Money, Happiness, and Socioeconomic Status

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Several studies over the past decade have looked at the influence of purchases on people’s happiness. The general conclusion from this work is that buying experiences makes people happier than buying things. That is, the purchase of tickets to a concert or an evening out has more influence on happiness than the purchase of a blender or a sofa.

But, as with so many things in psychology, there are factors that influence when this effect is observed. A paper by Jacob Lee, Deborah Hall, and Wendy Wood in the July 2018 issue of Psychological Science suggest that socioeconomic status has a significant impact on this relationship.

In particular, the authors point out that many of the previous studies on the impact of purchases on happiness has used college students who tend to be relatively high in socioeconomic status compared to the population at large. They suggest that people lower in socioeconomic status may be more focused on the wise use of resources, and so they may derive more enjoyment when they buy material goods that are likely to last a long time, satisfy practical goals, and can be sold later if necessary.

These researchers tested this proposal in several ways.

In one study, non-college student participants from the U.S. were tested through Amazon’s Mechanical Turk. Participants thought about two recent purchases. One purchase of an object and one of an experience. Then, participants rated whether they were happier with the object purchase or the experience purchase on a scale ranging from -3 (the object purchase definitely made me happier) to 3 (the experience purchase definitely made me happier) where 0 indicated that the two purchase made them equally happy. Participants were also shown a ladder that they were told represented how well-off people are in the United States. They were asked to choose one of 10 rungs to show how well-off they think they are.

Overall, people’s judgments correlated with their perception of their socioeconomic status. On average, participants low in socioeconomic status rated object purchases as making them slightly happier than experience purchases. Participants high in socioeconomic status rated experience purchases as making them happier than object purchases.

A second study obtained a similar pattern of results when participants only rated an object purchase or an experience purchase, but not both. So, the results of the first study do not just reflect something about comparing an experience purchase to an object purchase. It looks like people low in socioeconomic status have a slight preference for object purchases over experience purchases, but both make them happy.

A third study manipulated the perception of socioeconomic status. Some participants imagined having their income increase by 50 percent. Others imagined their income decrease by 50 percent. They had to write for three minutes about how they would budget in this situation. Then, they imagined a purchase of an experience and a purchase of an object made six months after the change in income. They had to rate their happiness with the purchase.

Participants who imagined an increase in income strongly preferred the experience purchase to the object purchase. Participants who imagined a decrease in income were neutral about which type of purchase was better.

These results qualify the advice about which kinds of purchases are likely to make you happy. Buying experiences creates more happiness than buying objects for people who are privileged to live in comfortable economic circumstances. People who are less well-off benefit from any purchase, but they clearly derive happiness from purchases of objects.