Memory as a Consumer Durable

Garett Jones - Economist at George Mason University. You can follow him on Twitter: @GarettJones

According to the arcane conventions of economic statistics, a "consumer durable" is any physical product that lasts longer than three years: cars, fridges, computers (Strangely, Levi's don't count as a durable). 

Normal economics has two pieces of advice about how to buy consumer durables:

1.  Buy them when interest rates are low (cheaper to borrow the money; and you weren't going to earn anything at the bank anyway).  

2.  Don't buy them when your income takes a one-time hit (if the 'crops' have been bad the last few years--like they've been since the Great Recession--it's best to focus on buying things that get used up: food, haircuts, doctor visits; you can keep driving the Corolla). 

Recessions are times when 1 and 2 usually push in opposite directions, but in practice 2 wins the battle: Durable purchases collapse in a recession. 

But the idea of a durable is more important than any official definition: And memory, wholly intangible, is quite durable. 

People often shrink from driving to a distant, promising restaurant, flying to a new country, trying a new sport--it's a hassle, and the experience won't last that long. That's the wrong way to look at it. When you go bungee jumping, you're not buying a brief experience: You're buying a memory, one that might last even longer than a good pair of blue jeans. 

Psych research seems to bear this out: People love looking forward to vacations, they don't like the vacation that much while they're on it, and then they love the memories. Most of the joy--the utility in econospeak--happens when you're not having the experience. 

Vacation purchases jump around just the way you'd expect if they were a durable: People spend a lot less on them during recessions, about 15% less in the Great Recession. Food spending, by contrast, only fell 5%.

So people treat memories somewhat like durables, but most of us could do a better job of it. Yes, it'll be a hassle to find that riad in Marrakech when your GPS fails you, but complaining about it with your sibling years later will be a ton of fun. Get on with it. 

A corollary: if memory really is a durable, then you should buy a lot of it when you're young. That'll give you more years to enjoy your purchase. 

So it's worth a bit of suffering to create some good memories, since the future lasts a lot longer than the present. Bob Hope and Shirley Ross figured this out, reminiscing over their failed marriage:

And thanks for the memory

Of sunburns at the shore, nights in Singapore

You might have been a headache but you never were a bore

So thank you so much.

Yes, it's only a song from a movie.  But it's pretty good social science.