Will a luxury car make you happy?

A lot of research has considered an important question: What makes you happy? From the research one could glean a few commonly-accepted principles that you should consider before spending money some something you think will make you happy.

– You adapt to (good or bad) experiences a lot faster than we think we will (i.e., we don’t anticipate that we will tire of the shiny new toy you just purchased)

– Experiential purchases makes you happier than material purchases (e.g., better to spend money on a vacation than that fancy watch).

– Improving hedonic sequences are more pleasurable than the opposite(e.g., workout first and then eat that fancy dinner).

So, given these principles, is a luxury car worth the extra cost? On one hand, the luxury car will be better than the last car you drove, and thus fits the “increasing hedonic” sequence. Moreover, a luxury car could be classified as an experiential purchase. After all, driving is an experience (allegedly,the ultimate driving experience if you drive a BMW). On the other hand, luxury car owners will  acclimate to their new experience and start desiring the next better car.

Worth the price?

One implication of a recent paper by Norbert Schwartz (University of Michigan) and Jing Xu (Peking University) warns against a luxury car purchase. The authors highlight that people predict that it is more enjoyable to drive a luxury car (stimuli: BMW vs. Honda Accord vs. Ford Escort). People also recall luxury car driving experiences to be more enjoyable.  The study, however, also asked respondents about their most recent commute without asking what type of car they were driving. The results indicate that there were no differences in the judged commute across BMW, Honda, and Ford owners. Schwartz and Xu concluded that people are indeed happier with luxury cars, but only when they are actively thinking about driving a luxury car vs. a non-luxury car.

Buy this and spend your money elsewhere?

As is the case with research of this nature, I would like to see further demonstrations of the effect; for example, it would be compelling to get some sort measure of real time enjoyment of the commute in the moment. Nonetheless, suppose that the real-time measures would replicate the results.

In any case, the study nicely highlights the difference between two questions:

-Will a luxury car  make you happy?

-Will a luxury car always make you happy?

As demonstrated by Schwartz and Xu, the answer to the first question is clearly a “yes.” The answer to the second question is likely a “no.” When reference points are activated, a luxury car will make you happier. Research on social comparisons supports this idea. When luxury car owners think about their car relative to other (less luxurious) cars on the road, they can get a boost in pleasure. Identity research similarly highlights the benefits of a luxury car. The luxury car owner can think, “I am an important person.” Other drivers seem to think the same thing. There is a notable psychology experiment found that people were less likely to honk at a luxury car than an economy car that failed to proceed when a light turned green.

With all that said, is the relative, sporadic happiness worth the price? You tell me.


Schwarz, N., & Xu, J. (2011). Why don’t we learn from poor choices? The consistency of expectation, choice, and memory clouds the lessons of experience. Journal of Consumer Psychology, 21, 142-145.

Why do consumers need advice on how to spend their money to improve their enjoyment of life? Why don’t they learn this from daily experience? We propose that consumers’ opportunity to learn from experience is impaired because hedonic experiences are fleeting. Once some time has passed, consumers rely on their general knowledge to reconstruct what the experience must have been, which is also the knowledge they use in hedonic prediction and choice. Given this overlap in inputs, prediction, choice and memory usually converge, leaving consumers with the impression that their predictions were correct and their choices wise. The actual in situ experience, however, may have been quite different. We illustrate these dynamics with a product many consumers want to spend their money on, namely, a luxury car.

See the paper.