Anna Shepard, Eco Worrier

A few years ago, I looked at my bulging wardrobe and overstuffed drawers and decided to stop buying clothes for a year. I had more than enough to keep me going and it had started to infuriate me that I kept buying more. As well as being a statement about excessive consumerism and waste, I wanted to see how I’d survive without that addictive post-shopping high after a high-street raid.

What I found was that I had to look elsewhere for my daily hit of happiness. Instead of rewarding myself with a dash to Topshop, I had to work harder. I organised boozy lunches with friends, trips to the cinema, weekend walks and pub outings. I did things rather than bought things. Compared with the brief rush that you get whipping out your credit card, all these things provided a deeper, more satisfying level of happiness. And it was one that carried on for weeks, often months, instead of ending soon after the prized item joined the ranks of others in a closet or drawer. I felt better than I had for years.

David Cameron may want to take heed. The Government is poised to poll us on our feelings about how happy we are. It has asked an independent statistician to come up with a set of questions, the answers to which will be used to create data on our psychology and attitudes. It is unclear what part money will play in the questionnaire, but if my experience is anything to go by, it should be an important one.

Household saving in the UK continues to rise. It reached 6.9 per cent of disposable income in the first quarter of 2010, up from less than zero in the first quarter of 2008, according to the Office for National Statistics. But by the end of my fashion famine, as well as being desperate for new underwear, I had reached the same conclusion as the Canadian psychologist Elizabeth Dunn: spending money on experiences, not possessions, will make you happy.

Dunn, based at the University of British Columbia, is at the forefront of research in this field. Her recent paper If Money Doesn’t Make You Happy Then You Probably Aren’t Spending it Right, to be published in the Journal of Consumer Psychology, concludes that how you spend money is as important as how much you have. She has come up with eight ways to improve your happiness by altering your relationship with money. The most potent suggestion is that we’re better off spending money doing things, say, trips away or evenings out, rather than buying material items. Why? “Because experiences are more likely to be shared with others and other people are our greatest source of happiness,” Dunn says. Her research also suggests that experiences are more self-defining, as they are connected to our identities. We are more likely to mentally revisit experiences and get pleasure from them, than from objects that we’ve acquired.

And we adapt more slowly to experiences. “After devoting days to selecting the perfect hardwood floor, homebuyers find that their beloved floors quickly become nothing more than the unnoticed ground beneath their feet,” Dunn writes. “A memory of seeing a baby cheetah on an African safari continues to provide delight.”

She points to earlier research on the subject by the psychologists Leaf Van Boven and Thomas Gilovich, who published a paper in 2003 called To Do or To Have? That is the Question.

In one of their studies, more than 1,000 Americans were asked to think of a material and experiential purchase that they had made with the intention of increasing their own happiness. Only 34 per cent reported greater happiness from the material purchase.

“We encouraged people to define what they meant by experiential and material,” Van Boven says. “Experiences tended to be vacations, travel, day trips, evenings out, artistic events . . . material possessions were likely to be clothing, jewellery and electronic equipment.”

This is something that we can apply to our own lives. When faced with a choice of ways to dispose of your cash, choose the cooking course or holiday you’ve always dreamt of, not the new car or carpet. Yes, your home may still look tatty when you return, but you’ll have gained experiences that will provide a reservoir of happiness for years to come.

It’s a theory that seems particularly relevant when you apply it to parenting. In some ways, it lets you off the hook — it’s an excuse to stand firm and resist pressure to constantly fork out for new trainers and games consoles. But it also drives home the importance of spending time with your children, not just flinging money at them. For some, a decision to plough money into private education is the ultimate form of paying for experience over material goods. When John Pearson, 34, was growing up in West London, he shared a room with his younger brother and his parents couldn’t afford family holidays abroad. All their savings were spent on boarding school for the three boys.

Of course, they were relatively well-off to be able to afford school fees, but money was rarely spent on consumer goods. The car was a clapped-out Volvo and summers were spent in Wales. Pearson remembers the joy of visiting friends’ houses in which he’d be able to play with the latest toys and gadgets.

Now a solicitor with two children, he can make sense of how his parents prioritised spending. “At the time, it seemed unfair, especially when many of school contemporaries’ parents were able to pay the fees and buy their children all the latest stuff. But as you get older and you go to a good university and realise how many career choices are available, you see the value of education — it’s an experience that lasts a lifetime,” Pearson says. “If I can afford it, I’ll make the same decisions for my children.”

James Wallman, editor of the online lifestyle site LS:N Global, agrees that flashy is no longer cool. “Having less is something that people are now showing off about,” he says. “It’s cool to suggest that you can resist consumer pressure and live a more simple existence.”

And when you look at the science, it makes sense. A study by Gregory Berns, a neuroscientist at Emory University, Georgia, revealed that it’s the anticipation of a purchase that releases the feel-good chemical dopamine into the brain, not the actual process of buying. By the time you’ve bought the item, the rush is almost over. This means that window shopping or ogling online stores can be as satisfying as parting with cash. And, of course, you avoid what retailers have dubbed “buyer’s remorse” afterwards.

Having spent a year stepping off the consumer treadmill, I can agree that resistance is hugely empowering. You feel as if you are carving out your consumer choices rather than giving in to the desires that motivate everyone else. And by choosing to invest in experiences instead of things, you feel that you are getting a better deal. Often, you spend less — digging the garden and tea with friends are easy on your bank balance — but with a higher return on happiness.

That’s not to say there isn’t a place for splashing out now and again on the odd delicious item. The mistake is to overestimate the impact that this will have on your overall happiness levels: a lesson worth remembering as we gear up for the annual present-buying bonanza next month. This year perhaps we should think about giving gifts that offer experiences: theatre tickets, gallery membership, or perhaps a couple of cocktails. In the place of toys, clothes or gadgets, these could offer a route to longer-lasting happiness for both giver and receiver. (This article first appeared in The Times on 16th November 2010; to read it, click here).