A Review of the Relationship between Subjective Well-Being and Consumption

It is commonly accepted that consumption increases individuals’ well-being. However, does consumption really increase individuals’ subjective well-being (SWB)? The objective of this paper is to review the literature on the linkages between consumption and individuals’ SWB, focusing on material goods and experiential goods. It focuses on papers that have been published in international journals since 1990 both in the area of economics and psychology. In order to search for the literature, key words “subjective well-being”, “consumption”, “material goods”, and “experiential goods” are used. The literature reviewed suggests some interesting findings. Material goods deliver comfort which is temporary and fades with time. It only increases SWB in the short term. Individuals adapt to the gain from material goods through time. On the other hand, experiential goods deliver pleasure. Experiential goods provide more SWB than material goods because of three reasons. The first reason is that experiences are more open to positive reinterpretation. The second reason is that experiences are less likely to disadvantageous comparisons. The final reason is that experiences are more prone to lead to successful social relationships. It is suggested that a person should spend money on experiential goods rather than material goods because experiential goods are less likely to be prone to an adaptation process, and can continually fascinate and provide satisfaction.