Central Data Catalog

Citation Information

Type Working Paper
Title The association between experiential and material expenditures and subjective well-being: New evidence from Hungarian survey data
Publication (Day/Month/Year) 2015
URL http://real.mtak.hu/31184/1/MTDP1555.pdf
In the last decade, a number of experiments have stated that spending money on experiences
rather than on material goods tends to make people happier. However, the experimental
designs used to analyze the relationship between consumption and subjective well-being had
several limitations: small and homogeneous samples, a direct question assessing the effect of
consumption, and a potential social desirability bias due to the stigmatization of materialism.
To reduce these limitations, we used a survey method. In two studies based on survey data
from nationally representative samples in Hungary, we estimated linear and non-linear
associations of experiential and material expenditures with life satisfaction. Although both
experiential and material expenditures were positively associated with life satisfaction,
evidence supporting the greater return received when buying experiences was limited. The
main difference between experiential purchases and material purchases was that the
marginal utility of experiential purchases appeared to be linear, whereas the marginal utility
of material purchases was decreasing. Despite the limited differences between the effects of
experiential and material purchases, the results of the non-linear estimates indicate that to
maximize life satisfaction, an average person should allocate more money to buying
experiences rather than material goods.

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