A lot of times people think that they are planning for the future when they are really just enjoying themselves in the present. I thought it would be helpful to classify a list of things that are sold as investments that may actually be more about consumption.
Young people's fake investments:
Certain formers of higher education education are definitely consumption rather than investment. Advanced degrees in humanities at less prestigious institutions come to mind. The supply of people with these degrees far outweighs the number of jobs available. Low ranked MBA schools give people an excuse to party for two years, but the cost of the school combined with the opportunity cost of not working for two years means that the marginally higher salary that most students get out of having an MBA does not make up for the time and money cost of the degree. Low ranked law schools might not be fun for students, but they are still paying up for the idea of being a lawyer and the many students suing their schools for misleading jobs statistics show that being a lawyer doesn't really pay. A four year college degree is probably an investment, but unless the students are actually learning something useful or learning how to learn it is only an investment because of how it helps the student signal.
Fake investments older people make:
A lot of real estate is actually consumption rather investment. Time shares are the most blatant obvious example. People are sold on them by being given free trips if they listen to a pitch, so someone who thinks about the margin these salesmen are making on the deal to make sales pitches worth it should think twice before buying. They are told that they will go up in value but generally time shares can be bought for much more cheaply than they were sold on the secondary market. Buying a home to live in makes more sense, especially with the mortgage deduction and the recent stagnant prices, but in 2005 and 2006 this was one of the biggest consumption decisions masked as an investment out there. Going forward, investing in housing only makes sense if you expect moderate inflation instead of deflation (But then, not many investments make sense in a deflationary environment).
Certifications such as those for yoga teacher or massage therapists are another expensive investment (more in time than in money) and people who think they are making an investment choice instead of a consumption choice are probably fooling themselves.
Fake investments for rich people:
Movies, wineries, start ups, second homes.
In each of these categories, there are people who know what they are doing who can make money. But for outsiders to the movie industry, a lot of their return on investment is the fun of being able to participate in the process in the first place. Wine country is littered with bankrupt wineries started by those who thought running a winery would be fun but didn't realize that they need scale to get proper distribution. Surprisingly, start ups can also be fake investments. If someone is working on their start up only because it's the cool thing to do or because they can't handle having a boss, that's a decision they are making because it suites their preference unrelated to whether or not they'll be able to capture the value they might be able to create outside of the institutional support of a normal business. Start up investors who are investing in science experiments or in really fun ideas might consistently lose money just for the idea of being able to hang around cool people doing cool things*. A good example of an investment that is really a consumption choice is company that will supposedly mine asteroids, Planetary Resources. It's a really cool idea, but the investors are most likely happy about the idea that they are working towards a really cool idea and won't mind when it doesn't work quite out.
I should probably add "writing blog posts" to this list, but I'm not sure which category it would fit under.
While investment that is actually consumption is bad, there is an additional category, consumption that's also an investment, that is good in exactly the way investments that are actually consumption is bad. If people can identify wich activities they enjoy are also good for their long term success and happiness they will be better off in the long run.
*If one of those cool things works well enough, then they'll make most of their money back, but this isn't the case outside of a small group of connected VCs and angel investors.