When Experiences Are Better than Buying Things

The first time I experienced “Insane Mode” in a Tesla was in Knoxville Tennessee. We were outside cousin Greg’s house next to a beautiful lake. Blake was in the back seat while we rolled to an empty straight-away in front of his house. Then Greg said, “Do you want to see something cool? Make sure your seatbelts are buckled.” He brought the car to a stop and pressed a few buttons. “Ready?” he said. Then he stepped on the accelerator and sent us from zero to sixty in less than three seconds. We were immediately pinned back in our seats as the sides of our eyes and mouth reached for the backrest. After we got out, I thought, “I would love to buy this car.”⁽¹⁾Here are some NSFW reactions of people with their first time with Insane mode.

But even if I bought the car, I wouldn’t be able to replicate that experience. The first time trying Insane Mode (or its newer cousins Ludacris Mode and Plaid Mode) can’t be duplicated. Companies try to convince you that you can do it—just purchase their products! This happens with kids’ toys all the time. A few years ago, I bought the Little Bits R2-D2. This is a nifty little kit for kids where kids build a remote-controlled R2-D2 that we built with some friends. We enjoyed building it that first time, but the box said, “Create. Play. Invent.” But after we followed the instructions and played with it, we never did create or invent, and R2-D2 went to hibernate in the closet.⁽²⁾It occurred to me that it would be better to rent toys like this rather than to buy them.

Each time you use something, you get a new experience. The first experience is the most powerful, then each additional experience is less so. Eventually, you just take it for granted and don’t appreciate it anymore. This is why behavioral economists⁽³⁾Behavioral economists study the psychological side of economics. say that experiences are more valuable than things. When you purchase that experience, you are spending all of your money on that first experience. The joy from these later experiences are a lot less valuable.⁽⁴⁾In his play Rosencrantz and Guildenstern are Dead, Tom Stoppard tells a story about how a truly novel experience can become commonplace. Most interesting is that transition, at the second experience.

GUILDENSTERN: A man breaking his journey between one place and another at a third place of no name, character, population or significance, sees a unicorn cross his path and disappear. That in itself is startling, but there are precedents for mystical encounters of various kinds, or to be less extreme, a choice of persuasions to put it down to fancy; until – “My God,” says the second man, “I must be dreaming, I thought I saw a unicorn.” At which point, a dimension is added that makes the experience as alarming as it will ever be. A third witness, you understand, adds no further dimension but only spreads it thinner, and a fourth thinner still, and the more witnesses there are, the thinner it gets and the more reasonable it becomes until it is as thin as reality, the name we give to the common experience… “Look, look” recites the crowd. “A horse with an arrow in its forehead! It must have been mistaken for a deer.”

People become accustomed to almost everything, even something as wonderful as living in paradise. The Nobel Prize winner Daniel Kahnemann was offered a position at a California University after having spent years in Michigan. He thought that clearly, people were happier in California with all the great weather and good vibes. If he would be happier in California, that might tip the scales on whether to take the position. So he did a large study to figure out the difference between people’s happiness in Michigan and California. He learned that when people move to California they see an immediate uptick in their happiness. But over time, that fades and the people settle into the same level of happiness they had before the move. Kahnemann pointed out that it’s very hard to get answers to questions on happiness. When you ask people, “How happy does living in California make you?” you invariably get the answer to the question “How happy does living in California make you when you are thinking about the fact that you live in California?” This is an important distinction because rarely are people thinking about the weather and good vibes of California on an everyday basis.

When I was at Amazon, I wanted to see how experiences fade over time. The company had these beautifully designed badges you’d use to get into buildings. The designers spent a huge amount of time and money to get them perfectly right. They had this silky matte sheen that reflected the light perfectly. When I got the badge, it was immediately placed in a plastic sheath, providing it with a more gauche glossy protection.

Unable to decide whether to leave it exposed and attractive or protected and shiny, I decided to do an experiment. By default, I’d leave it in the plastic sheath for the night. When I got to work, I took it out of its plastic covering so I could appreciate it. At night I’d put it back. So each morning I’d have to take the action to unprotect the badge and make it prettier. For the first few months, I took it out and really admired the craftsmanship of the badge. After three months I realized that I didn’t care about the design anymore and left it in the protective case. The experience of appreciating the badge had worn off.

Experiences are also great because they create powerful shared moments.⁽⁵⁾The group Improv Everywhere creates amazing experiences between people. One of my favorite experiences in college didn’t cost any money—well, not any additional money. $2 bills have always been pretty rare. Back when people used to pay for everything with cash, I’d get one every few years. My grandfather Barney Liebman used to save all of his $2 bills in his desk drawer. But something strange happened in Harvard Square in 1995. I was at the Au Bon Pain, standing behind a young African American grad student waiting to pay. He bought a pastry and a coffee. He paid for his $8 purchase with one $5 bill and two $2 bills. Two $2 bills! One would have been unusual. Maybe he didn’t care about his $2 bill. But two?! How could this be?! I had to find out. After a thorough investigation, I learned that you can ask for $2 bills at the bank, just like any other money. So I got a bunch and started buying things with them. It would always put a smile on the cashier’s face, and it was free!⁽⁶⁾The one problem was that banks would only have a few $2 bills at any time. If you’re really serious about two-dollar bills, you can have your bank order you a stack from the Federal Reserve. It’s less relevant these days as no one pays with cash anymore.

Even though I know that experiences are more important than physical items, it still seems like physical items have more weight (no pun intended). There’s still the temptation to buy something “real” even when it’s less useful. Before the pandemic, Blake asked for virtual Fortnite presents for his birthday. These were outfits for his virtual characters.

Abigail said, “That’s such a waste. It’s just something that will live on his computer. He’ll use it once or twice and then forget about it.”

I replied, “Yes. It’s awesome. He gets a gift he really wants for his birthday and has a wonderful experience. And when he gets sick of it, we never have to throw it out!”

Note: For people that want a good compromise between renting and purchasing movies, Amazon’s Prime Video has an interesting solution. Each time you rent a movie, you are credited for the purchase of that movie. You can rent the movie as many times as you want but you are capped at the total cost of buying the movie.

Note: There’s a lot more about this in Chapter 5 of Jonathan Haidt’s The Happiness Hypothesis.