Contrary to expectations, life experiences better use of money than material items

Despite knowing that buying life experiences will make them happier than buying material items, shoppers might continue to spend money on the latter because they mistakenly believe items are a better value, according to a San Francisco State University study published today. That belief, however, isn’t accurate.Those surveyed after making a purchase rated life experiences both making them happier and as a better use of their money, indicating many are sacrificing their well-being for a sense of value that never materializes. The study is one of the first to shed light on why people buy material items even though years of research has shown experiences provide a greater happiness boost.”People actually do know, and accurately predict, that life experiences will make them happier,” said SF State Associate Professor of Psychology Ryan Howell, a co-author of the study who has extensively researched the link between spending and happiness. “What they really underestimate is how much monetary value they will get out of a life experience. Even though they’re told experiences will make them happier and they know experiences will make them happier, they still perceive material items as being a better value.”Part of the reason, Howell suggests, is that material items are a tangible reminder of what the item is worth. Life experiences produce only memories, which can be 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.”To conduct the study, Howell and lead author Paulina Pchelin, a student at SF State when the research took place, surveyed individuals both before and after making a purchase. Prior to the purchase, respondents said they believed a life experience would make them happier but a material item would be a better use of their money. After the purchase, however, respondents reported that life experiences not only made them happier but were also the better value.”There were just huge underestimates in how much value people expected to get from their purchase,” Howell said. …

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Wealthy neighborhoods fuel materialistic desires, study says

Where you live could affect whether or not you spend compulsively, according to new research from San Francisco State University published today in the Journal of Consumer Culture.Individuals who live in wealthy neighborhoods are more likely to have materialistic values and poor spending habits, the study says, particularly if they are young, living in urban areas and relatively poor compared with their surroundings. The study is the first to show a connection between neighborhood socioeconomic status and materialism.The reason for the link, said co-author and SF State Associate Professor of Psychology Ryan Howell, may have to do with “relative deprivation,” or the feeling someone gets when they believe they are less well-off than those around them. If someone is bombarded with images or reminders of wealth, such as an abundance of investment banks nearby or neighbors driving luxury cars, they are likelier to feel a need to spend money they may not have to project an image of wealth they don’t actually possess.”People who live in more affluent areas are vulnerable to this implicit social comparison, where you start to see other people spending a lot of money,” Howell said. “Because you feel the need to live up to that standard, you end up impulsively buying material items, even though they don’t actually make you happier.”To conduct the study, researchers determined a neighborhood’s socioeconomic status by looking at its per-capita income and poverty rate as well as the number of financial institutions present. That information was compared with survey data measuring participants’ materialistic values, views about money and spending, and savings habits. After controlling for age, gender and individual socioeconomic status, researchers found residents of wealthier neighborhoods were likelier to be materialistic, spend compulsively and manage their money poorly than those living in less well-off areas.The effect was seen especially in younger people, who Howell said tend to be more materialistic in general, those who live in urban areas, where residents are exposed to a larger socioeconomic spectrum, and those whose individual socioeconomic status is lower than their neighborhood’s. Conversely, someone with a high individual socioeconomic status was less susceptible to such behavior.”We did find that individual socioeconomic status is negatively correlated with materialism, so the more money you have for yourself, the less materialistic you are,” said Jia Wei Zhang, lead author of the study and current University of California, Berkeley graduate student who conducted the research with Howell while an undergraduate at SF State. “But it doesn’t fully negate the effect of a wealthy neighborhood. Regardless of how much someone is worth in general, the richer their neighborhood, the more likely they are to be materialistic, independent of their own socioeconomic status.”The next step in the research, Howell said, is to explore whether there are ways to counter a neighborhood’s effect on an individual’s materialistic values. This could be done simply by making more people aware of the correlation, or through interventions developed to make people feel more grateful for their status. …

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