Yes, a plasma TV could make you happy

By U.S. News & World Report

Americans these days are being more careful about their purchasing decisions. The recession has taken a big bite out of consumer spending, affecting all Americans -- even the wealthy ones.

A recent Gallup Poll found that since the financial crisis began in September, people with incomes over $90,000 have slashed their per-day spending by 40%. Personal consumption has fallen in four of the past six months. The resulting crunch in lavish spending has punished high-end retailers. Some commentators have even come up with a new term: "luxury shame," when affluent consumers feel it's necessary to conceal their exorbitant purchases in a weak economy.

Accumulating stuff may no longer be chic, as consumers look for other ways to find pleasure, such as spending more time with their families. But what if they're wrong? What if fulfillment really could be found in buying that iPod or jewelry you've been salivating over?

Consumer-behavior and psychological research has found all sorts of counterintuitive lessons about how we shop. So it's not surprising that a forthcoming study in the Journal of Consumer Research shatters some myths about materialism. The results may change the way Americans have been squeezing every ounce of fulfillment they can out of each purchase.

Money can't buy happiness? Not true

An adage goes, "Money can't buy happiness," but people usually mean, "Material goods can't buy happiness." Spending time with the wife and kids on a camping getaway costs money, but it's the kind of spending that is worthwhile and fulfilling. At least, that's the conventional wisdom.

"Most people think materialism is not a good thing," says Joseph K. Goodman, an assistant professor of marketing at the Olin Business School at Washington University in St. Louis and one of the authors of the study. "They think you're not going to get happiness through possessions."

The flip side to material spending is experiential spending, or spending on experiences such as the camping example. Goodman says the prevailing view among psychologists has long been that, for each dollar spent, experiential purchases tend to be "better" purchases than material ones. People can more easily forget about the bad things from an experience and focus on the positive. Being positive isn't so easy with material spending.

"It's easier to fudge the size of the fish you caught than to fudge your feelings about the couch you see every day," Goodman says. But when Goodman put these feelings to the test, he found that the intuitive bias against possessions didn't always pan out. Sometimes, being materialistic really can make you happier.

Hindsight matters

Goodman, along with Julie R. Irwin, an associate professor of marketing at the McCombs School of Business at the University of Texas, and Leonardo Nicolao, a doctoral student there, conducted three experiments on undergraduate participants. Two experiments asked the participants to recall different purchases -- material and experiential -- and rate how happy the purchase made them. In the third experiment, participants thought of three positive or negative purchases and then rated them on a continuum of how materialistic and how experiential those purchases were. They then rated their happiness with those purchases.

After tallying up the results of these experiments, Goodman found that the subjects of the experiment rated positive experiential purchases as more fulfilling than positive material purchases. As expected, memory seemed to favor good experiences.

But what he discovered next defied his expectations. When it came to purchases that the subjects looked back upon with regret -- such as "Why did I buy that concert ticket?" -- the results were flipped. "When a purchase turns out negatively, experience leads to less happiness," Goodman points out.

Continued: We adapt slowly

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