Splurging Is Good for Your Health

Taken from the Wall Street Journal - hence, a legit source ;)

Buying overpriced indulgences may feel good in the short term, but you pay the price later. Or at least that’s the conventional wisdom.

But a study by a couple of business-school professors says splurging now makes you happier later. Even more surprising: Not splurging now gives you pangs of regret later.

Anat Keinan, an assistant professor at Harvard Business School, and Ran Kivetz, a professor of marketing at Columbia Business School, make their case for thevice lifestyle in an article in the Harvard Business Review.

One of their studies polled college students and alumni on the subject of spring breaks. Regret about not having spent more money or traveling during breaks increased with time, whereas regret about not having worked, studied, or saved money during breaks decreased with time.

The authors write: “We saw a similar pattern in a study of how businesspeople perceived past choices between work and pleasure. Over time, those who had indulged felt less and less guilty about their choices, whereas those who had been dutiful experienced a growing sense of having missed out on the pleasures of life.” (As the old saying goes, nobody dies saying “I wish I’d spent more time at the office.”)

The authors also did a study of mall shoppers, asking about their regret about buying an expensive item of clothing. Those who anticipated short-term regret bought less-expensive items, while those who anticipated long-term regret splurged. “Thinking about short-term regret drives consumers to be virtuous, while thinking about long-term regret leads them to be extravagant,” the authors write.

Luxury-goods makers, of course, will eat this up. I can see the slogan now: “Luxury: It’s Good for Life.” Or “Cartier: You’ll be sorry you didn’t.” Whether luxury is good for your finances is another matter. (Nobody goes bankrupt saying “I wish I’d spent more on Gucci bags).

Wealth Report readers, what do you think? Do the long-term benefits of indulgence outweigh the short-term risks of regret?

http://blogs.wsj.com/wealth/2008/07/07/splurging-is-good-for-your-health/?mod=yhoofront