An interesting talk by Arthur C. Brooks which is also summarized in a New York Times opinion column “A Formula for Happiness“ (mirrored at AEI) He recounts research that identifies the key drivers for happiness
- Big life events
The bad news is that first two account for about 88% of baseline happiness and are not under your control. So, what choices can you make that influence the remaining 12%? Brooks suggests:
- Faith: thinking about the transcendental, the things that are not of this world, and incorporating them into your life.
- Family: having solid family relationships; the things that cannot and should not go away.
- Community: cultivating important friendships and being charitable toward others in your community.
- Work: marrying our passions to our skills, empowering us to create value in our lives and in the lives of others.
What’s interesting is that money increases happiness only as it moves people out of poverty. More income after reaching the lower middle class does not seem to have a big impact on happiness, which is worth considering when you are counting on a multi-million dollar payout from an acquisition to change your life. A study of lottery winners showed them to be slightly less happy a year after winning the lottery than they were immediately prior to winning.
He elaborates in “A Formula for Happiness“
Along the way, I learned that rewarding work is unbelievably important, and this is emphatically not about money. That’s what research suggests as well. Economists find that money makes truly poor people happier insofar as it relieves pressure from everyday life — getting enough to eat, having a place to live, taking your kid to the doctor. But scholars like the Nobel Prize winner Daniel Kahneman have found that once people reach a little beyond the average middle-class income level, even big financial gains don’t yield much, if any, increases in happiness.
So relieving poverty brings big happiness, but income, per se, does not. Even after accounting for government transfers that support personal finances, unemployment proves catastrophic for happiness. Abstracted from money, joblessness seems to increase the rates of divorce and suicide, and the severity of disease.
Which as Brooks points out aligns with:
“Happiness lies not in the mere possession of money; it lies in the joy of achievement, in the thrill of creative effort.”
Franklin D. Roosevelt
This matches my experience watching a number of folks become very wealthy in the 1990-1994 time frame at Cisco. For the most part people who were happy stayed happy and people who were not found new ways to use money to become unhappy. When I hear entrepreneurs talk about how happy they will be when they cash in I am reminded of those days. If I had to pick one thing Brooks’ analysis ignores, it’s the need to invest time and effort in health and fitness so that you have the energy to be able to support and enjoy your family, take part in your community, and pursue meaningful work.
”To pursue the happiness within our reach, we do best to pour ourselves into faith, family, community and meaningful work.”
Arthur C. Brooks “A Formula for Happiness“
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