Summary of Luxury Vehicles and Happiness

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Luxury vehicles, while providing an important function, are often purchased as positional goods, which can signal wealth or status. In a 2011 paper, Schwarz and Zhu found that while people imagine enjoying the experience of driving luxury vehicles more than economy vehicles, their actual experience driving is not different. In a 2015 paper, luxury car owners are not happier than frugal car owners. The authors find that what the title says: the wealthiest people in the world are not typically luxury vehicle owners. In a 2016 survey, documented in the next millionaire next door, the median amount that millionaires paid for their most recent vehicle purchase was 35,000 US dollars, and the most common makes were Toyota, Honda, and Ford. The problem here is that luxury vehicles are expensive. If owning a luxury vehicle means spending less on things that do tend to make people persistently happy, the net effect on well-being may be negative.

• 00:00:00 Luxury vehicles, while providing an important function, are often purchased as positional goods, which can signal wealth or status. In a 2011 paper, Schwarz and Zhu found that while people imagine enjoying the experience of driving luxury vehicles more than economy vehicles, their actual experience driving is not different. This makes sense, as people tend to be bad at predicting how they will feel in the future and bad at remembering how they felt in the past. In a 2015 paper, luxury car owners are not happier than frugal car owners. The authors find that what the title says: the wealthiest people in the world are not typically luxury vehicle owners. This is important, as documented in Andrew Hallam's 2021 book, Balance: The Median Cost of Vehicles Driven by the Wealthiest People in the World is 46,000 US dollars. In a 2016 survey, documented in the next millionaire next door, the median amount that millionaires paid for their most recent vehicle purchase was 35,000 US dollars, and the most common makes were Toyota, Honda, and Ford. The problem here is that luxury vehicles are expensive. If owning a luxury vehicle means spending less on things that do tend to make people persistently happy, the net effect on well-being may be negative.