Articles warning about the dangers of overspending at Christmastime have become as predictable as ever-earlier Christmas sales. Even before Thanksgiving, articles appear, exhorting you to create a gift budget, go easy on the “self-gifting” as you shop for others, and don’t be among those poor souls who find themselves still paying for last year’s gifts as this year’s Black Friday ads roll out. We can’t argue with any of that.
So it may surprise you that we’re encouraging you to buy more this year. Don’t worry. We haven’t changed our name to Unsound Mind Investing. You see, we aren’t talking about giving a greater quantity of gifts; we’re talking about giving more meaningful gifts.
The half-life of happiness
If you’re trying to make the recipient of a Christmas gift happy, it’s important to understand that the happiness we get from things doesn’t typically last very long. For proof, try remembering what you received for Christmas last year. Quick, can you name anything? What about the gifts you gave last year? Do any come to mind? Not to add insult to injury, but it’s unlikely that the recipients of your gifts can remember what you gave them either. How much happiness could such gifts have provided if they can’t be recalled just 12 months later?
While things don’t provide much happiness bang for your hard-earned bucks, don’t despair. Research demonstrates that a particular type of gift does create measurable increases in happiness — the gift of experiences.
Try remembering the last vacation you took. Where did you go? Who were you with? What did you do? Chances are, you have little problem bringing those memories to mind. And as you think about them, chances are equally good you’re smiling. The experience itself was enjoyable, and the memories created during the experience continue to bring joy long after the event ended.
Yes, experiences are usually more meaningful than things, and the joy we get from experiences lasts far longer. It’s counter-intuitive because “stuff” stays with you while experiences are over and done. But the research is clear: when it comes to lasting happiness, experiences are better than stuff.
The cost/value conflict
The finding that experiences produce more happiness than things has become relatively well-known. Many articles have been written on the topic in recent years. But sadly, that discovery doesn’t seem to have made much impact on people’s behavior.
In a study by researchers at San Francisco State University, most people said they know experiences will make them happier than material goods, but they perceived material goods to be a better value for their money.
Lead researcher Ryan Howell, a psychology professor, believes this disconnect is because material items are a tangible reminder of what the item is worth. Life experiences produce only memories, which can be much harder to put a price tag on. “We naturally associate economic value with stuff. I bought this car, it’s worth $8,000,” he said. “We have a hard time estimating the economic value we would place on our memories.”
The stuff of happy experiences
Another study pointed out that things and experiences are not always mutually exclusive. Some things can be thought of as “experiential goods,” which can bring about just as much happiness as pure experiences.
Whereas things are purchases made “in order to have” and experiences are purchases made “in order to do,” experiential goods are purchases of “things in order to do.”
Knowing which goods might qualify as experiential requires knowing what types of experiences tend to make people happy. Research points to three that are especially good at promoting happiness — those that satisfy “the psychological needs of autonomy, competence, and relatedness.”
Some items might foster all three. “A musical instrument, for example, makes possible a sort of human happiness hat trick: finely tune your skills, get the happiness of mastery (competence); play your heart out, get the happiness of self-expression (autonomy); jam with friends, get the happiness of connecting with others (relatedness).”
That last factor, relatedness, may be the most important. After all, playing an instrument in front of an appreciative audience or with friends in a band is likely to be more enjoyable than playing alone. So, think of gifts the recipient could enjoy with others, such as a board game or gear for a favorite hobby.
Examples of purely experiential gifts include tickets to a play, a meal (together) at a favorite restaurant, or tuition for a class on a subject of interest to the recipient, such as art, photography, or writing. (Gifts that bring back happy memories of a great experience, such as a vacation photograph, are also typically well-received.) Examples of experiential goods might include camping equipment that will be used for future family camping adventures.
As you think about the relatives or friends you plan to buy gifts for this year, think beyond the usual sweaters, shoes, and such. Consider giving gifts of experiences or experiential goods. They’re likely to be deeply appreciated, much enjoyed, and long remembered. All of which may make this a more meaningful Christmas — for the recipients of your gifts, and for you.
