Happiness For Sale; Do Experiential Purchases Make Consumers Happier Than Material Purchases

1. Happiness For Sale; Do Experiential Purchases Make Consumers Happier Than Material Purchases Leonardo Nicolao,Julie R Irwin,Joseph K Goodman by Benson Nwaorgu (2016) (PhD-inview) Benson.nwaorgu@ozu.edu.tr

2. Overview “EVERYBODY WANTS TO BE HAPPY” Should I spend money on a vacation or a new computer? Will an experience or an object make me happier? A new study says it depends on different factors, including how materialistic you are • we test this experience recommendation, and show that it may be misleading in its general form • We test for happiness with positive and negative experiential/material purchases and also the first to explicitly test purchase type adaptation differences in time. • We found that the link which holds true when consumers feel the purchases were positive. Negative outcomes, however, produce very different results. Benson.nwaorgu@ozu.edu.tr

3. Introduction • Our study is the first to compare the after-effects of experiential and material purchases on the happiness levels of buyers, both when the purchases went well and when they did not. • Distinguish between the concept. • Hedonic Treadmill : Better things becomes less good overtime, when someone buys a car, they may be very happy initially, but soon they get used to driving it. Then it's just a car,“then they move to another level of satisfaction. Similarly, when people are displeased with a purchase of consumer goods, they soon adapt to the situation. • Experience recommendation: individuals become happier when they spend their money on experiences. “Purchasing material* cars, Houses etc* goods leads to less happiness compared to experiential goods* Vacations, concert etc* • Any question?? Benson.nwaorgu@ozu.edu.tr

4. The İdea

5. Theoretical Background • Happiness is measurable, Predictable and comparable across context • Only one previous study tested whether experiential versus material purchases make people happier, and it focused solely on positive situations (Van Boven and Gilovich (2003)) • Jonathan haidt(2006) suggests that “people should accumulate less and consume more” in order to achieve happiness. • Hedonic Adaptation is *an enemy of happiness* purchase type affect* + or – , Van Boven(2005) surmises that people may tend to adapt faster to material purchases • Expanding this ideas propelled us to admit that people adapt to experiences , on average more slowly than material purchases Benson.nwaorgu@ozu.edu.tr

6. Methodology Researcher typically measures happiness by asking people how happy they are and how happy they in particular situation. Using multi-item scales. Regression analysis • We experimentally address 3 component of experience recommendation. • The first tested how positive/negative experiential and material purchases affected happiness and rated levels of materialism. • The second examined positive/negative memory associations based on purchase type. • The third measured happiness with a small material or experiential purchase immediately after the transaction, then at seven minutes, one day, one week, and two weeks. Participants were several hundred university students. Benson.nwaorgu@ozu.edu.tr

7. EXPERIMENT • In Experiment 1, we gave participant specific instruction to recall either a material or an experiential purchases that made them felt happy Total of 211 undergraduate student from various colleges, questions for both: 300usd , responses was scaled (Not happy-moderately-happy-very happy) . P<0.05 • In Experiment 2, measures associations between purchase type and outcome valence that occur naturally in consumers memories. By asking them to remember 3 different purchases and rate them. Total 198 Undergrads and MBA student, They were ask to rate on a 7point scale. P<0.05 • In Experiment 3, participant were asked to choose an actual product between material purchase or experiential purchase. Collected Ratings, Total 350 student participated(without their knowledge) using lab dollars Benson.nwaorgu@ozu.edu.tr

8. EXPERIMENT 1 & 2 • in the first two of these participants were randomly assigned to groups in which they recalled material and experiential purchases that had either turned out well, or that had turned out badly. They were then asked how happy (or otherwise) these purchases had made them. • The results suggested that, just like Van Boven and Gilovich’s research, experiential purchases (e.g. a meal out) beat material purchases (e.g. clothes) if each turned out well. But, for some people whose scores were low on a measure of materialism, when the purchases turned out badly, it was the material goods that left them slightly happier. In contrast the highly materialistic were left less happy when their material purchases went wrong. Benson.nwaorgu@ozu.edu.tr

9. EXPERIEMENT 3 • Log(happiness) = B0 +(B1xtype of purchase)+BbXset point + error • In a third experiment participants actually made a small experiential versus a small material purchase and then their happiness over time was measured. It was found that when participants made a material purchase that turned out badly it was easier for them to forget about it than an experiential purchase that went wrong. • Across three experiments, then, Nicolao and colleagues found evidence that when our experiential purchases go wrong we are likely to end up slightly less happy than if we had chosen a material purchase. But, as in previous research, when our purchases go well we are likely to end up significantly happier if we choose an experiential rather than a material purchase. Benson.nwaorgu@ozu.edu.tr

10. RESULT AND DISCUSSION • People adapt more slowly to experiences than to material acquisitions. It's a process known as hedonic adaptation. • Highly materialistic individuals, were equally happy with their positive purchases and equally unhappy with negative purchases whether they were experiences or material goods. • emotional intensity decreases more quickly after material purchases than experiential ones. • Given a good probability of a positive experience, our research echoes past research in suggesting that money is well spent on vacations, concerts, amusement parks, and restaurants over comparably priced objects and trinkets • We find that valence of the outcome significantly moderates differences in respondents’ reported retrospective happiness with material versus experiential purchases. This valence by purchase type interaction is especially strong for consumers who are not materialistic Benson.nwaorgu@ozu.edu.tr