Is it more rewarding to spend money on experiences or gadgetry?
As the Consumer Electronics Show in Las Vegas opens, a nagging question arises: will the latest device, from a smartphone to a 60-inch television, really make a difference to me? An article in the Washington Post points to a well-known paradox of consumption, the "hedonic treadmill." After the initial pleasure of use, we grow accustomed to features and conveniences and don't feel better using them than we did the last generation of equipment. (This feeling was spotlit by The Onion a few years ago, as I mentioned in a previous post.)
The Post cites books by two economists, Todd Buchholz and Thomas Gilovich, on the superiority of experiences to possessions, including technology:
It's much better, Gilovich says, to spend money on doing things rather than buying things. Experiences, such as vacations and barbecues with friends, don't seem to be as easily devalued by our adaptive abilities. "You get a lot more social value out of your experiences," he says. "When you talk to people about your experiences, it tends to be an enjoyable conversation. You talk about material goods much less."
And our experiences don't lend themselves to easy comparisons, which gives them unique value. Gilovich points out that with a car, for example, comparisons are too easy: "Your car costs less money? It gets better mileage and it's more reliable? Argh! You have a better car than I do!"
But, he says, "What if you went to Bali and I went to Hawaii? Well, Bali's more exotic, but I went to Hawaii with friends and I have my memories, and I'm not worried by that comparison."
So a $200,000 space excursion can actually be excellent value compared with, say, a Bentley Continental GT. But even at the price levels of the 99 percent, it's a question always worth asking about a new purchase -- in addition to saving the money: what is the alternative experience, unthreatened by comparisons, that the price would buy?