Updated on 07.31.17

Buying Things Versus Buying Experiences: A Deeper Look

Trent Hamm

One of the core ideas that I like to share regarding personal finance success revolves around the idea that it’s better to spend your money on “experiences” rather than “stuff.” For example, I’d rather spend $100 going to a convention for a particular hobby than spend $100 on items for that hobby.

An astute reader, Lisa, called that into question with a very nice mailbag submission:

How do you draw the line between “stuff” and “experience”? Is it just whether or not you wind up with a physical item at the end?

If I buy a book for example, I buy it to go on some intellectual experience. Take me away with a good story or some new ideas! That’s an experience, right? Or is it stuff, because you wind up with that physical book at the end? Does the distinction really matter?

That’s a really good question, and it’s one that’s right in line with several other things I’ve read recently and some of the directions of my own life as of late.

What really led me down this path was this interesting short article from The Guardian, which describes a recent research study from by two researchers from the Hungarian Academy of Science, Tamás Hajdu of the Institute of Economics and Gabor Hajdu of the Institute of Sociology. Their paper suggests that there really isn’t that much of a difference between the total amount of happiness that people extract from “material” purchases versus “experience” purchases. Here’s the abstract of that paper:

In the last decade, a number of experiments have stated that spending money on experiences rather than on material goods tends to make people happier. However, the experimental designs used to analyze the relationship between consumption and subjective well-being had several limitations: small and homogeneous samples, a direct question assessing the effect of consumption, and a potential social desirability bias due to the stigmatization of materialism. To reduce these limitations, we used a survey method. In two studies based on survey data from nationally representative samples in Hungary, we estimated linear and non-linear associations of experiential and material expenditures with life satisfaction. Although both experiential and material expenditures were positively associated with life satisfaction, evidence supporting the greater return received when buying experiences was limited. The main difference between experiential purchases and material purchases was that the marginal utility of expeiential purchases appeared to be linear, whereas the marginal utility of material purchases was decreasing. Despite the limited differences between the effects of experiential and material purchases, the results of the non-linear estimates indicate that to maximize life satisfaction, an average person should allocate more money to buying experiences rather than material goods.

In other words, the overall joy one receives from material purchases versus experiences was actually pretty similar. The biggest difference between the two was that the joy received from experience purchases was linear while the material purchases decreased over time.

To be more specific, people tended to be very consistent when reporting their joy about a past experience, regardless of how long it was in the past. If they liked it a certain amount a month after the fact, their feeling was pretty similar a year after the fact.

On the other hand, if they were considering a material item, their pleasure with that item was much higher if it was a recent purchase, and it declined over time. Overall, the total happiness was about the same in the survey data, but the brunt of the happiness from a material purchase occurred shortly after the purchase, while the happiness from an experience tended to spread out more.

Let’s put that into a real world example. Let’s say, for example, that I had $100 to spend. I might use that $100 to buy a new ten gallon mash tun for my home brewing setup, as it’s something I’ve been itching to have for a long time (don’t worry about what a mash tun is – let’s just say it’s a useful thing for home brewing). On the other hand, I might spend that $100 going out with my wife and a couple of friends for a great meal and something fun afterwards.

If you ask me a week or two afterwards, I’d probably give higher marks to the mash tun. I would have probably used it for two different home brew batches by then and would be really high on that purchase. I’d give high marks to the dinner, but I’d really be happy with that mash tun. I would mark the mash tun as providing more happiness than the dinner at the two week mark.

On the other hand, if we wait a year, I’d probably have that mash tun on a shelf somewhere without having touched it for a couple of months. I’d think about how I probably should use it and feel guilty that I hadn’t used it, and then also think about how much space it was taking up. My marks might still be positive, but they wouldn’t be strongly so.

At that same point, I’d still look back at that night out on the town with my wife and our friends with fondness. I’d probably remember a few of the highlights and get a big smile on my face, and I’d mark it as being a very positive memory that still brings me happiness and helped to reinforce some of my best relationships. I’d probably rank the dinner experience as being better than the mash tun one year out.

Overall, the total amount of joy is about the same. Neither one can be rated as spectacularly higher than the other one.

However, there are a few big key advantages that point toward the value of experience rather than the value of a material item.

First, the material item requires upkeep. If you have an experience, then it’s done. It’s over with. You don’t retain any sort of physical item. What remains of that experience is in your head. Perhaps it changed you in some way, like a great book or an amazing piece of music or a wonderful experience with a friend. No matter what, though, the experience doesn’t leave you with a physical item.

Buying a material item does leave you with a physical item, for better or worse. Often, as Lisa pointed out in her question, that physical item is connected to an experience of some kind. That book you bought will take you on an intellectual journey, for instance. That mash tun will enable me to make an amazing IPA.

The problem comes when you’re not actually having that experience. At that point, the book just becomes another thing clogging up your shelf. The mash tun becomes a large object in your garage.

Those objects that aren’t a part of an active experience take up space, and that’s space you have to pay for in some way. It has a real cost. You have to pay for the square footage to store it; if you have too much stuff, that means a larger home or a storage locker of some kind, which has a direct financial cost. You have to maintain it – dusting it, keeping it clean, and so on. You have to deal with it when you move. It’s another item that’s in the way when you’re trying to find something else. You may have to deal with the guilt when you see it because of the unfulfilled experience it represents (“Man, I have that mash tun… why am I not making a batch of beer with it? I’m so lazy!”).

On the flip side of that, a fresh purchase brings along with it some additional happiness due to that positive feeling of acquisition. We feel good when we buy something that we’re excited about. We get that short term burst of pleasure of having this new item, of opening it up and using it for a time or two. That’s a heightened experience, one that is often even better than a paid experience at the same cost that’s often over very quickly.

The problem, of course, is that the newness fades. The honeymoon ends. At that point, you’re left with that physical object, one you may not be as excited to use. It ends up on the shelf, unused, and then it becomes much less of a positive and perhaps even a negative.

Let’s compare these two situations using something very similar.

Case in Point: A Book You Want to Read

Let’s imagine, hypothetically, that a new book is coming out and you’re really excited to read it. You have two potential options regarding this book: you could reserve it at the library and read it within a few weeks of getting it from the library and then return it, or you could buy it and read it at your convenience and keep the book.

The library option gives you the experience of reading the book. You get that full intellectual journey. You also don’t have to pay for it. However, after going on that intellectual ride, you have to return the book to the library. You paid nothing, but at the end, all you have are the memories and thoughts.

On the other hand, the bookstore option gives you that physical book. You get the burst of pleasure of buying it, and then you can read it at your convenience. You still get that same intellectual journey, but afterwards you still have the physical book, although it’s used now. On the downside, you do have to pay for the book in this situation. You get the memories and thoughts and you still retain the physical book.

Is it better to pay $0 for the experience alone, or $10 for the experience and the physical book (which you could probably sell for a dollar or two later on)?

It’s probably not easy to answer that question, just as it’s not easy to answer the overall question of experience versus physical purchase. That’s because you’re choosing between two completely different curves. They’re both fun immediately, one rises to a peak shortly after the initial expense (the purchase) and then falls below the other over the long tail (dealing with the less-wanted physical object).

Even given that, there are four reasons why I prefer an experience purchase over a physical one most of the time.

The Four Reasons

First, the chaining together of that peak pleasure from buying physical objects becomes addictive. Let me offer up a theory here, one of my own devising based on the research study quoted at the start, many other readings, and my own experiences.

You buy an item. It’s pretty enjoyable – you get that rush of excitement from the purchase and the new experience of enjoying that object. It’s yours – you can use it at your convenience and enjoy it as you please! It’s fresh and new!

But, eventually, that starts to fade. It’s not providing pleasure like it once was. How can you fix that? Buy another new thing!

By consistently buying new things, you manage to keep that level of pleasure artificially high. (Of course, after a while, even that high consistent level of pleasure begins to dull, but that’s another subject.)

You buy something. The pleasure bursts, then fades. You miss that pleasure, so you buy something else. The pleasure bursts, then fades.

In other words, to consistently keep the level of pleasure from buying physical objects higher than that of experiences, you have to keep buying physical objects. This explains a great deal about how people fall into credit card debt. They become accustomed to that high level of consumer pleasure. They feel empty when it fades and buy things to bring it back.

To put it bluntly, I don’t want to fall into that addiction.

Second, I want to find joy and contentment in what I already have. It is my goal to be content with what I have, to explore my inner self, and to find joy in the simpler things in life.

The reasons for this are plenty, but almost every one of them points toward valuing experiences over things. Many experiences are free, while not many things are free. Delving into one’s own thoughts is an experience, and a free one. Most simple pleasures – things like walking barefoot in the grass or getting lost in a great book or walking on a trail or enjoying the company of a good friend – are free experiences, and many other simple pleasures – the flavor of homemade potato salad, the chill of a cold glass on a hot summer day – are nearly free experiences.

Best of all, those types of experiences can always be found, no matter what hand life deals you. There are very few outcomes in my life that would cause me to lose the pleasure of a good book or a cool glass of lemonade or the feeling of warm sun on my skin. I want my life to be full of those things, rather than physical objects. I yearn for every day to be an appreciation of the bounty I already have, rather than a yearning for endless new things.

Third, I already have plenty of clutter, and adding another object that I’m not certain to be using frequently is not a good choice. I’m far more interested in downsizing the number of possessions I have rather than increasing them. I want to spend less of my time (and, to an extent, my money) taking care of the possessions I have. Instead, I’d rather spend time enjoying them and having experiences.

This simply boils down to a time and energy management issue. The more possessions I have, the more time and energy I have to spend in my life dealing with them – cleaning them, maintaining them, finding places to store them, digging through them when I’m looking for something, and so on. When I add a possession to my life, I want to be sure that it’s actually adding enough value to overcome that, which means I tend to default to “experience” over “stuff” unless a clear case is made otherwise.

Finally, a focus on collecting great experiences – and things that provide the foundation for more, such as good friendships – raises the baseline joy of life. If my life is loaded with a long history of great experiences, my life becomes more joyful. Every one adds a small note of joy to my overall life – every book read, every conversation, every hike in the woods, everything. Investing my time and energy into experiences – and into things that build more and better experiences, such as building good friendships – equals a higher baseline quality of life, one that doesn’t constantly have to be refreshed with the latest purchase. This is actually one of the most active areas of my life right now, as I’m spending a lot of time evaluating how I use my time and energy to make my life consistently better, and I’m finding that experiences and building up to great future experiences adds a ton of value to my life, a value that sticks around and doesn’t really fade over time.

There’s the obvious additional factor that most of the time, experiences are simply less expensive than things. Undoubtedly, there are expensive experiences and free things, but in general, there is such a wide variety of free and low cost experiences in life as compared to the variety of free and low cost physical items that, by defaulting to spending your time and energy focused on experiences, you’re likely to spend less money. It costs far less to check a book out from the library than to buy one from the bookstore, after all.

Tying It All Together

So, here’s my answer to the battle between things and experiences. I default to experiences, and avoid buying things unless there’s a clear reason to do so. I want to spend as little of my time as possible managing and caring for and storing objects, and as much of my time as possible actually having experiences or preparing for greater experiences by building skills and relationships. That choice also happens to be the more financially astute choice most of the time, which is another large benefit.

This leaves me with one final question: when is it the right choice to buy a thing rather than buying an experience? When is it okay to have an object rather than just paying for an experience? For me, it comes down to consistent use. Am I going to use this item consistently in my day to day life? For example, with a book, have I checked it out from the library multiple times? That’s why I own a copy of The History of Western Philosophy. With a tool, have I borrowed it from a friend multiple times? That’s led me to buy a corded drill, for example. I return to those things consistently.

Things that I’m going to use once and then simply store it, likely never to be used again, are things I want to avoid buying going forward. I don’t mind owning a few reference books or books I intend to reread, but books that I’ve never read before? I’m going to borrow them. I’m in the process of rapidly paring down my board game collection to ones that I want to play again and again, and I’m becoming much more picky on new ones that I acquire (and that’s one of my biggest hobbies). I haven’t bought any new home brewing gear in a long while.

Am I spending more money on experiences than before? I don’t know, perhaps a little, but I do know I’m consciously investing more of my time into trying to genuinely experience things and stay in the moment and build the foundation for more experiences. The number of people I count as “friends” has gone up drastically in recent years. The percentage of the books I’ve read that have come from the library or from book swapping at little free libraries has gone way up. I’m “collecting” things like trails walked at local parks or days with more than 10,000 steps taken, rather than collecting DVDs.

I generally come down on the side of “experiences” for all of these reasons. I don’t believe it’s always the right answer, and I don’t think there’s a perfect right answer for everyone, but it’s something that I think is worth exploring for everyone.

Do you need all of the physical objects that you own? How many of them just sit there gathering dust until you have to dig through them to find something or to rearrange a room or to simply get cleaned up? Is there any reason to add more, when you already have all of this stuff? Perhaps most important: can you find joy without buying something?

Good luck in figuring out the answers to those questions for yourself!