Buying Experiences and Not Things
You may have seen this popular piece by James Hamblin in The Atlantic rehashing the old advice to buy experiences rather than things. It’s an intriguing idea, but I have some misgivings.
Over in the business school, we often try to divide businesses into those that sell products and those that sell services. Once people started trying to actually classify businesses, the distinction broke down. You can sell a product with a hefty service component (think IBM). You can sell services where what you get at the end is really a product (think festival cartoon portraits). Fast food restaurants mostly sell you a product, but there is certainly a service component. Formal dining restaurants mostly sell you a service, but there is certainly a product component.
We now teach students to think of products and services existing along a continuum. It seems like the same applies to experiences and things.
If I rent a bike, that seems like it’d clearly be an experience purchase. But if I buy a bike and ride the same route, that is a product purchase. Is it really true though that the former will make me happier than the latter?
Writing is an experience, but in my case required the purchase of a laptop, which is a thing. Indeed, most of the purchases I make are to gain the experiences they enable. I bought a guitar so I could experience playing it. I rarely buy something solely to possess it rather than to use it.
Additionally, the research I see cited appears in psychology journals that don’t seem to acknowledge any notion of changing marginal utilities of consumption. I can believe that perhaps people in general ought to spend less on housing and more on massages, but the research doesn’t acknowledge any limits on how far this should go. As far as these folks are concerned, any amount of money spent on housing is being wasted on a thing that would be better enjoyed if it were spent on an experience.
I’m sure happy homeless people exist, but I don’t think that lifestyle choice will work for the average reader of The Atlantic, New Yorker, or New York Times. (This seems to be the demo that likes the message most.)
Why are experiences more valued? Kumar, Killingsworth, and Gilovich (2014):
Van Boven and Gilovich (2003) found that experiences tend to produce more enduring satisfaction than do possessions.
OK, “enduring satisfaction” does sound like a good thing, but does that mean that possessions are systematically overpriced relative to experiences? Does it mean consumption of possessions ought to be reduced relative to consumption of experiences? There doesn’t seem to be any mention of price or marginal utilities in the research I’ve seen. It’s all people reporting about how they feel about things, and there is research suggesting that people mistakenly inflate how happy unique experiences will make them.
Subsequent research has explored the mechanisms underlying this difference. Experiential purchases tend to make people happier because they evoke fewer comparisons (Carter & Gilovich, 2010), are more associated with the self (Carter & Gilovich, 2012), and foster more social connection (Caprariello & Reis, 2013; Kumar & Gilovich, 2014b; Kumar, Mann, & Gilovich, 2014; Van Boven, Campbell, & Gilovich, 2010).
This makes some sense. You are less likely to compare U2 to Elvis Costello than you are to compare a BMW to a Mercedes (or worse, your BMW to a newer one).
Experiences are generally more associated with the self. You take a trip, but you just possess a BMW. (Yes, you drive it too, but I could see how that might fade in a way that “I went to Italy” does not.)
I can also understand the social connections bit. Experiences are often experienced in groups with friends or relatives while possessions are often used alone.
Still, this seems like an admission that the problem with possessions is not that they are possessions but are instead with how they are used. Similarly, the virtue of experiences are not in their being experiences but with how and with whom they are experienced.
Why not consume things less likely to evoke comparisons, more associated with the self, and more likely to foster social connection regardless of whether they are experiences or possessions?
My wife and I have cross-country skis. They do not evoke comparisons. They are associated with the self, and they foster social connections. Still, they are tarred as a “thing” rather than an experience. Meanwhile, if I were to go to a movie by myself, that would be a lauded “experience” but fail on all three things that supposedly make experiences good.
Similarly, what if instead of buying a BMW, you got something unique and joined an enthusiasts club? An old MG doesn’t invite comparisons as a late-model BMW would. It certainly is tied to the self, and it is quite plausible that it would encourage social connections. Is it really so awful that it is a thing rather than an experience?