The Paradox of Modern Life

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The first time I traveled to Africa, I was stunned. Meeting a one-legged taxi driver in Kenya, an orphan schoolgirl in Rwanda, and a disabled subsistence farmer in Mozambique, I expected to be confronted by their poverty. Instead, what shocked me was their happiness. It was a deeper, more challenging realization than their material circumstances. Many people, above a basic subsistence level, seemed genuinely content. This sparked a fascination in me about the concept of happiness, something I began to study both as an economist and through the lens of social enterprise. After all, happiness is the ultimate social outcome.

Today, we are fortunate to have the Prime Minister of Bhutan with us, the pioneer of Gross Domestic Happiness as a measure of national progress. Bhutan's approach contrasts sharply with the conventional reliance on GDP to gauge success. But before diving deeper into this, let's play a little game to explore how well we understand happiness. Imagine you're an athlete at the Olympic Games. Would you prefer to come in second, third, or second to last? Most people choose second, but research shows that those who come third are often happier than those who come second. Why? The silver medalists compare themselves to the gold medalists, lamenting a near miss. In contrast, bronze medalists are often just happy they made it to the podium.

Next, consider winning the lottery: would you prefer a lump sum of $10 million or incremental payments over a lifetime totaling $8 million? Most people opt for the immediate $10 million, but research suggests that incremental payments bring more sustained happiness. Finally, would you prefer a salary of $50,000 when everyone else earns $50,000, $50,000 when others earn $60,000, or $40,000 when others earn $30,000? Surprisingly, more people choose the third option, revealing how our satisfaction often hinges not on absolute wealth but on relative standing.

Our flawed perception of happiness is not unique to individuals. At a macro level, the data reveals that while we are wealthier than ever, we are also unhappier than ever. We experience greater prosperity but more depression, quicker transport but faster complaints, and in many places, more suicides than homicides. This paradox suggests that our assumptions about happiness are fundamentally flawed. But why are we so bad at predicting what makes us happy?

The most compelling explanation I have found is that our happiness is deeply tied to our expectations. Happiness suffers when our expectations exceed reality, creating what I call an "expectation gap." This gap can be traced to three main sources: our imagination, our social comparisons, and our past experiences.

Our imagination often paints a picture more vivid than reality can deliver. When we plan vacations, choose goods, or elect leaders, we select what we think will be the best, only to be disappointed when reality falls short. Technology exacerbates this problem by distorting reality with photoshopped images, digital enhancements, and unrealistic portrayals. We imagine grand, perfect experiences, but reality rarely measures up.

We also measure our happiness against those around us. This is the interpersonal gap. If you earn $50,000 in a wealthy neighborhood, you might feel poor, while the same income in a poorer area could make you feel rich. The same goes for appearance, social status, and more. We constantly compare ourselves to others, creating a hedonic treadmill where we strive for happiness but never quite reach it.

Lastly, we have the intertemporal gap, where we compare our current situation to our past. If our current reality falls short of our past experiences, we feel dissatisfied. For example, two people with the same average income over a lifetime will feel differently if one sees their income rising while the other sees it falling. This is why constantly improving one's situation tends to bring more happiness than a static or declining state, even if the absolute levels are the same.

So, what can we do to bridge these gaps and win the battle for happiness? First, we must take happiness seriously and recognize that it's not just an artistic concept but a scientific one. Entrepreneurs and businesses should focus on improving contentment, not just consumption. We must manage our expectations realistically, be it through the media we consume or the social comparisons we make. Governments should work towards greater income equality, and parents should nurture children to set realistic expectations while fostering self-belief.

In conclusion, we've been seduced into a way of life that seems to conspire against basic contentment. Our happiness is intertwined with our expectations, which are shaped by our imagination, our social surroundings, and our past. Understanding why we are unhappy is the first step toward achieving true happiness. Next time your decision-making abilities are measured against those of monkeys, may you come out on top. Thank you.