Research indicates that positive experiences make people happier than material objects over time. Even though our physical purchases last longer than a one time experience, we adapt the new physical object into our lives and as it becomes normal our happiness with it wanes. The happiness we feel when remembering experiences grows over time.
Dr. Thomas Gilovich, a psychology professor at Cornell University, has been studying the relation between money and happiness and conducted a study asking people to rank their happiness with physical objects and experiences they purchased. Their satisfaction with both categories of purchases was initially ranked about the same. However as time passed, their happiness with the objects they purchased (like a new phone) went down and their happiness with experiences they purchased (such as a trip or concert) went up. Experiences become part of our identity and a way to connect with people, while things remain disconnected from us.
Gilovich said that even our assessment of negative experiences can go up as we talk about them and share those experiences with others. He attributes this to our ability to look back upon uncomfortable and negative memories as character building experiences and funny stories.