Rethinking the Experiential Advantage on Consumption Happiness

Rethinking the Experiential Advantage on Consumption Happiness Joseph K. Goodman Associate Professor of Marketing Marketing in Israel 13

Collaborators Brittney Dalton, Washington Univ. in St Louis Julie Irwin, The University of Texas at Austin Selin Malkoc, Washington Univ. in St Louis Leonardo Nicolao, TCU Joachim Vosgerau, Tilburg University

What would make you happier?

The Experiential Advantage Experiences make people happier than luxurious goods or pecuniary market objects (eg, Van Boven & Gilovich 2003; Easterlin 2003; Frank 1999; Scitovsky 1976; Hume 1975/1737) Experience Recommendation à We should buy experiences, not material goods Multiple Advantages Less Comparable/Interchangeable (Carter & Gilovich 2010; Rosenzweig & Gilovich 2012) Central to one s identity (Carter & Gilovich 2012) More social (Caprariello & Reis 2013) Slower to adaptat (Nicolao, Irwin, & Goodman 2009) Do material goods have advantages?

Five Advantages to Material Purchases 1. Less extreme (in good and bad) When purchases go bad (Nicolao, Irwin, & Goodman 2009) 2. More enduring in memory Marking special achievements (Dalton, Goodman, & Malkoc) 3. Easier to justify The case of indulgence (Dalton & Goodman) 4. More traditional & require less effort The case of gift giving (Goodman) 5. Can be experienced The case of being in the moment (Goodman, Vosgerau, & Malkoc)

1. Material Purchases are Less Extreme Recall a purchase that turned out positively (negatively) 6.5 Mean Happiness 6 5.5 5 4.5 4 3.5 3 Material Purchase Experiential Purchase 2.5 Negative Positive (Nicolao, Irwin, & Goodman 2009)

2. Material Purchases are More Enduring Material goods are memory markers (Zauberman, Ratner, & Kim 2009) If so, what is the best way to mark a special achievement? Celebrate (ie, an experience) Commemorate (ie, material good) Commemorate à create a longer lasting memory

Wedding Study: Better to Commemorate in the Long Run N = 152 married U.S. Mturk workers who had a reception/ring Independent Variables: Prime: Experiential (wedding reception) vs. Material (wedding ring) Measured Time since wedding (log transformed) DVs Memory of achievement Purchase reminds me of achievement (mediator)

Better Memory from Ring, not Reception Memory of Achievement 7.5 7 6.5 6 5.5 5 4.5 4 Commemoration: Ring Celebrate: Reception 4 8 12 16 20 24 Time: Years Since Married

Ring is a Better Reminder of Achievement over Time Purchase is a Reminder of Achievement 7 6.5 6 5.5 5 4.5 Commemoration: Ring Celebrate: Reception 4 4 8 12 16 20 24 Time: Years Since Married

Commemorating Increases Positive Affect via Memory Mediation: Significant indirect effects with bootstrapping Reminder Commemorating (vs. Celebrating) Stronger Memory

What Is the Best Way to Mark an Achievement or Special Occasion? N = 124 U.S. Mturk workers described purchase following graduation Independent Variables: Prime: Experiential vs. Material Did you do (get) something to celebrate (commemorate) your graduation? Measured Time since graduation (log transformed) Dependent Variables Positive affect with achievement Memory of achievement Purchase reminds me of achievement

Commemoration Increased Memory over Time Vivid Memory of Achievement 5.40 5.20 5.00 4.80 4.60 4.40 4.20 4.00 Commemoration Celebration 4 8 12 16 20 24 Time: Years Since Graduation

Commemoration is a Better Reminder of Achievement over Time Purchase is a Reminder of Achievement 6.50 6.00 5.50 5.00 4.50 4.00 3.50 Commemoration Celebration 4 8 12 16 20 24 Time: Years Since Graduation

Commemoration Increases Positive Affect over Time 4.35 4.30 Commemoration Positive Affect 4.25 4.20 4.15 4.10 Celebration 4.05 4.00 4 8 12 16 20 24

Commemorating Increases Positive Affect via Memory Mediation: Significant indirect effects with bootstrapping Reminder Stronger Memories Commemorating (vs. Celebrating) More Positive Affect

Justification à More utilitarian à Choose more material goods 3. Material Purchases are Easier to Justify Important when trying to indulge or looking for a license to indulge When trying to indulge, easier to justify utilitarian purchases (Kivetz & Zheng 2006; Okada, 2005; Zemack-Rugar, Bettman, & Fitzsimons) If so, then justification should lead to choosing more material goods

Does Justifying Lead to more Material Purchases? Scenario: Have extra $1000 to spend from savings (bonus). What would you purchase? N = 252 U.S. MTurk Participants 2(Justification vs. Control) x 2(Windfall/Bonus vs. Savings) Justification Manipulation: We would also like you to explain to a friend why you made this purchase DV: Item purchased (experiential-material) 2 coders rated items on 5-pt scale

Yes! Justification Increases Material Purchases More Material 3.4 3.2 No Justification Justification 3 2.8 2.6 2.4 More Experiential 2.2 Bonus (Dalton & Goodman working paper) Saving Justification vs. No Justification: p <.05 Bonus vs. Savings: ns

Justifications to Utilitarian to Material Purchases 2(Justification vs Control) N = 314 U.S. MTurk Participants Scenario: Have extra $100 to spend. What would you purchase? Measure Utilitarian (5 items) Hedonic (5 items) Material-Experiential Rating: primary intention to acquire a material good or a life experience

Justification Leads to Material Purchases More Material 4.5 4 3.5 3 More Experiential 2.5 No Justification Justification

Justification Leads to More Utilitarian Purchases (& not Hedonic) 5.9 Utilitarian 5.7 Hedonic 5.8 5.6 5.7 5.5 5.6 5.5 5.4 5.4 5.3 5.3 5.2 5.2 5.1 5.1 5 No Justification Justification 5 No Justification Justification

Bootstrapping: Significant indirect effect via utilitarian No indirect effect through hedonic Utilitarian Aspects Mediates Effect, Hedonic Aspects Do Not Utilitarian Rating Purchase Justification Material Purchase

4. Material Purchases are Traditional & Effortless Being traditional and thoughtful are important considerations in gift giving literature (eg, Belk 1996) Givers gift choices should reflect traditional and thoughtfulness and thus lead to More instances of material gifts No difference in prediction of happiness with material vs. experiential gifts

Are Material Gifts Different? ns Characteristics But not more enjoyable Material Gifts Experiential Gifts Traditional 3.92 3.56 2.27 0.02 Memorable 4.81 5.03 1.49 0.14 Enjoyable 5.58 5.63 0.42 0.69 Risk 2.22 2.42 1.34 0.18 Appreciate 5.84 5.89 0.48 0.63 t p Decision Difficulty 2.88 2.92 0.25 0.80 Giver Effort 3.29 3.41 0.68 0.49 Receiver Effort 2.06 2.89 5.58 <.01 N = 405 givers, material vs experiential between subjects

Most Gifts are Material N = 100 U.S Mturk workers, > 95% approval Recall a gift given for holidays or birthday Rate gifts on 7-point scale Most are material 81% of holiday gifts (< midpoint of 4) 66% of birthday gifts (< midpoint of 4)

Do Receivers & Givers Show an Experiential Advantage? " 2(Give vs. Receive) x 2(Material vs. Experiential) between subjects N = 159 undergrads " tell us about an experiential (material) gift that you gave to (received from) someone for the holidays that costs under $50 " Happiness of Receiver (3 q s): When the receiver (you) thinks of this gift, how happy does it make the person you (you) gave it to?

Givers Do Not Estimate an Advantage 6.00 Happiness of Receiver Happiness 5.50 5.00 4.50 Material Gift Experiential Gift 4.00 By Givers By Receivers

Do Givers Predict the Effect? 2(give vs. receive) Recall 3 gifts Rate each in terms of happiness (same 3 measures) Rate each on material-experiential continuum (7-pt scale) N = 127 undergrads Hierarchical regression Regression for each person based on 3 gifts (g) Happiness g = β 0 + β 1 (Experience/Material) g If β 1 > 0, then Experiential Advantage If β 1 < 0, then Material Advantage

Again, Experiential Advantage Only for Receivers Happiness of Receiver Slope: Experiences vs. Material Gifts Experiences led to more Happiness Material led to more Happiness 0.40 0.30 0.20 0.10 0.00-0.10-0.20-0.30 0.23* -0.10 By Receivers By Givers

Some Material Purchases are Owned

Some Material Purchases can be Experienced

Experiences being Obtained

5. Material Purchases can be Experienced Can Being In the Moment (in the here and now ) make purchases feel more experiential?

Can Being In the Moment make Purchases feel more Experiential? 3 (Concrete, Abstract, Control) N = 226, Mturk Rate 12 purchases on a materialexperiential scale eg, TV, grill, speakers, cooking class, vacation

Purchases are more Experiential when In the Moment 4.60 More Experiential (vs. Material) 4.40 4.20 4.00 3.80 3.60 3.40 3.20 3.00 Concrete Abstract Control All Purchases (Goodman, Malkoc, & Vosgerau working paper)

Does being In the Moment Enhance Happiness? " Manipulate material vs. experiential " tell us about an experiential (material) purchase you made " Manipulate Mental Construal: " Abstract vs Concrete " Happiness (3 q s from previous studies) N = 338 U.S. Mturk

Yes! In the Moment Increases Retrospective Happiness 5.80 5.60 Happiness 5.40 5.20 5.00 4.80 Concrete Abstract 4.60 4.40 4.20 Material Experiential

Advantages of Material Purchases 1. Less extreme (in good and bad) When purchases go bad (Nicolao, Irwin & Goodman 2013) 2. More traditional & easier to consumer The case of gift giving (Goodman 2013) 3. More enduring in memory Marking special achievements (Dalton, Goodman & Malkoc 2013) 4. Easier to justify The case of indulgence (Dalton & Goodman 2013) 5. Can be experienced The case of being in the moment (Goodman, Vosgerau & Malkoc 2013)