Summer Vacation: Good to Live It Up

Millions of families will take off this week to do something Americans do less than almost any other country — go on vacation. If you plan on spending lots of money, you’re probably doing it right.

Beach_SmallVacations are expensive. You know that already. Traveling costs money. Hotels cost money. Being pampered costs money. How much? Travel surveys by Visa, AAA, and Money Magazine have all put the median cost somewhere around $1,600. It should be much more.

Our brains are hard-wired to think we need to spend a lot on summer vacations to be happy. But underneath what you might call biases and miscalculations, there is a good deal of wisdom. The fact is that economic and psychological research suggests we would be happier if we devoted more of our time to buying brief experiences on vacation rather than buying even durable stuff to wear and keep around us.

There are at least three reasons why families with means are already likely to spend considerable sums on their brief vacations, already. The first reason is in that adjective, brief: Americans don’t go on vacation that often compared with other countries. We’re the only advanced economy in the world without a federally-mandated minimum number of vacation days, and more than 50% of workers don’t use all their vacation days, anyway. According to the law of diminishing marginal utility, this should make vacation especially valuable for us. The same way the first sip of lemonade on a hot day is more refreshing than the 15th, a brief once- or twice-a-year vacation appears more valuable than a routine long weekend.

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Source: Derek Thompson | The Atlantic