The Happiness Equation

1. Happiness is measurable and can be studied scientifically

The cognitive part of our brain tends to suffer from what he called the 'peak-end' effect, which is the tendency to judge past experiences – both pleasant and unpleasant – almost entirely on how they were at their peak and how they ended.

Happiness science emerges. Over the past few decades, researchers have developed reliable methods to measure and study happiness. These include self-reported surveys, physiological indicators like blood pressure and cortisol levels, and brain imaging techniques. The science of happiness has revealed that our subjective well-being is influenced by a complex interplay of factors, including genetics, life circumstances, and intentional activities.

Challenges and breakthroughs. Initially, economists were skeptical about the validity of happiness data. However, advances in statistical methods, particularly the work of McKelvey and Zavoina on ordered probit models, allowed researchers to analyze happiness scores as ordinal data. This breakthrough, combined with improvements in data collection and analysis, has led to a surge in happiness research across various disciplines.

Key findings:

• Happiness is partially heritable (about 50%)
• Life circumstances account for about 10% of happiness
• Intentional activities and mindset can influence up to 40% of our happiness

2. Money buys happiness, but less than we think

A win doesn't feel as good as a loss feels bad, and the good feeling doesn't last as long as the bad. Not even close.

The Easterlin Paradox. Richard Easterlin's seminal work revealed that while richer people within a country tend to be happier, increases in national income don't necessarily lead to proportional increases in overall happiness. This paradox highlights the complex relationship between money and well-being.

Relative income matters. Research shows that our happiness is significantly influenced by our income relative to others, not just our absolute income. This explains why economic growth doesn't always translate to increased happiness at the societal level. The pursuit of status and "keeping up with the Joneses" can lead to a collective waste of resources without improving overall well-being.

Diminishing returns:

• Beyond a certain income threshold, additional money has less impact on happiness
• Non-monetary factors like social relationships and personal growth become more important
• The hedonic treadmill effect: we quickly adapt to income increases, returning to our baseline happiness

3. Social relationships are crucial for well-being

To compensate someone for being single as opposed to being married, income would have to be ... approximately £200,000 ($300,000) higher, on average, than the current household income.

The power of connections. Numerous studies have shown that strong social relationships are one of the most significant predictors of happiness and life satisfaction. Good relationships provide emotional support, a sense of belonging, and opportunities for personal growth.

Quantifying social capital. Researchers have attempted to put a monetary value on various social relationships:

• Marriage: worth about £200,000 per year in terms of happiness
• Seeing friends regularly: equivalent to £230,000 per year
• Talking to neighbors daily: valued at £120,000 per year

Quality over quantity: While these figures are striking, it's important to note that the quality of relationships matters more than the quantity. Deep, meaningful connections contribute more to well-being than superficial interactions.

4. We adapt to most life events, but not all

Time, it seems, completely heals only the wounds that don't constantly require our attention.

The adaptation principle. Humans have a remarkable ability to adapt to both positive and negative life changes. This adaptation, also known as the hedonic treadmill, explains why lottery winners aren't perpetually elated and why people with disabilities often report higher levels of happiness than others might expect.

Exceptions to adaptation:

• Unemployment: people struggle to fully adapt, even after years
• Commuting: the stress of long commutes remains consistently negative
• Death of a spouse: adaptation occurs within 1-2 years for most people
• Divorce: people often adapt within 2-3 years

AREA model. The Attend, React, Explain, and Adapt (AREA) model proposed by Dan Gilbert and Timothy Wilson explains the process of emotional adaptation. Events that require constant attention (like unemployment) are harder to adapt to than those we can explain and move past (like bereavement).

5. Happiness is relative and influenced by comparisons

Misery loves company, and so sometimes it may be good to share our unfortunate experiences with other people who are experiencing the same event.

Social comparison theory. Our happiness is significantly influenced by how we compare ourselves to others. This explains phenomena like the negative effect of others' incomes on our well-being and why unemployment hurts less in areas with high unemployment rates.

Norm effects:

• Unemployment: less psychologically damaging in high-unemployment areas
• Obesity: overweight individuals report higher well-being when surrounded by other overweight people
• Crime victimization: less detrimental to well-being in high-crime areas

Implications. Understanding these relative effects is crucial for policymaking and personal well-being strategies. It suggests that addressing inequality and fostering a sense of community can be as important as absolute improvements in living standards.

6. Our focus and attention shape our happiness

Nothing in life is quite as important as you think it is while you are thinking about it.

Focusing illusion. We tend to overestimate the impact of specific life events or circumstances on our overall happiness. This is because we focus disproportionately on salient aspects while neglecting other important factors that contribute to our well-being.

Examples of focusing illusion:

• Climate: People predict Californians are happier due to better weather, but actual happiness levels are similar across regions
• Parenthood: The focusing illusion leads people to overestimate the happiness impact of having children
• Income: We focus on the positive aspects of higher income while neglecting potential drawbacks (e.g., longer work hours, less leisure time)

Practical implications. Understanding the focusing illusion can help us make better decisions by considering a more holistic view of how life changes might affect our happiness. It also highlights the importance of mindfulness and appreciating the present moment.

7. Happiness is both an input and an output

Happier people tend to live longer. And given that happiness is highly correlated with a variety of favourable life outcomes (e.g., stable relationships, low accident and suicide rates, great emotional and physical support from close ones, and less stress), it should be no surprise ... that happiness should also be positively correlated with longevity.

Happiness as a cause. Research shows that happiness itself can lead to positive outcomes in various life domains:

• Work: Happy people tend to be more productive and creative
• Relationships: Happiness attracts others and fosters better social connections
• Health: Positive emotions are linked to stronger immune systems and longevity

The upward spiral. This dual nature of happiness creates a positive feedback loop: happiness leads to success in various life domains, which in turn contributes to greater happiness. This understanding challenges the notion that we should pursue success to become happy, suggesting instead that cultivating happiness can be a pathway to success.

Practical applications:

• Organizations can focus on employee well-being to boost productivity
• Healthcare systems can incorporate happiness interventions as part of treatment
• Individuals can prioritize activities that boost their mood as a strategy for overall life improvement

8. The pursuit of happiness has individual and societal implications

Even though studies have found that happiness is often fleeting and that often we can't make someone happier without making someone else worse off (as in the case of the race for status), the evidence from 'happiness as input' studies provides yet another incentive for making the greatest happiness principle the main political objective for any society in the world.

Policy implications. The science of happiness challenges traditional economic measures of societal progress, like GDP. Some governments are now considering well-being indicators alongside economic metrics to guide policy decisions.

Ethical considerations:

• Should governments actively try to maximize citizens' happiness?
• How to balance individual freedom with policies aimed at increasing collective well-being?
• The risk of manipulation: happiness data could be misused by politicians or special interests

A middle ground. Many researchers suggest using happiness insights to improve political processes and inform individuals, rather than as a direct policy goal. This approach respects individual autonomy while leveraging the valuable insights from happiness research.

Future directions:

• Developing more robust measures of national well-being
• Integrating happiness research into education, healthcare, and urban planning
• Exploring the long-term societal impacts of happiness-focused policies

Last updated: October 10, 2024