The Secret to Happiness: Where Buddhism and Behavioral Economics Meet
Humans often disagree on most things in life: from arguing over the best restaurant in town to the greatest footballer of all time. However, most humans — ancient or modern; from the east or the west; living in mountains or in deserts — would agree that the ultimate purpose of any human endeavor is to find “happiness”.
And sometimes, we do find happiness from both individual and collective successes. But, the fundamental predicament of life — as Buddha suggests — is that happiness derived from earthly successes does not last forever. In fact, contrary to our expectations, suffering — the exact opposite to happiness — often pervades our lives. Once back in college, one of my friends, while referring to the sine wave on an oscilloscope, said “if we could plot happiness over time like the voltage, it would follow a similar pattern!” Regardless of the true shape of happiness over time, my friend, at least in philosophy, was not wrong after all! None of us knew about Daoism back then but he was on the right track: happiness and sadness often come in phases.
Buddha apparently found a solution by identifying the cause of suffering and proposing an intervention. According to Buddhist philosophy, “unfulfilled” expectations cause suffering. Given the causal assumption is correct, logically, if we do not have any unfulfilled desires, we cannot suffer; in other words, we find something we may call “happiness”.
But how can we avoid the trap of unfulfilled desires? Buddhist suggestion is quite simple: just avoid any desires. No desire would lead to no unfulfilled expectations, which, in turn, would lead to no suffering(happiness).
The above pathway may seem rather radical and extreme — perhaps it makes sense only for monks and nuns. How about us ordinary humans: the ones not necessarily “aspiring” for nirvana? Can we do something to maximize our happiness?
Last semester, as part of one of the courses I was taking, I found this amazing paper by Medvec, Madey, and Gilovich (1995). The authors investigate the emotional reactions of silver and bronze medalists of the 1992 Summer Olympics. According to their findings, the bronze medalists, despite finishing behind silver medalists, appear to be happier!
But how is that possible? The authors argue: the level of expectation makes the difference — silver medalists are more likely to have the expectation of winning the gold, whereas bronze medalists are more likely to consider the possibility of finishing fourth and winning nothing.
Long story short: the happiness we derive out of any outcome depends on the relative difference between the actual outcome and the expected outcome. If we achieve more than we expected, we find happiness; if we achieve less than our initial expectation, we become sad.
Working with a simple equation illustrates the point:
Let’s assume, someone's happiness can be described using the following expression:
If Actual Outcome ≥ Expected Outcome,
Happiness = Actual Outcome - Expected Outcome
And, if Actual Outcome < Expected Outcome,
Happiness = -2 * (Expected Outcome - Actual Outcome)
You may have noticed, for the second condition, I am multiplying the difference by -2. This is to account for “loss aversion”, which purports that we experience greater unhappiness when we lose something compared to the happiness when we win the same thing (Tversky and Kahneman, 1991).
Many empirical studies indicate that if people find X amount of happiness by winning something, typically, they will experience about 2X amount of sadness by losing the same thing (Merkle, 2020).
Let’s think about some real-world scenarios to explore the implications of the equation!
Let’s say, I get a 90 in an exam. I expected to get a 93. Then, my happiness = -2 (93-90) = -2*3 = -6 (meaning 6 units of negative happiness or sadness)
In case I had a lower expectation, for example, an 85, with the same actual score of 90, my happiness would have been = 90–85 = +5 (meaning 5 units of happiness)
What this simple example implies is: the lower someone’s expectation is — regardless of the actual outcome of an event — the greater will be her happiness!
Presumably, Buddha is right. Happiness, then, is not necessarily about conquering the world, rather about training ourselves to avoid expectations or, at least, to keep them low. A relevant practical question is: how far down can we put our expectations without puncturing our motivations? Ultimately, as Daoists may argue, the solution is all about finding the right balance between expectations and no expectations to make us “sufficiently” happy.
Medvec, V. H., Madey, S. F., & Gilovich, T. (1995). When less is more: counterfactual thinking and satisfaction among Olympic medalists. Journal of Personality and Social Psychology, 69(4), 603.
Merkle, C. (2020). Financial loss aversion illusion. Review of Finance, 24(2), 381–413.
Tversky, A., & Kahneman, D. (1991). Loss aversion in riskless choice: A reference-dependent model. The Quarterly Journal of Economics, 106(4), 1039–1061.