can be difficult to categorize does not invalidate these important distinctions.

As we have noted before (Van Boven & Gilovich, 2003), there are moments during the day that are hard to categorize as either night or day and yet that occasional difficulty does not undermine the utility of the distinction between night and day.

Moreover, the fuzzy boundary between material and experiential purchases comes with a benefit that is every bit as important as whatever complications it entails.

That is, it allows investigators to use the very same purchase, described in either material or experiential terms, and see whether those different frames affect the utility people derive from their purchase (Bastos & Brucks, 2017; Carter & Gilovich, 2012; Chan & Mogilner, 2017). Holding the objective stimulus constant in this fashion provides an especially rigorous way to test relevant hypotheses.

THE DEPTH AND BREADTH OF THE EXPERIENTIAL ADVANTAGE

As noted earlier, the experiential advantage has been documented many times by many different investigators and it is worth considering both the depth and breadth of the existing empirical evidence.

By depth, we mean the extent to which the experiential advantage is manifest in different ways and has been captured by different measures. By breadth, we mean the extent to which it applies to a range of different people, not a narrow slice of humanity.

As we all see, the tendency for people to derive more enduring satisfaction from experiential rather than material purchases is quite deep and, although it does not apply to everyone, it is broad as well.

Depth

Most of the research on the experiential advantage is retrospective and subjective: Participants are asked to recall past material or experiential purchases (or both) and then to rate those purchases on a variety of scales, such as how satisfied they are with them, how much happiness they have received from them, and the extent to which the money paid for them was “well spent” (Howell & Hill, 2009; Nicolao et al., 2009; Pchelin & Howell, 2014; Thomas & Millar, 2013; Van Boven & Gilovich, 2003).

These studies consistently show that, looking back, people believe they have received more pleasure from their experiential purchases and that they are more satisfied with them. People also report feeling more grateful for having had the opportunity to purchase experiences than the opportunity to purchase material goods (Walker et al., 2016). An entirely different sort of converging retrospective evidence was obtained in a study that asked participants simply to recall either material or experiential purchases and then, seemingly incidentally, assessed their mood. Thinking about past experiential purchases put them in a better mood than thinking about material purchases (Van Boven & Gilovich, 2003, Study 3).

But not all demonstrations of the experiential advantage are retrospective. In one experience‐sampling study, individuals who were surveyed while waiting to acquire or consume an experiential purchase rated themselves as happier than those who were surveyed while waiting to acquire or consume a material good (Kumar et al., 2014).

Waiting for either purchase was positive, but consumers waiting for a material good were “edgier” and less happy (see also Goodman, Malkoc, & Rosenboim, 2019).

In other experience‐sampling studies, individuals who were surveyed while they were consuming an experience, or immediately after having done so, reported being happier than those surveyed during or just after the consumption of a material good (Kumar, Mann, & Gilovich, 2019; Weidman & Dunn, 2016).

Thus, the experiential advantage is not simply a retrospective phenomenon: It applies both prospectively and contemporaneously as well.

The prospective urge to consume experiences is also reflected in the fact that consumers are more willing to borrow to make experiential purchases than they are to make material purchases (Tully & Sharma, 2017).

This difference appears to result from consumers worrying about missing out on experiential opportunities, which are often more bounded in time than material purchases.

The depth of the experiential advantage is further reflected in the fact that people tend to enjoy experiential gifts they receive more than material gifts (Chan & Mogilner, 2017) and, less directly, in the fact that people’s biggest regrets when it comes to experiential purchases tend to involve inaction – experiential purchases that the consumers did not make but now wish they had.

To a significantly greater degree, people’s biggest regrets when it comes to material purchases tend to involve action – material purchases made that now strike the consumer as a mistake (Rosenzweig & Gilovich, 2012).

If people are more pleased when they receive experiential gifts, and are more likely to regret not taking advantage of opportunities to purchase experiences, experiential purchases must provide more of a hedonic return to consumers than material goods.

Breadth

Like so much behavioral science, most of the research on the experiential advantage has involved WEIRD participants – Western, educated, independent, rich, and democratic (Henrich, Heine, & Norenzayan, 2010).

Does it apply to other groups?

Not all other groups, it turns out. One limitation established early on is that only relatively wealthy individuals appear to be subject to it. Van Boven and Gilovich (2003) reported in their seminal paper that the experiential advantage held for all of their groups of respondents (gender, age, marital status, etc.) except the very poor, a result that has been replicated by Lee, Hall, and Wood (2018).

The experiential advantage thus appears to be a phenomenon involving disposable income – individuals without any truly disposable income are not likely to benefit from spending their money on experiences rather than possessions.

Note, however, that the poorer individuals in these studies did not derive more happiness from their material purchases. They simply did not, unlike their wealthier counterparts, derive more from their experiential purchases.

A related variable that does give rise to a reversal of the usual pattern is being focused on one’s financial constraints. Doing so leads people to prioritize durability, and thus material over experiential purchases (Tully et al., 2015).

Similar results have been reported among adults who have experienced unpredictable and harsh childhood environments, who tend to evaluate experiential purchases less favorably and expect to get less value out of them (Mittal & Sundie, 2017).

A final reversal has been reported among individuals who feel powerless. Analyzing consumers’ preferences for different types of luxury, Dubois and Ruvio (2014) found that powerful people prioritized experiential luxury (measured through willingness to pay), whereas powerless people prioritized material luxury.

Finally, note that another type of constraint increases consumers’ preference for experiential over material consumption: Shim and White (2017) found that the feeling of having limited time that comes with thinking about death leads people to seek out experiences over material goods.

The impact of the enduring motivations and personalities of different consumers on their preference for material or experiential purchases has also received research attention.

Nearly everyone who first hears about the experiential advantage wonders whether it applies to people who are materialistic – those who value the acquisition and ownership of material goods and consider their material acquisitions to be important elements of who they are (Richins & Dawson, 1992).

In support of this idea, Millar and Thomas (2009) found that individuals who scored high on a measure of materialism did not derive greater satisfaction from their experiential purchases. But note that here too there was no “material advantage” – participants who scored high on materialism got the same amount of enjoyment from their material and experiential purchases (see also Nicolao et al., 2009).

The same pattern was observed among participants who scored low on the experiential buying tendency scale (i.e., those who buy more material goods relative to experiences): These participants received an equal level of enjoyment and satisfaction from their material and experiential purchases, unlike those who scored high or in the middle of the scale (Zhang et al., 2014).

Another characteristic of consumers that has received some attention from investigators interested in the experiential advantage is their age.

The advantage holds for participants across different age groups (Chan & Mogilner, 2017; Hayase & Ura, 2015; Kumar et al., 2014; Pchelin & Howell, 2014; Van Boven & Gilovich, 2003), but with younger participants gaining comparatively more happiness from extraordinary experiences, and older participants getting more enjoyment from ordinary experiences (Bhattacharjee & Mogilner, 2014).


Source:
UT Austin

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