THE BLOG

Money and Happiness in Adulthood: The Value of Experience

08/13/2010 06:43 pm ET | Updated Nov 17, 2011

"It's amazing how many things in life would be better if you just had more money," a friend of mine once observed. She wasn't particularly sad when she said it, or even particularly wistful. In her view, it was just another of those life lessons you pick up along the way.

I've given her comment a lot of thought over the years because -- let's face it -- we all give in to the temptation from time to time to imagine what we'd do if a boatload of money suddenly rained down upon us. In my current life stage, I'm quite certain that I'd purchase some additional childcare to help me with the daily schlep around North London between 3 and 5 p.m. Then there's always that second home in Southern France I've coveted (and maybe another one in Hawaii ... hey, why not? Live large.) And as a newly card-carrying member of the biking brigade, I'd sure love some of that fancy schwag that goes with the whole cycling thing.

Despite the apparent perspicacity of my friend's casual remark, the relationship between money and happiness isn't quite so straightforward after all. According to a recent article in The New York Times, just getting more stuff doesn't actually make you any happier. What counts is how you spend your money.

It turns out that spending money on experience-related purchases -- the article cites things like concert tickets, French lessons and sushi-rolling classes -- produces longer-lasting satisfaction than spending money on plain old stuff. As a scholar interviewed in the article sums it up: "It's better to go on a vacation than to buy a new couch."

The article goes on to say that over the past few years, consumers have been gravitating more and more towards experience-rich expenditures. Indeed, one study by Thomas DeLeire of The University of Wisconsin and Ariel Kalil of The University of Chicago showed that the only category of consumption to be positively related to happiness was leisure: vacations, entertainment, sports and equipment like golf clubs and fishing poles. (Full disclosure: DeLeire and Kalil are former colleagues.)

While much of that shift has been driven by the global economic downturn, many analysts are predicting that these changes are likely to last. Simply put, people have discovered -- albeit by circumstance -- that they actually prefer their pared down, leisure-oriented purchases to the more lavish consumption patterns of yore.

Which brings us to the staycation. I wrote last week about the rise of the staycation as a lifestyle choice in advanced, industrial countries like the U.S. and the U.K. But what the Times article is suggesting is that part of the staycation's appeal is precisely that it gibes so well with leisure (read: happiness) oriented purchases like barbecues and movies and board games that enhance the value of experience over mere acquisition. Comments on that post noted that their choice to "staycate" (is that a verb?) was driven less by financial squeeze than it was by the fact that were actually happier just staying home and hanging out doing simple things with their families.

I once wrote a post where I asked readers where they drew the line between what counts as a luxury vs. what counts as a necessity in their daily lives. (The post was occasioned by the acquisition of a new rice cooker in our household.) I confessed that for me, at least, a New Yorker subscription constituted a necessity, even though many would probably term it a luxury. But now that I've read this article, I'm thinking that the reason that I continue to value The New Yorker so highly is actually that it brings me so much happiness.

So I'm curious. As you narrow your spending to focus on what counts (if you are, in fact, doing that), what sorts of things do you find bring you the most happiness?