Notes on Nicolao et al (2009) – Happiness for Sale

Main Topic or Phenomenon Addressed

This paper examines whether the widely accepted “experience recommendation” - that consumers should spend money on experiences rather than material possessions to maximize happiness - holds universally across different purchase outcomes. The phenomenon investigated is the relationship between purchase type (experiential vs. material) and consumer happiness, specifically challenging the assumption that experiences always lead to greater happiness than material goods.

Core Theoretical Construct

Experience Recommendation: The theoretical proposition that individuals will be happier if they spend money on experiences (e.g., theater, concerts, vacations) as opposed to material purchases (e.g., cars, houses, gadgets). This recommendation traces back to Hume (1737) and extends through various theorists including Scitovsky (1976) and Frank (1985).

Key Definitions:

• Material Purchases: Tangible goods that can be moved from place to place, last beyond a couple of days, and take up physical space (e.g., stereos, cars, houses)
• Experiential Purchases: Intangible purchases that entitle the consumer to a finite event in time, resulting in memories rather than physical objects (e.g., movies, amusement parks, restaurant dinners)
• Hedonic Adaptation: The lessening of a hedonic response over time, where better things become less good and worse things become better
• Hedonic Treadmill: The adaptation mechanism that integrates positive purchases into decision makers’ reference point, shifting purchases from gains to status quo

Key Findings

1. Valence Moderates the Experience Recommendation: For positive purchases, experiential purchases lead to more happiness than material purchases (replicating Van Boven & Gilovich, 2003). However, for negative purchases, experiences provide no benefit over material goods and sometimes induce significantly less happiness.

2. Differential Adaptation Rates: Consumers adapt more slowly to experiential purchases than to material purchases. This slower adaptation leads to both greater happiness (for positive experiences) and greater unhappiness (for negative experiences) compared to material purchases.

3. Materialism as a Boundary Condition: The valence by purchase type interaction is strongest among consumers low in materialism. High materialistic consumers show no differential happiness between purchase types regardless of outcome valence.

4. Temporal Emergence of Effects: The purchase type by valence interaction emerges over time through differential adaptation rates, becoming significant after one day and persisting through two weeks post-purchase.

Boundary Conditions or Moderators

Primary Moderator - Purchase Outcome Valence:

• Positive outcomes: Experiences > Material goods for happiness
• Negative outcomes: No difference or Material goods > Experiences

Secondary Moderator - Consumer Materialism:

• Low materialism: Strong valence by purchase type interaction
• High materialism: No differential effects of purchase type on happiness

Temporal Boundary:

• Effects emerge after adaptation period (7 minutes show no interaction, but 1 day+ shows significant interaction)
• Adaptation follows power law function with most change occurring in early time periods

Building on, Extending, or Challenging Previous Work

Builds on Van Boven & Gilovich (2003): Replicates their finding that experiences lead to greater happiness than material purchases, but only for positive outcomes.

Extends Previous Research by:

• First experimental test of the experience recommendation across both positive and negative purchase outcomes
• First direct measurement of hedonic adaptation rates by purchase type
• Integration of materialism as a moderating factor
• Longitudinal tracking of happiness over multiple time points

Challenges the Universal Experience Recommendation: Demonstrates that the widely accepted advice to “buy experiences, not things” is incomplete and potentially misleading when purchases turn out negatively.

Theoretical Integration: Connects hedonic adaptation theory with purchase type effects, providing a mechanistic explanation for when and why the experience recommendation works.

Major Theoretical Contribution

The paper’s primary theoretical contribution is demonstrating that the experience recommendation is contingent rather than universal. By identifying outcome valence as a critical moderator and hedonic adaptation as the underlying mechanism, the research provides a more nuanced understanding of when experiences versus material goods lead to greater consumer happiness. This challenges the prevailing wisdom in both academic literature and popular press that universally advocates for experiential spending.

The research also contributes the first direct evidence of differential adaptation rates between purchase types, establishing that experiences resist adaptation more than material goods - leading to both prolonged positive and negative effects.

Major Managerial Implication

For Marketers: Companies should consider the risk profile of their offerings when positioning experiential versus material benefits. Experiential providers (travel, entertainment, dining) should focus heavily on ensuring positive outcomes since negative experiences can lead to prolonged unhappiness. Material goods marketers can emphasize that even if initial satisfaction is lower, negative outcomes fade more quickly.

For Consumer Advice: Financial advisors and consumer educators should provide more nuanced guidance than simply “buy experiences.” The recommendation should include caveats about experience quality and individual materialism levels.

For Product Development: Companies might develop hybrid offerings that combine experiential and material elements to optimize happiness across different outcome scenarios.

Theoretical Factors Not Explored (Novel Moderator Opportunities)

1. Social Context: Whether purchases are made alone or with others (social vs. solitary consumption)

2. Purchase Planning vs. Spontaneity: Planned purchases vs. impulse purchases may show different adaptation patterns

3. Cultural Dimensions: Individualistic vs. collectivistic cultural orientations may moderate the experience recommendation

4. Life Stage/Demographics: Age, life circumstances, and generational cohorts as moderators

5. Purchase Frequency: Whether the purchase is novel vs. repeated consumption

6. Economic Context: Economic uncertainty or scarcity vs. abundance conditions

7. Psychological Traits:

   • Need for variety vs. stability
   • Risk tolerance levels
   • Future time perspective
   • Nostalgia proneness

8. Product Category Involvement: High vs. low involvement purchase decisions

9. Purchase Motivation: Hedonic vs. utilitarian vs. social motivations

10. Memory Processes: Individual differences in memory vividness and recall ability

11. Social Comparison Tendencies: Whether individuals are prone to social comparisons with others’ purchases

12. Regulatory Focus: Prevention vs. promotion focus as a moderator of adaptation and happiness

Reference

Nicolao, Leonardo, Julie R. Irwin, and Joseph K. Goodman (2009), “Happiness for Sale: Do Experiential Purchases Make Consumers Happier than Material Purchases?,” Journal of Consumer Research, 36 (2), 188–98.