Why Doing is Better Than Having

by Will Wilkinson on August 18, 2006

Bryan Caplan on Gilbert…

“Money itself doesn’t make you happy,” [Harvard psychology professor Daniel] Gilbert says. “What can make you happy is what you do with it. There’s a lot of data that suggests experiences are better than durable goods.”

I’m baffled. Don’t many durables provide a flow of experiences? A nice T.V. is the obvious example; a fine stereo system’s another. My CD collection is my pride and joy - whenever I worry about being robbed over vacation, my first thought is the sorrow of seeing my CD shelves empty.

I don’t share Arnold’s methodological aversion to happiness research, but this sounds like a very hasty generalization.

Two points. (1) Market egalitarianism. Qualitiative differences between cheap and expensive consumer goods is almost nil. There is almost no experiential difference between a cheap TV and a “nice” TV. If Deadwood is good on a $2000 plasma screen on HBO, it’s 98% as good on your sister’s giveaway used 19″, a $35 DVD player, and Netflix. The extra expenditure buys almost nothing in terms of the quality of experience. Same with the music. For $4.95 a month, I can get I’m guessing 75% of of Bryan’s CD collection on Yahoo. Capitalism makes money worth much less when it comes to manufactured non-positional goods. (2) Adaptation. The mind is a novelty whore — a change detector. Consciousness loses its grip on the added quality of a premium picture, sound system, etc., very fast. The cheap, almost perfect substitute for an expensive stereo is a cheap stereo. The cheap substitute for an exquisite meal at the best restaurant in Paris is… what? IHOP in Arlington? A great memory and a great story is an ongoing flow of positive experience. Gilbert is right.

Viewing 18 Comments

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    If "the mind is a novelty whore" as you say...well then, we should all grab a copy of Lonely Planet Guide to China and get outta here .... but also we should revolutionize every part of our life that is substantially tracked. Do you believe that?
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    I disagree with the "market egalitarism." I used to, but I think I have learned that you DO get what you pay for.
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    I was more or less with you up until the IHOP part. I've been told by someone who has tried both that there's no food difference between a $500 meal and a $1000 meal, that the difference is just the showing off. But there's a _huge_ difference between good food and bad food, and IHOP is bad. Now that I think of it this makes me doubt some of the other examples, too. What about the difference between a cheap suit and a good one (not a super fancy one, just a good one)? It's significant in both the look and the feel, and even if you get used to one or the other, that doesn't mean you'll not instantly notice if you see or try the other.
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    Will, I agree with you, and I have definitely made the move toward owning less, buying used if needed, and renting (e.g., Netflix and books on CD) wherever possible. Not only do I think that experiences do more for us than material goods for the reasons you mentioned, but I also think that people really underestimate how much of a stressor clutter can be. Additionally, buying more expensive things only makes us more worried about them. I'd rather spend my money moving toward physical freedom (i.e., financial independence), and along the way acting as much as possible as if I'm already independent, which means enjoying great vacations and free time in general. I'll take used (or better yet, library) books and a vacation (or investing) over a 50 inch plasma TV any day...
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    Matt, Right. Dining is an experience, not a commodity. The point was that there is no cheap substitute for that kind of sublime experience. IHOP, which is for EATING, not dining, was a joke.

    You're right that as you get into the expensive range of experiences, the marginal improvement in quality with added cost diminishes sharply. Really super expensive stuff is usually positional dickwaving.

    Thanks for bringing up suits! I have a decent eye, and can often spot a genuine bespoke saville row-quality suit. But once you get to off-the-rack, quality differences really are almost indiscernible, until you get to truly cheap cheap cheap in terms of materials and construction. I bought my favorite suit for $180 off overstock.com. If I told you I paid $800, no non-fashionista would know the difference. (I think it retailed at $600 before getting remaindered to overstock.) There is a whole Style channel genre about creating an astronomically expensive designer "look" for a budget of $100. Sometimes it can't be done. But sometimes they nail it. That this is possible is an egalitarian triumph.
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    Maybe Caplan's point is the modest one that experiences and durables can't be neatly separated (in evaluative terms), since experiences often have a basis in specific durable goods. It's not unreasonable to value both the experience and its material-causal basis -- the novel and the dog-eared book, the painting and the painted canvas, etc.
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    May I just say that there is no need to insult the Arlington IHOP, which is a culinary delight.
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    I concur with Alex. Slow, but delectable.
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    I seriously have a problem with the "Market Egalitarianism" argument. As a car guy and general gear head I'll use an automotive example.

    There is a substantial and obvious difference between buying a Porsche and buying a Honda Civic. If money is no object and won't be in the future, then as a car guy I'd choose the Porsche. Having driven both, the comfort and nature of the Porsche was far greater than that of the Civic.

    If money's no object, give me the more expensive car.

    (It should be noted that this is not always the case, but I believe a general relationship trend can be drawn between similar goods of different price ranges.)
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    Jon, Two things. First, that you're a gearhead in part means that you place a great deal of emphasis on relatively trivial differences in performance. But you need to put things into context. 150 years ago, the high-end low-end distinction was a coach-and-four versus slogging barefoot through the mud. Now it is a used economy car vs a luxury car, almost totally erasing the consumption gap between the rich and poor. This is what I mean by market egalitarianism.

    Second, you provide a great example of my point. I happen to drive a 1996 Civic, which I bought for $6000 several years ago. It is functionally identical to a Porsche in the sense that it conveys me to any location to which I wish to go at a speed within the boundaries of law in comfort. I have driven for more than 10 hours in a day in it, without any particular discomfort. It has air conditioning, a good stereo, is extremely reliable, and costs almost nothing to service. Etc. etc. A low-end Porsche costs about 10X as much, and does almost nothing that a Civic doesn't do. I understand that the difference between the two are important for those who have a special interest in automotive performance and luxury, or in signaling social status. But without a concern for those, the Civic and the Porsche are essentially the same machine sold for vastly different prices.
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    Wil, I like your points about the Civic vs the Porsche. However, I have a minor disagreement. I happen to own a 1998 Monte Carlo, I've had since it was new. And my husband at about the same time had a 1997 Neon that was nothing but problems from the start. What was the difference? I think it was that my 98 Monte Carlo was a $20,000 car brand new and my husband's neon was $8,000 when new. Both did the same things but my husbands car was just plain cheap. I realize this is only one persons' experience but perhaps someone else has noticed it as well. My opinion is the cheaper the car the sooner it craps out on you. We had to sell the Neon in 2001 and get something else, but we still have the Monte Carlo.
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    "It is functionally identical to a Porsche in the sense that it conveys me to any location to which I wish to go at a speed within the boundaries of law in comfort."

    This is obviously a value judgment. Allow me to state the obvious equivalent: "A meal at the IHOP is functionally identical to an exquisite meal at the best restaurant in Paris." Both are grotesquely wrong for my personal value system. The subjective qualifier "exquisite" certainly appears in discussions of driving fine sports cars.

    To suggest that value systems which differ from your own (dining > driving) are "trivial" is naked righteousness. The entire market egalitarianism assertion is spurious because it can be inverted and applied to any source of joy.

    The adaptation assertion I think is obviously dismissable both for requiring a very ambitious set of assumptions and for its broader implication.

    But of course any counter-argument can be haughtily dismissed as cognitive dissonance for some big purchase which brought no happiness. "I guess you folks who paid through the nose for your trip to Paris are very proud. Fair enough."
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    I'm with DJH -- and Bryan. You're just elevating your dining preferences above other folks TV and car preferences. If you want to look just at numbers, I'll bet more folks prefer Porche + 50" TV + IHOP (or Denny's, Chile's, Applebees etc.) to Honda + 19" TV + Paris.

    I also disagree that people stop benefitting from the larger TV. Sure, it becomes the new normal, but if you want to see whether they appreciate it, try to get them to trade down to the old 19". NO WAY. (By the same token, I'll bet those who can afford the ultra dining experience all the time lose the same novelty effect. The examples are quite interchangeable.)
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    Grrr... Man, I must be doing a really bad job here. See... it used to be that there was NO motorized transportation. When there was none, the qualitative gap between the upper (coach) and the lower (walking) segments of the market was huge. Now there is motorized transportation that does pretty much the same thing (drives you around) at vastly different prices, and the difference between the good at the lower (Kia) and upper (Mercedes) segment of the market is much smaller than the difference between walking around and being driven in a coach. This is just true. It's apparently not as obvious as I think it is, and I apologize if I'm not communicating the point effectively.

    In terms of nutrition IHOP and the best restaurant in France are practically identical. This is another egalitarian triumph of the market. I was talking about the overall experience (including ambience, service, etc.), as opposed to just a source of calories.

    Scott, If you used to have a 50" and move back to a 19", you'll be briefly annoyed, but 19" will quickly seem normal and perfectly satisfactory again. Adaptation need not be a one-way upward ratchet.
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    In general, Gilbert is right, but some physical objects are effectively tools to certain experiences. They tend to make you happy as long as you use and value the tool. A nice surfboard can make you happy years after you purchase it. As long as you use it.

    I do know someone whose hobby is working on and racing old porches, it costs a lot of money, and it does make him happy, but that is more because he is continually learning about repairing and racing porches and meeting people with the same interests. In part, this just means pick the right interests for your income level.
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    Will: you've done a good job of engaging in reasonable debate. In that spirit: If you had left out the dining comparison, you may well have found general agreement on your point that both a cheap and expensive car do generally the same thing. You even agree that nutrition for IHOP (etc.) and Paris are generally the same.

    So, you think the "experience" of Paris is incomparable, and others think the "experience" of Porche/bigTV is comparable. You've elevated one over another without any principled distinction. Of course this is an old argument, e.g. Mill (I think) on the higher vs. lower virtues.

    One more point: I have a Honda and a 19" TV. I can't argue directly on 50" back to 19", but here are two examples that underscore my view that it's hard to go back:
    - having experienced broadband, going back to dialup is ACTIVELY PAINFUL, even though I used dialup for many years (e.g. using 14.4 on Compuserve, and 300 baud back in the dark ages)
    - having used a fast new computer, it's ACTIVELY PAINFUL to go back to a slow one ... even though that was a refreshing speed bump from the one before it
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    Wow. People pay you for these "thoughts?"
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    I think Will may be on to something. The question is not whether given the same opportunity cost, which would you pick: a Porsche or a Civic, but whether the extra cost of the Porsche is worth what is gained. His answer is the same as mine: no.

    Think about money as the product of your labor. Unless you really love your job, this has a meaningful value that you can directly compare to the product you are purchasing. Assuming a middle-class income of $50,000 US/year after tax, a Porsche costs anywhere from 1 to 2 years of your labor. A Civic costs between 1/3 and 1/2 a year of labor. Both are reliable modes of transportation. The practical difference between the two products is largely inside the head of the purchaser. It is an expensive delusion.

    Can anyone honestly tell me that a Porsche is worth 1.5 years of slogging it away at your job over and above the cost of a Civic? I can't say I would be surprised if someone said yes, but surely the majority would say "no."
 

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