Buy experiences, not stuff.

That’s the conclusion of numerous studies that find consumers get more happiness from spending money on experiences like vacations, restaurant meals and concerts than from buying material goods. But new research suggests the battle between experiences and things isn’t so black and white.

“The conventional advice is if you have $100, for example, buying concert tickets or another experience you can share with family or friends will make you happier than buying yourself a new pair of shoes or something for your home,” says Kristen Duke, an assistant professor of marketing at the Rotman School of Management at the University of Toronto. “However, previous research typically pits experiences and material goods against each other, treating them at opposite ends of the same scale.”

Published in the Journal of Consumer Psychology, the 2022 study “What makes people happy? Decoupling the experiential-material continuum,” co-authored by Duke, took a different approach by putting experiential and material purchases on two different scales. The researchers examined how different levels of material and experiential qualities separately relate to happiness, and how they combine to contribute to happiness. This approach means a purchase can be both highly experiential and highly material (for example, a swimming pool or a new kitchen); low on both dimensions; or some combination of the two.

In a two-part study, participants first recalled recent purchases that increased their happiness, and rated their material and experiential qualities (to what extent each item was an experiential versus material purchase) and then reported their happiness on a scale of “not happy” to “very happy.” The second study asked participants to rate the material and experiential qualities from a predetermined set of goods and services, using the same qualifiers from the first study.

The researchers found that when experiential and material qualities are captured separately, both can positively contribute to happiness. “The more experiential a purchase is, the happier you become. But also the more material it is, the happier you become,” says Duke. “I think the biggest takeaway is material goods can make people more — as opposed to less — happy when we don’t conceptualize them as the opposite of experiences.”

So, what specific purchases buy happiness? In the first study, goods that were rated high on both experiential and material dimensions had the greatest share of maximal-happiness purchases, at 40 per cent. These purchases included a webcam, camper, paddleboard, children’s toys, iPhone and smart watch. High-experiential/low-material purchases, such as a pedicure, hotel room, new puppy, plane tickets and digital video game constituted 10 per cent of highest-happiness purchases. And 28 per cent of highest-happiness purchases were high-material/low-experiential — for example, blue jeans, winter gear, computer monitor, chair, sweater, jewellery box and blankets. Just 4 per cent were low on both dimensions, with items like feta cheese, garden seeds and avocados.

In the second study, nearly one quarter (24 per cent) of purchases ranked high on both experiential and material, for example swimming pools and vacation homes, and none were low-low mixes. The biggest share of highest-happiness purchases (43 per cent,) went to high-material/low-experiential goods, with items like pillows, gold and central air conditioning, followed by high-experiential/low-material purchases, such as private dinner events, live music and hiking trails (32 per cent).

“The set of all the goods participants rated leaned a bit towards the material. But interestingly, goods that are high on both material and experiential qualities, such as smart watches, paddleboards and campers, often provide the highest levels of happiness,” says Duke.

In Duke’s view, material goods and experiences both have pros and cons. “The classic experience is special, it’s memorable, it’s social and oftentimes it is out of the ordinary,” she says. “But they’re also passing and ephemeral. We get some utility afterwards when we reflect on them, but they’re a one-and-done thing, and so they have that downside.”

With material goods, Duke continues, “they’re tangible, we can look at them over and over, we can reuse them, or we can use them for status signalling. However, a physical object might not bring much value if you just have it sitting on a table. You really need to interact and engage with it to get joy. So, we have this sense that mixed goods — those that are highly experiential and highly material — are the best of both worlds.”

For marketers, the study points to an opportunity to give “high-high” goods more attention by integrating experiences into material goods. “For a long time, consumers and marketers have been told to stop focusing so much on physical goods — basically, material goods are bad and experiences are important,” Duke says. “Our research is saying that might be overstated. There is still value in material goods and marketers should look to mixed goods to bring people the most happiness.”