Money and happiness research

Every day more and more people are trying to understand the relationship between money and happiness. Numerous studies have shown that spending money on life experiences, compared to material possessions, improves psychological well-being. However, not everyone feels happier when purchasing life experiences. Psychologists have begun to study the psychological consequences of different motivations for experiential purchasing. They have found that purchasing experiences for intrinsic reasons, such as personal satisfaction, leads to more well-being than purchasing experiences for extrinsic reasons, such as trying to impress others.

For example, my colleagues, Jia Wei Zhang and Peter Caprariello, and I surveyed nearly 1000 adults and found that a person's motivation for making a purchase predicts whether psychological needs are satisfied when spending money on life experiences (DOI:10.1007/s10902-012-9357-z).

In a recent study we conducted in my lab, using the data we collected on BeyondThePurchase.org, we were interested in individuals’ motivation for spending money on life experiences. Visitors to the website completed the Materialistic Values Scale and the Motivations for Experiential Buying Scale as well as a happiness quiz. Results indicated that people who had greater materialistic values were more likely to buy experiential items for extrinsic reasons, such as showing off or impressing others. This suggests that materialistic individuals may not feel happiness from experiences because they spend money on experiences to pursue extrinsic goals. Individuals who choose life experiences to gain recognition from others reported feeling less autonomous, competent and connected to others.

These results may shed light on why materialists tend to be less satisfied with their lives. Materialists may perceive experiential items as another possession they want ‘to have’, instead of ‘to do’. Therefore, they spend money on life experiences for the same reason they pursue material possessions--to show off to others. Because materialists tend to pursue extrinsic goals whenever spending their money, their purchases are not making them happier (even their life experiences). 

To increase life satisfaction materialists, therefore, may want to focus on the intrinsic benefits of life experiences, such as representing one’s identity or improving interpersonal relationships, as opposed to how these experiences will be perceived by others. When you make your next purchase, the biggest question you have to ask yourself is why you are buying something. Motivation appears to amplify or eliminate the happiness effect of a purchase.

Beyond The Purchase is a website dedicated to understanding the psychology behind spending decisions and the relationship between money and happiness. We study how factors like your values and personality interact with spending decisions to affect your happiness. At Beyond The Purchase you can take quizzes that help you understand what motivates your spending decisions, and you’ll get personalized feedback and tips. For example:

How do you score on the five fundamental dimensions of personality? Take our Big Five personality test and find out.

How do you feel about your past, present, and future? Take the Time Attitudes Survey and learn about your relation with time.

How happy are your Facebook updates? We can analyze your last 25 Facebook status updates and determine how happy you have been.

How happy is your subconscious? Take our Happiness IAT and find out.

With these insights, you can better understand the ways in which your financial decisions affect your happiness. To read more about the connection between money and happiness, go to the Beyond the Purchase blog.

Jia Wei Zhang, Ryan T. Howell, Peter A. Caprariello. Buying Life Experiences for the “Right” Reasons: A Validation of the Motivations for Experiential Buying ScaleJournal of Happiness Studies, 2012.

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