I remember being shocked the first few times I went to a distant village in West Bengal. It shocked me when I met a one-legged taxi driver in Kolkata. It shocked me when I met Sonia, an orphan schoolgirl. And it shocked me when I met a disabled subsistence farmer in a place close to Kodaikanal. What shocked me wasn’t their poverty, but their happiness. I found their happiness confronting, far more confronting than poverty. Not everyone was glad, but of those above a primitive subsistence threshold level, it surprised me at how content many of them were. And I became fascinated by this notion, this idea of happiness. Since then, I’ve researched it, I’ve worked on it, I’ve thought about it. I’m interested in it from an economics perspective, and from a social enterprise perspective because happiness is the ultimate social outcome. So what does Happiness mean? What does the research say about what makes us content, what makes us satisfied, what makes us happy? The research suggests that happiness is merely a combination of how satisfied you are with your life (for example, finding meaning in your work) and how good you feel on a day-to-day basis. Both are stable—that is, our life changes and our mood fluctuates, but our general happiness is more determined than anything else. you can control how you feel—and with consistent practice, you can form lifelong habits for a more satisfying and fulfilling life. The macro data supports this. We’re wealthier than ever but unhappier than ever!. Prosperous, but more depressed and less satisfied.Faster and faster transport, but faster and faster to complain about it. In many countries, there are now more suicides than homicides. We now have more goods and services than ever before. We have technology improving, but we don’t see a corresponding increase in our life satisfaction, in our happiness. It’s perhaps one of the great paradoxes of our time, and I think the obvious question is, Why is it that governments and individuals are such poor predictors of happiness? Why is that we get it wrong so often? I think it’s because we don’t understand why we’re often unhappy and so the obvious question is, Why is it we’re unhappy? What’s the explanation? Now it’s not a simple question to answer, but it’s one that I’ve thought about, and have burrowed into, through my little of understanding over the years thinking about it. I think there’s one explanation that I find far more interesting, far more plausible, far more persuasive than any other and that isn’t that we have so much choice that we get stressed. It’s not that we are worse off; most times, we’re better off. It’s not that we just have great reporting of depression and suicide; that’s true, but it only explains a small portion of the data. It’s not because of family breakdowns or reduced freedom. You know, the reason why we’re unhappy? the most interesting reason - as shown by the data, - relates to expectations. At a very basic, simple level, we’re unhappy when our expectations of reality exceed our experiences of reality. When our expectations exceed reality it called an expectation gap when our expectations are greater than reality. It’s a very simple concept, but it’s a hugely important concept to fully understand, to fully get our head around. And to help us get our head around, I’d like to think in terms of three different types of expectation gaps - three different types of gaps based on scientific evaluation of the different ways in which we form expectations as.
I think we form expectations based on our imagination, based on those around us, and based on our experiences. So to this first expectation gap, the imagination gap, which occurs when our imagination exceeds reality. When we buy goods, we choose from a range of options. When we choose where to travel to, we often choose from a range of options. When we choose which leader to elect, we often choose from a range of options and therefore how do we make that decision? What we do is that we choose the one we think will be best. We choose the one we imagine will be the best of all the options. What we do is we try to maximize our utility at a price, that’s how most people decide. To do otherwise would be to choose an option that we didn’t think would be as good, which seems counterintuitive. Now the problem here is that the very act of choosing the thing we think will give us the greatest happiness, that very decision-making process actually undermines our happiness because what it means that when we then see reality, when we experience it, whether it’s the good or the place we travel to or the leader we elect, it’s likely that reality won’t live up to our expectation and that leads to disappointment and technology makes this even worse. What technology has loused is things that are actually unrealistic to appear real, things that aren’t even on the happiness scale are made to seem as though they are actually possible. We photoshop things in; we airbrush things out, we digitally enhance photos. What this does is it makes us romanticize travel and makes us come up with fantastical ideas about places that reality can’t live up to. What technology does is that it skews our vision, it distorts reality and makes the unreal seem real. Many of the times that when we’re happiest when we go travelling, they’re actually the times when we stumble across things we didn’t expect when we discover things for ourselves, where we don’t have preconceived notions of different places. And what also makes this worse is selection bias. Many content-based algorithms, whether it’s a Google search or Facebook News Feed, or the Instagram posts presents or prioritize that information which are the best images, the most shared images, the most liked images. You’re more likely to be shown a photo on Facebook if it has 200 likes than if it has 2. And so we come to think of the best images as being normal, as being average. This also plays with our imagination. That’s selection bias. Then there’s persuasion because politicians often get elected on the basis of promising things that they can’t deliver, by raising our expectations. Who would you be more likely to vote for? A politician that says, “I’ll fix your problems if you vote for me,” or someone who says, perhaps more honestly, “Things will probably be the same, whether you vote for me or not”? Probably you’ll vote for the former, and be disappointed as well. So we’re in this constant cycle of expectations being raised and hopes being dashed. It’s the same with companies. I mean, companies are more likely to tell us that phones have never performed tasks so quickly. They’re probably not going to tell us batteries have never run out so quickly, both of which are true. And so when you have the technology, when you have persuasion, and when you have selection bias, what that means is that we imagine and demand and expect more than reality can provide. When the limitless potential of our minds is met by the confined nature of earth, we’re disappointed, we’re unhappy. Expectations and disappointments irrevocably are intertwined. In terms of beauty, it’s no wonder that self-esteem levels are so low. I mean, advertisers learned long ago that if you can make people hate themselves, you can sell them things. Now they’re applying it time and time again, and we see this. What we see is advertisers showing only the best before-and-after photos. What we see is pictures of models who are made to seem perfectly even though they’re not. We’ve become a society of complainers, of perfectionists, of counter-factual historians - people who always imagine different and better outcomes for ourselves, but people whose imagination can’t be satisfied. So that’s the imagination gap. That’s why our imagination exceeds reality, and that’s the first main reason why we’re unhappy.
The second key type of expectation that we have, its called the Interpersonal gap. That’s where we compare our reality to the reality of others. We judge ourselves based on what we experience around us. If you earn 50,000 rupees in a poor neighbourhood, you’ll feel rich. If you earn 50,000 rupees in a wealthy neighbourhood, you’ll feel poor. If you get a small pay rise, but everyone around you gets a large pay rise, you’ll be upset. Your gain is someone’s pain; someone’s pain is your gain. Unfortunately, it’s a bit of a zero-sum game, or so it seems. And it’s not only relative income that matters; it’s also the relative appearance that matters. One person’s plastic surgery is another’s a psychic loss. Research has shown that we’re actually happier when we’re with worse looking people because we’re perceived by others to be objectively better looking. And what’s interesting about this is that we have an asymmetry of emphasis - we prioritize, we focus on one end of the spectrum. We focus on the rich, the famous, the beautiful, and pay less attention to the other end. And so we’re made to seem poorer, made to feel poorer, made to feel less successful than we are. It’s almost as though we’re running on a hedonic treadmill, constantly striving to be happy, but getting no closer, because when our standard of living improves, if everyone else’s standard of living improves, we don’t always feel happier. So that’s the second way in which we form expectations, based on others around us.
The third and final way on our experiences is called the Inter-temporal gap. We’re unhappy when our past reality is better than our present reality. Take two people who have the same average lifetime income. There’s person A whose income decreases over their lifetime, person B whose income increases. Now, research shows you’re always happier if your person B, if you have that increasing income, even though the average might be the same. Why is this? It’s because of something that psychologists refer to as anchoring. We compare to our past, and if you’re constantly improving, constantly exceeding expectations, moving forward you’re happy. The reverse is true for person A.
So what does this mean when raising children? I think often we spoil children; we give them everything, to give them the best start in life. But often the best intentions don’t always lead to the best outcomes. Yes, we should support children, but if we give them everything, it’s much harder for them to have what is called a positive inter-temporal gradient - it’s harder for them to improve over time throughout their life and that actually potentially undermines their happiness. While I’m talking about parenting, I think another problem in our society is that we tell children they’re special, that they’re unique, that they’re one-of-a-kind, that they’re amazing. We tell them they can be Prime Minister or President, that they can be the next Mark Zuckerberg or Jeff Bezos. We tell them they’ll be known figures one day. What this means is that we raise their expectations. So when that child gets a normal job, when they start a business, and it fails, as most do, they’re disappointed, they’re unhappy, their expectations haven’t been satisfied. Yes, we want to give children self-belief, but we don’t want to delude them, and we don’t want to delude ourselves. So what we see is that our happiness is largely determined by expectations. Our expectations are largely determined by what we consider being normal. And what we consider being normal is largely based on our imagination, based on others around us, and based on our past. So we have these constant battles: the battle between our imagination and our reality; the battle between the reality that we experience and what we think or perceive that others experience; the battle between our reality and our past reality. How can we win these battles? I think the first challenge, the challenge for entrepreneurs and businessmen, for parents, for every person is to take happiness seriously, to take expectations seriously. I think often we relegate happiness to the world of art, not science. We dismiss it; we think of it in terms of hippies rather than businessmen. To win the imagination battle, I think it’s important that we make it known to content providers, the importance of having realistic representations of images, people, and places and events. We might even go so far as to ban things like digital enhancement in ads, pics and graphical representation. In terms of winning the interpersonal battle, I think it’s important that governments prioritize income equality and that we learn to compete against ourselves rather than against others. And in terms of that inter-temporal battle, I think it’s important that we support kids, encourage kids, but also make them realize when it’s impossible and not to give them completely unrealistic expectations.
Let me conclude-
We seem to have been seduced into a way of life that almost conspires in every way against the most basic level of contentment. We’re terrible predictors of what will make us happy. I mean, anytime someone beats you (not physically!), you know there’s a problem. We’re terrible predictors of happiness because the way in which we rationalize, the way in which we make decisions is optimal on the basis of actual levels, absolute levels, but the way in which we feel is based on relative outcomes, based on expectations. It’s the expectation that explains why a bronze medalist can be happier than a silver medalist because the silver medalist imagines coming first, the bronze medalist imagines coming fourth. It’s the expectation that explains why, often, lottery winners aren’t that happy; their happiness doesn’t last because they don’t have that increasing level of satisfaction throughout their life. It’s the expectation that explains why you can be happier with an income of 40,000 to an income of 50,000. We often think of happiness in a vacuum, when in reality, it’s far more intertwined with our community, our imagination, and our past. It’s important that we think carefully about how our minds work, how our feelings work, how our expectations work, and it’s important that we change the way in which we make decisions so that our thinking process matches our feeling process. Sirs and Madams, for people that want to improve the lives of others, as well as for people that want to be happy, I think the first step is understanding why we’re unhappy. And I hope that the next time if ever it happens, that your decision-making prowess exceeds as compared to that of your ancestors (Monkeys), assume that you come out on top. Thank you.
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