The rich are out to make memories.
More and more of the world's wealthy have switched from buying fancy things to buying luxury experiences, according to a new study by the Boston Consulting Group cited by The Atlantic. Neurologically speaking, they're on the right track: research shows that good experiences tend to make us happy.
More than half of all luxury spending worldwide now goes toward luxury experiences -- $770 billion out of a $1.4 trillion total luxury spending market, according to the BCG report. Luxury experiences account for 51 percent of all luxury spending in the U.S. and 61 percent of all luxury spending in Europe, according to the report.
Comparatively, America's rich are still a little preoccupied with keeping up with other rich people. Thirty-five percent of all luxury spending in the U.S. is spent on luxury cars -- an example of the kind of conspicuous consumption that can drive people of more modest means to spend more than they really should -- while luxury cars account for just 16 percent of luxury spending in Europe and 20 percent of luxury spending in Brazil, Russia, and India, according to the report.
A variety of studies show that dropping cash on good experiences, instead of things, is what really tends to make people happy. The initial pleasure of buying something usually fades as we get used to seeing that possession over and over. But happy memories linger in our minds for a long time.
It would make us even happier to take loved ones along for the ride. Studies show that spending on other people gives us a good feeling, according to Harvard Business School professor Michael Norton.
Not surprisingly, simple financial security can make us happy, too. Households with an annual income of more than $50,000 have a better quality of life than households making less than $50,000, according to one study. And researchers at Princeton University found that the more money you make, the happier you'll be. There's a ceiling on that, though -- past the $75,000 mark, salary doesn't seem to affect happiness much one way or the other.
So take heart -- you don't have to ride across Dubai with your significant other in a hot-air balloon to be happy. Even though one South Florida couple is about to do just that.