Money can’t buy you happiness — or can it? A recent poll by Eventbrite found that more than 75 percent of millennials would rather buy an experience, like a ticket for a popular music festival, than a desired thing. In fact, 32 million people attend at least one US music festival every year. In 2017, Coachella alone grossed a record breaking $144 million. So what makes a concert — or a weekend getaway, or a five-star restaurant — worth the money?
One study from researchers at Cornell found that experiences are so rewarding in part because you get more than just one thing; you get the anticipation of the event and also the memory. They even studied the act of waiting in line. Their findings? It was a more pleasant experience for people intending to buy an experience rather than a tangible item. And unlike unpleasant experiences with goods — your new car breaks down, your sweater gets snagged, your iPhone starts sputtering — unanticipated hiccups within an experience usually make for a great story down the road. In fact, in another study from San Francisco State University, researchers discovered that even when participants thought a material item was a sounder way to spend their money, they actually found greater well-being from buying experiences.
This preference for buying experiences over things has a direct impact on the economy, as detailed by economists Joseph Pine and James Gilmore in their 1998 article, “Welcome to the Experience Economy.” They contend that as human societies have evolved, so have specific types of economic offerings. You can see it firsthand with your beloved cup of coffee, as they cite in their later book. First, in the agrarian economy, you make coffee directly from the beans you grow. In the goods economy, you buy the beans and make the coffee yourself. In the services economy, you get your cup of joe at the local diner. And in the experience economy? A $5 latte in a cozy cafe where you can plug in to work or read a good book. With each iteration, the price goes up — but we’re willing to pay.
The experience economy is alive and well in retail. While online shopping is on the rise, some brick-and-mortars are reinventing themselves as places not just to shop, but also to partake in an experience. Lululemon has meditation pods, REI has a rock climbing wall, Adidas has an indoor track, and the new PGA Tour Superstore in Indianapolis has a 1,400-square-foot putting green. Known as “retailtainment” or “experiential,” even big players like Macy’s are investing in experiences over traditional retail. The chain recently acquired a boutique “experiential” store in NYC called STORY and placed its CEO as their new brand experience officer.
What could possibly come next? According to Pine and Gilmore, it’s the transformation economy: purchasing experiences that fundamentally change us. Watch to experience it for yourself.