Why are we like this?

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Why do people buy things that they DON'T need thinking it will improve their lives and make them happy? My wife and I live a comfortable life, we don't have any money problems because we live in our means and splurge only on special occassions. We are in our mid 30's and will have our house and cars paid off in less than a year due to hard work and MANY extra payments. We would like a bigger house, a newer car, etc. but we know we we need to be happy with what we have instead. So we save our money for a future child and prepaid vacations that will give us memories. Its really hard to be happy with what you have, and it seems like many people think buying a bunch of stuff will make them happier. My friends had a nice house, but had to sell it to buy a bigger one that costs twice as much. They are still not happy with their house and now they are in major debt with all their equity loans. Why do so many people have so much stuff, like cars, expensive houses, gadgets, clothes, etc. when it doesn't make them feel better about their lives? Why are we like this?