My favorite discovery in the field of behavioral economics confirms what we already knew deep down, even if it contradicts “common sense”–that experiences are more valuable than stuff. I recently put this finding to the test:
Concert of a Lifetime
Those were my wife’s words when I called her from the road, rushing to discuss what I termed “the concert of a lifetime.”
I’d just learned that living legends U2 were touring in support of the 30th anniversary of their most celebrated album, “The Joshua Tree.”
The greatest live band of a generation playing the soundtrack of my youth from start to finish.
Andrea was on board with going to the show–she’s a big fan, too. But what invited her claim of insanity was my insistence that we take the whole family to Seattle to see the show. We live in Charleston. South Carolina.
But the Seattle show promised to be superior to almost all others along the route. In the Emerald City, the Emerald Isle’s most melodic export would be supported by Mumford and Sons as the opening act, playing only the first three West Coast stops.
The two best live bands performing in one of the world’s greatest cities in a single concert.
(In case you’re wondering, music is not subjective, but objective. These are all facts.)
I insisted that we had a moral obligation to go as a family–assuring my wife that it would result in a lifelong memory soon to be deemed priceless.
Now, we’re a family of four (and a half) with two boys–13 and 11–in youth sports (and an adorable puppy). One could argue that every piece of furniture in our home is a candidate for replacement.
If you are in–or remember–or tried to forget–this phase of life, you know that, regardless of your income, every dollar seems to be pledged even before it is earned. Even when you’re occasionally surprised by a surplus inflow, it feels like the money has already been spent (if it hasn’t) on the necessity du jour.
Experiences > Stuff
But a mathematical fact remains: There are only two ways to dispose of our money–on experiences or stuff. Even if we save, invest or give, we’re just deferring when and where the money will be spent on experiences or stuff.
Our eyes tell us that stuff is worth more because we can see it.
But our hearts know what has now been proven in numerous studies–that we derive more joy from [insert experience] than by purchasing a [product of comparable price].
For our family, going to see Mumford and U2 in Seattle was simply more valuable than something like … replacing the battered couch, maybe the bedroom furniture.
But why? It’s not necessarily because it’s obvious from the start. Initially, the experience worth $X gives about the same amount of joy as the stuff worth $X. But as we adapt to the stuff, as it literally depreciates in value, our joy in its utilization also decreases. Or as Cornell psychologist Dr. Thomas Gilovich puts it, “One of the enemies of happiness is adaptation.”
But while stuff devalues, the recently elapsed experience can actually increase in value. “Even if it was negative in the moment,” writes James Hamblin in the The Atlantic, “it becomes positive after the fact. That’s a lot harder to do with material purchases because they’re right there in front of you.”
Furthermore, those material purchases aren’t only in front of you. They’re in front of lots of people who have the same thing–or better. My black four-door Jeep was awesome until my buddy pulled up–right behind me–in his black four-door Moab-edition Jeep (with the top down and the doors off).
The intangible nature of experience means that no one has the exact same one. Meanwhile, having shared experiences compounds their value further, as diverse recollections tend to open our eyes to elements we didn’t catch the first time around.
Sadly, despite the conviction in our collective gut and the studies that prove it’s right, “People do not accurately forecast the economic benefits of experiential purchases. ”
Where the Streets Have No Name
By now, you know what happened, right? Yes, my loving wife succumbed to my outlandish pledge that “this will be the best memory we’ve ever had as a family!” We scraped together all the respective rewards points and discretionary dollars we could muster, ordered the tickets, booked the flights and reserved the room.
We fought through jet lag to enjoy hiking in a blizzard on Mt. Ranier, having coffee at the first-ever Starbucks, enjoying breakfast overlooking a bustling Pike Place Market, going up the Space Needle and down the Great Wheel, taking in a comedy show at a vintage theater near University of Washington, running to catch the ferry to Bainbridge Island for lunch and–the best part–watching my boys’ eyes light up as the prelude to “Where the Streets Have No Name” rumbled through our bellies.
On the plane ride home–gloriously exhausted–my wife turned to me and said, “You were right. It was worth it. But you’re still crazy.”
She’s right. About all of it.
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I’m a speaker, author, Head of Wealth Management for Triad Financial Advisors. Connect with me on Twitter and LinkedIn.