Holiday Vs. Mobile Phones: Which is the Better Deal?

Let’s take a situation. You have 1 lakh rupees in the bank. You can take a fancy holiday with it or you can buy that new mobile phone that everyone in the office and all your friends are talking about and maybe missing it too.

what should you do? Buy that new mobile phone? Or go on vacation? Economics provides a way for us to think and make decisions.

According to the leading economist of the 20th century, John Maynard Keynes, there are two types of human desires. As he wrote in Economic Possibilities for Our Grandchildren: “(Human needs) fall into two categories—needs that are absolute in the sense that we feel them which may be the condition of our fellow human beings, And what they are relative is the feeling that we feel them only when their satisfaction lifts us up, makes us feel better than our peers.”

Now what will you do with this in mind? Let’s say you buy that new mobile phone before someone you know. In short, you may feel on top of the world, but once in a while someone will buy it.

Also, a new model may soon hit the market within a year, making your model obsolete and creating the need for a new one. In that sense, satisfaction from buying a mobile phone is relative; It depends on what others around you are doing and how quickly a new slightly better model comes to market.

What if you choose to spend money on vacation? Money is better spent than buying a mobile because satisfaction is less relative and more absolute in this case. As Robert Frank writes in Under the Influence: Putting Peer Pressure to Work: “Several studies have demonstrated … money spent on experiences (like vacation) has a greater effect on well-being than the amount spent on goods. More sustainable growth.” This is because “relative comparisons matter less for experiences than for goods”.

When you buy an expensive mobile phone, your happiness or satisfaction largely depends on what other people around you are doing. But if you take a vacation, that’s a personal thing. Others may go to the same hill station or beach you went to, maybe even stay at home hotels, but their experiences can never be the same.

You must have seen the beautiful sunrise or sunset. Or stayed in a hotel near a valley on a very beautiful rainy or snowy day, reading a book. Or the most non-description of the restaurant had the tastiest food. Or spent some quality time with your partner, family and/or kids for that matter. The list can go on and on. Your experience is absolutely not comparable with theirs.

As Frank writes, “Experiences are far less susceptible to adaptation than physical objects. For example, people quickly become accustomed to the greater clarity of a 4K TV image, but recall memories of vacations with friends.” years spent”.

So, spend money on vacation and create a pleasant experience for a lifetime. Of course, if you really need a mobile phone, buy a cheap phone. It will have most of the features that a more expensive phone has.

Alternatively, make more money so you can buy that expensive phone and go on a fancy vacation too. But then, it’s easier said than done.

Vivek Kaul is the author of the Easy Money trilogy.