norway experience

Why Experiences Work

Nancy Volkers
Writer

Editor’s Note: We’ve talked all over this platform about the incentivizing power of non-cash rewards, especially about experiences and travel. It’s an important area for the future of applied behavioral science and, really, the future of any business with either employees or customers (i.e. any business).

But why are experiences, in particular, so incentivizing? What gives them such motivating power? Nancy Volkers – with the help of two leading researchers – takes us on a deeper dive. Read it. I believe you’ll enjoy the experience.

 

Incentives should motivate. Otherwise, they’re not incentives, right? For the carrot to be more effective than, or at least as effective as, the stick, you have to have the right carrot. You have to – dare we say it? – spark joy.

Happiness, and maximizing it, has become its own industry. Amazon lists more than 50,000 books about the topic, and you can hire a “happiness coach” to set you on the path to bliss. Do your socks not spark joy? Get rid of them!

Aside from the obvious – it’s not possible to be happy *all the time*, and hey, where are all of my socks? – what types of incentives will give you the best return on investment? Cash, material goods, or experiences?

On the surface, it would seem like cash is king: After all, people can use it to purchase whatever they want. But in practice, non-cash rewards get people more excited and hold their interest more. It’s simply more rewarding to receive something you’ve looked forward to enjoying, or something you wouldn’t have purchased yourself. (Editor’s note: See “How We Tested Whether Cash Is King”)

Within that “better” category of non-cash rewards, what’s more effective, material goods or experiences? “People derive more satisfaction from experiential purchases – meals at a restaurant, theater, sporting events, travel – than on material purchases,” Amit Kumar, assistant professor of marketing and psychology at UT Austin, said in an interview with me.

Even though experiences have been proven to be more impactful than material goods, we often lean towards those material goods instead, whether it’s for incentives, gifts or for our own use. Why?

People tend to predict that material goods will be a better investment because they "last," whereas experiences seem fleeting and can’t be kept on a shelf (or in one of those plastic storage tubs in the basement [Editor’s note: With all my socks!]).

Experiences aren’t truly fleeting – they live on in our memories and the stories we tell to others.

After the fact, though, folks tend to say that money spent on experiences was more worthwhile than cash they laid out for material purchases, Kumar said. That’s partly because experiences aren’t truly fleeting – they live on in our memories and the stories we tell to others. Material items, on the other hand, fade into the background as we quickly become habituated. Think about any kid the week after their birthday – where are those gifts they desperately wanted? (Editor’s note: Socks. They’re with my socks.)

Experiences also do a better job connecting us to other people. “You can talk with people about your experiences and about your possessions, but see how much time people will give you to talk about a thing, versus an experience,” Tom Gilovich, the Irene Blecker Rosenfeld Professor of psychology at Cornell University, told me. “You should notice a difference. People find conversations about experiences to be more mutually rewarding.”

Experiences help shape who we are, much more than a toaster or running shoes. “However much you like your sweater, your car, your house, they are separate from you, whereas your experiences live on inside you,” said Gilovich. Because of this, it’s possible for us to romanticize our experiences such that we can eventually appreciate even the crummy ones – the vacation where you got food poisoning, the bike trip when it rained, the theater production that was not up to snuff (and for which you got a parking ticket).

 

 

It’s possible for us to romanticize our experiences such that we can eventually appreciate even the crummy ones.

“In retrospect, an experience like that can be charming, or hilarious,” said Gilovich. Not so much with the smart TV that stopped working two weeks after you bought it.

Finally, research shows that when it comes to experiences, we’re less likely to compare ourselves with others, which doesn’t bring happiness (and often has the opposite effect). We can’t help it when it comes to material goods; we notice when someone we like or admire buys a new car, a new phone, or even a new pair of shoes. And we wonder: Should I get one of those?

 

When it comes to experiences, we’re less likely to compare ourselves with others.

Not so with experiences. “Even if you find out somebody else had a better vacation than you had, your trip is still uniquely yours and makes up your memories,” said Kumar. “You want your trip to the jungle or beach or whatever, with all of its idiosyncrasies. You don't want someone else’s trip.”

As a bonus, the rewards of an experience extend through time: From the moment you get tickets to Hamilton or decide you’re going to St. Maarten on vacation, you can plan, daydream, anticipate and plan some more. Then you live through the experience itself, which gives you memories and photos you can hang onto for years afterward, reliving it as much as you wish.

The rewards of an experience extend through time.

When it comes to stuff, there’s also a time period between deciding to buy the whatever-it-is and actually holding it in your hand … but it’s not quite the same. In fact, for online purchases, studies have found that in the time between tapping “Buy” and receiving the box of whatever-it-is, people feel impatient and slightly irritable, rather than excited or full of anticipation.

 According to Gilovich, the experience trend is gaining momentum. “There’s some backing away from material things,” he says. “This is the first generation to have lower car and home ownership, and architects are designing buildings that encourage people to be with other people.”

We must beware, however, that social media can turn experiences into commodities and negate their non-comparison benefit. Gilovich notes that the intrinsic motivation of seeking certain experiences for your own satisfaction is valuable; the extrinsic motivation of using your experience to get attention on Instagram will cheapen it.

The extrinsic motivation of using your experience to get attention will cheapen it.

Changing the world, one experience at a time

Besides cultivating happiness, experiences also could make the world a better place. Reflecting on a past experience inspires gratitude, said Kumar, and that leads to prosocial behavior. He’s been involved in studies that show that after people reflect on a past experience, they treat other people better and are more generous than after they reflect on a material purchase.  (Editor’s note: More on this in “Get Up and Go!”)

So whether you’re in charge of corporate gift giving or stumped about what to get a friend for his birthday, get with the times – and the science – and consider experiences over stuff … and both over cash. People will appreciate movie passes, violin lessons, a trip to an amusement park or something less mainstream (Indoor skydiving! Cooking lessons! Indoor sky-cooking lessons!) far more than another logo-branded clock or coffee mug. Not only that – they’ll be happier, more grateful and more generous.

Related: I do have several logo-branded clocks and coffee mugs but am still waiting for violin lessons.

(Editor’s note: I’m not sure we can afford that.)

Nancy Volkers
Writer

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