Optimising for happiness

financial independence

Yes, but are they rich?

The Escape Artist proposes that we try to optimise our lives for maximum happiness.

Some people will read this and be all like “Duh…obviously”.  Some people know what makes them happy. Some even know and then do it. But this is much rarer than you might think.

Others will be inherently suspicious of anything as soft and mushy as the word happiness.  Isn’t this just like motherhood, apple pie and world peace? Those people would say we have to aim for tangible objectives that are SMART.  But I’m not so sure about that.

Reaching financial independence requires figuring out what is important to us and then prioritising it relentlessly.  For me, one of the big mental leaps I needed to make on the journey was working out what the ultimate objective should be.  The answer really is obvious. Our overriding objective I think has to be maximising happiness. If its not happiness then what?

I had always assumed that if I hit tangible goals (earn this much, have this much, spend this much, buy this thing, travel to this place, live in this house, learn this skill) then happiness would follow.  This assumes happiness is just round the corner and will come via achievement of proximate goals. This may even be true, but only if we have the right goals.

Until recently I never set conscious personal goals or objectives – if you had asked me I would have said that this was too “self-helpy”.  Lets face it, we are all (rightly) a bit suspicious of Self Help gurus and Feng Shui consultants.  As for happiness, well that seemed too ephemeral to have as an objective.   To me, happiness seemed like a nice concept but lacking substance. A bit like elves wings, floaty ghosts and pixie dreams.

But there is a large and growing body of empirical data gathered scientifically on what actually makes people happy and what makes people unhappy.  For example, one of the key factors that’s been shown to make people miserable is commuting .  This is a paradox because last time I was on the 6.53am train to Waterloo, it was rammed.  Commuting sucks and yet thousands of people continue to do it.

Why is this?  They must be optimising for something other than happiness. Perhaps gross salary, perhaps perceived status?  Lets be explicit.  Salary is not the same thing as happiness.  Not even close.  Tax and hedonic adaptation are just 2 of the factors ensuring this not the case.  The evidence suggests that happiness in western societies is not really increased by income over £45,000 ($75,000) per year (implying its a relative measure as we compare ourselves to others).  Yet many people act continue to live ignoring this and seeking to maximise income at the expense of balance in the rest of their life.

We are trained at school and college to be goal focussed.  The exam system actively encourages this – implying its all about the destination not the journey.  Unfortunately school, family and advertisers are all trying to set your goals for you.

There is nothing wrong with being goal focussed but, somewhere along the way, I lost sight of the right goals and the things that actually made me happiest.  It was odd that during my time in the Prison Camp, I spent a lot of money on fancy stuff – restaurants, holidays, houses etc. Yet I never thought about bang for the buck.  As in: did the happiness provided by that holiday really justify the price tag?

If you only remember one thing from this post, remember this: we are really bad at working out what really makes us happy…and then just doing it.  The best way to start thinking about this is to put aside your pre-conceived notions of what makes you happy and try to measure it objectively, like you were a scientist standing next to yourself monitoring the situation. If it helps, get a clipboard and put on a white lab coat to get in the mood.

You need to remove the price tag from the value judgement.  There is plenty of evidence that, despite what Jesse J might say, people unfortunately do not forget about the price tag.  If you serve people the identical wine in a blind taste test and tell them that one cost £100 per bottle and one cost £10 per bottle, they will tell you that the £100 bottle tasted better.  People believe that you get what you pay for.  But there are many areas of life where this is just not true. Investment management fees are a case in point. As Jack Bogle says: when it comes to investment fees, you get what you don’t pay for.

When I was in the Prison Camp, the happiest holidays I had were the cheapest – the staycations where I just chilled out at home. The best period was between Christmas and New Year when the emails died right down, the weather was ropy and there was nothing to do.  This was bliss.

It was a paradox that, whilst I loved summer holidays, these provided less bang for the buck.  When you spend a lot of time travelling for work, the prospect of spending more time in airports is not appealing.  Whenever you have squeezed too much into your life, more new stuff or more travel can not provide the answer.  In those circumstances, only less can be more.  The trouble is that no one is ever paid to try to sell you less.

The other thing I found is that happiness is not just determined by objective reality.  Its determined by how we think about that reality i.e. how we perceive it.  This is a bit over-simplified but here is one way that I found helpful to think about this:

Happiness = Reality – Expectations

If this is true then we can either increase our happiness by improving reality or by lowering our expectations or some combination of both.  This is a bit like profit maximisation – no sensible firm maximises profit just by growing revenue and totally ignoring costs or by slashing costs, firing all the salesman and watching revenue evapourate.  Its a balance.

The Escape Artist is all for working to improve your reality. Particularly where it involves actions which we can control. This may include creating stuff, earning money and saving. This stuff can be fun but can also require hard work.

In some ways though, its easier to increase happiness by reducing our expectations.  By reducing our sense of entitlement, we feel more gratitude.   I recently cut my finger.  I realised how amazing it is that the blood clots, the cut heals and you don’t bleed to death.  What are the odds? Think about the millions of organisms (your ancestors) that came before you and how many died for your benefit before evolution stumbled upon the miracle of clotting and an immune system.  Or think about the sheer fucking awesomeness of clean hot water piped to the tap in your home.

About 10 years ago, without knowing it, I conducted a scientific experiment on happiness.  I had been living in central London and after we had kids we wanted to move out to natural beauty and open spaces. We sold our small London terraced house and packed up.  We hired a self storage unit (this is a clue you have too much shit).  To give ourselves time and optionality, we moved into rented accommodation in the town where we were looking to buy.

Because we were renting we didn’t want to waste money renting a large house. For six months we lived comfortably in a small house about the same size as our London terrace had been.  We hunted and then bought the biggest house we could afford.  When I look back on it, I was an idiot conforming to a social norm. I thought that was just what “everyone” does.

Given the house was the most expensive thing I ever bought, you might expect that my happiness would shoot up and I’d be happier than Pharrell Williams or the pig in the photo above.  Nope.  Here’s what I discovered, shown in a graph which plots capital tied up in housing against my happiness:

If you are struggling to see the relationship, its because there is no relationship. The new house was fine – it just didnt have any effect on my happiness.  This casts doubt on the common assumption that spending = happiness.

I have thought a lot about this and it turns out that what actually makes me happy is very different from what I used to think should make me happy. Being fit and healthy, plenty of sleep, eating a low-carb diet, not being hung-over (often). Being surrounded by people that I respect or love (ideally both).  Not being stressed.  Humour sprinkled with profanity. No money worries. Music.  Sunshine. Being able to choose what I do.  These are huge wins.

4 comments

  1. Paullypips · · Reply

    Great article…and I love the “happiness is just around the corner” cartoon. Why does it take us so long to realise what is important in our lives? Are we brainwashed or do we just have it too easy to make us think clearly? Financial security is important but our health, happiness, family and friends are so often not really appreciated…until we lose them. The pig in muck photograph made me smile, so many thanks for making my day a little brighter.

    1. Thank you for the comment PP….its much appreciated. If you look carefully at the photo, I think you can see that the Pig is smiling as well…

  2. Neverland · · Reply

    The whole “big house = good, bigger house = better” cult in the UK will no doubt come to a sticky end one day just as it did in the US and is doing so in China

  3. professorsimonpeach · · Reply

    “Happiness is achieved when the gap between what we have and what we want is very small”.

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