Video directed and produced by Joanie Tobin
Conventional wisdom says that money can't buy happiness. Behavioral science begs to differ. In fact, research shows that money can make us happier—but only if we spend it in particular ways.
In their book Happy Money: The Science of Smarter Spending, authors Elizabeth Dunn and Michael Norton draw on years of quantitative and qualitative research to explain how we can turn cash into contentment.
The key lies in adhering to five key principles: Buy Experiences (research shows that material purchases are less satisfying than vacations or concerts); Make it a Treat (limiting access to our favorite things will make us keep appreciating them); Buy Time (focusing on time over money yields wiser purchases); Pay Now, Consume Later (delayed consumption leads to increased enjoyment); and Invest in Others (spending money on other people makes us happier than spending it on ourselves).
In the following video, the first in a series, Norton doles out some cash to two women in Harvard Square on a sunny summer day. The catch: Each of them must take the money and spend it on an experience.
"One of the most common things people do with their money is get stuff," explains Norton, an associate professor of marketing at Harvard Business School. "But we have shown…in research that stuff isn't good for you. It doesn't make you unhappy, but it doesn't make you happy. But one thing that does make us happy is an experience."
Watch the video to find out why Norton believes that taking a trip yields more happiness than, say, buying a necklace—and to find out whether the women in Harvard Square end up happier.
See the companion video, To Buy Happiness, Purchase an Experience.
- Tim Bowman
- Manager, Revel Consulting
This reminds me of the dichotomy between the experiencing self and remembering self that Daniel Kahneman laid out so clearly in his March 2010 TED talk (http://www.ted.com/talks/daniel_kahneman_the_riddle_of_experience_vs_memory.html).Running the risk of putting words in his mouth, the principle is as follows:
1) We spend orders of magnitudes more time experiencing something than we do remembering how that experience made us feel (which may or may not actually tie back to the reality of the experience itself)
2) By living in the moment and focusing on experiences vs. living in the past and recalling how experiences made you feel or living in the future and worring how future experiences will end up, you maximize happiness
When you extend the Kahneman insight by bifurcating "experiences" into broad (multi-faceted, complex life adventures) vs. narrow (one-dimensional, limited usage of stuff) and you'll see the connection that I'm drawing between Kahneman's theory and the ideas summarized in this post.
Put simply: an "experience" is chaotic and unpredictable that can bare unexpected self-propagating fruit whereas buying "stuff" is known and uninspiring.
- Janet Simic
- Senior Cruise and Leisure Specialist, The Travel Network
As an agent working in the travel industry I wholeheartedly support your proposition. What better job is there than to specialize in leisure!Janet
- Mary Welsh Schlueter
- Chief Executive Officer, Partnership for Innovation in Education www.piemedia.org
This is just another reason why travel companies like Ritz Carlton (Brand stmt: "Let us stay with you") are making their marketing play to the traveler who values purchasing credible engaging experiences vs. purchasing a thing (a hotel room). Subtle change in brand messaging, but very effective.- Alyse Cori
- Owner, Travelwize
Experiences last a lifetime. These are the things no one can buy from you, borrow or steal. That's why it's important not just to be another confirmation number when you are planning a vacation. Use an experienced professional travel agent. They know how to give you memories that last a lifetime by adding extra special experiences and value for your vacation.- Jenny Sandhaas, M.A.
- Free-lance language and cross-cultural coach in Germany, TransatlanticLink
This article rings so true! It also helps me explain to workshop participants that there is no substitution for active participation and becoming involved in a workshop experience - AND that they cannot just "read the reader" instead!! I've encouraged a few to actually enjoy the video and learn something interesting while practicing their English skills....Thank you!- Steve
- VP Marketing
I disagree with this theory. I have many things that I've purchased over the years that continually give me pleasure. I'm also planning to purchase a European sports car, something I've wanted for many years. I know I will get loads of happiness everytime I drive it, or even see it parked in my garage....moreso than taking a trip to the factory where it's made, only to return home empty-handed. Experiences are great, but often times the fading memory is all you have left.- Susan Chipman
- retired
Not at all convincing, I am afraid. Not a good example of psychological science. I say this as a fellow of both the Association for Psychological Science and of the American Psychological Association, as well as a Harvard MBA. Not surprised the travel agent liked it ->- Keri King
- Event Coordinator, Triple Crown Sports, Inc.
As an event coordinator for youth sports, we organize experiences for people and families. The stories that are told at the dinner table are not only about the "on-field" service we specialize in (fields, officials, teams) but also the experiences they have in the swimming pool, the festival and the night life. The secret to our success is in the fact that we shut down our events at a reasonable hour so the participants can experience something besides our services.- Baboloki Boniface Reetsang
- General Manager, Benefits Administration, Botswana Public Officers Pension Fund
Happiness is a result of good feeling and good feeling can be caused by various circumstances including the experience gained from a particular activity or eventuality. I therefore believe that experience is one of the factors which can lead to happiness only if the experience is a positive one. In summary, the statement "To buy happiness, purchase an experience" is not totally true especially in situations where the experience is negative.- Marlis Krichewsky
- researcher in educational sciences, CIRPP
Can you really strictly distinguish between "stuff" and "experiences" ? "Stuff" allows experiences and experiences need "stuff": a sports car, kitesurf equipment, a new house. Buying things beyond the satisfaction of primary needs usually means that we want to make new and satisfying experiences that way. Perhaps the real question is if we get happier when sharing new experiences rather then making them alone.- Richard cheung
- Executive director, Hong Kong jockey club
If this research is right, then it will have implications on how loyalty reward program shall be designed .... How to maximize the impact.From my hands on experience, I would tend to agree with the findings. A reward such as a football or rugby game (experience) at prime seat (scarcity) where tickets difficult to get and you can also bring your kids to (spend on others on a future date) is indeed most desirable
Of course, a reward shall ideally be related to the underlying product you are selling too
- Kapil Kumar Sopory
- Company Secretary, SMEC(India) Private Limited
The type of experiences examplified in the article are bound to give happiness for the period the events last as also as a welcome memory in the future. Nevertheless, the passing off of the events also gives a feeling of loss at times.In my view making the best of the present without brooding on the past or worrying about the future is the best treatment for remaining happy.
- Atul Guglani
- Director, Mantex Technologies
Experiences are intrinsically linked to the products you buy. Like Steve talks about his dream sports car.All my working life, I have advised the customers that it is the experience from the product which makes it far apart from the others. Same same but different.
Holiday experience can mentally fade away, but product experience is nurtured every single day of its usage.
Happiness is a product of quality of thoughts, not purchases.
- Jill Tompkins
- Sea Education Association
This applies to fund raising and donor motivations as well.- Stephanie Armistead
- CEO, GreenBusiness WORKS
I have been buying happiness for decades.To celebrate the Holidays, I ceased buying things and began purchasing experiences for my three nephews and me to do together. The 'certificate' of the experience is given at a dinner where just my nephews (now ages 30-44) and their spouse/significant other comes for dinner. Post entree, pre dessert, the drum rolls and they all open the certificate at once.
Because we are located in different cities, we come together over July 4th to enjoy each other again and experience the happiness Aunt Stephanie bought.
As I read the article about the five principles, mentally I said, check. check, check, check, and check! All true!
So yes, Harvard, it is true. Next time, just call me!
- Alycia Holland
- Vice President, Avant Destination Concepts, LLC
I completely agree with this research. In my industry, we know that when companies reward employees with experiences rather than cash the employees are actually happier. And the company enjoys benefits from that as well. Overall it's a great scenario.