What is happiness?

This may seem like a rather crazy post but, what is happiness?


What is happiness not?


I want you to think about what makes you happy first. Make list even.


Now throw that list out. Actually, you are going to find, we humans are very bad at making judgements on what makes us happy. I would like to dedicate a post to the work of Daniel Kahneman, who won the Nobel Memorial Prize in Economic Sciences in 2002. Kahneman said that we humans are victims of a focusing illusion. The focusing illusion is a cognitive bias where as humans, we tend to overvalue  the things that we immediately see in the present, assigning a disproportionate amount of importance to the first pieces of information we encounter, while assigning too little weight to other pieces of information.


The other big thing that I will say is that happiness is not money. In their paper,  Kahneman and the other authors argue that money is not the dominant decider of happiness that it is often portrayed as and the correlation between happiness is actually quite weak based on surveys they asked their readers.  It is one example of the focusing illusion. Anyways, it turns out that this is not the case at all. Even increases in income have only a transitory effect on happiness.  Herzberg’s motivation-hygiene theory argued that money was primarily of hygiene value – that is, insufficient funds will make one unhappy, but once sufficient, money loses its value in terms of happiness. There is also a discussion as to the cause. Anyways, the article argues that although happiness is not reliably derived from raising one’s income, many in our society feel highly pressured to do so. In a dramatic example, they noticed that Japan’s substantial economic rise did not lead to increased happiness.


The one thing I will say is that although happiness does not come with money, this is not a justification for inequality, as that appears to be negatively correlated with happiness.


Kahneman et al have another paper arguing that warmer climates do not lead to greater happiness. I have noticed that many Canadians have believed that moving somewhere warm would make them happy. Perhaps that is because of Canada’s harsh winters. Such people harboring ideas on moving may wish to read that paper and reconsider. Certainly other factors may cause the desire to move, such as being near family and friends, but moving to a warmer climate is not a reliable way to obtain happiness.


So what then is happiness?


There is a difference between happiness in the short-term that makes you happy for a day or two, versus happiness in the long term.  Let’s focus on the long-term happiness, what makes you happy for a prolonged period of time, versus say, a day.


Happiness is a sense of long-term contentedness and sense of security. Kahneman referred to it as “life satisfaction”. Rather than something that is short-term, immediate, or that is right in front of you, happiness is about something that happens throughout one’s life. Happiness is about being content with one’s life decisions, with a sense of security in the decisions that you have made, with the idea that the world is for the most part going well, and that you are emotionally stable.


The real question then becomes how to achieve this state of security and contentedness. Well, it would seem that proximity to achieving one’s life goals is the dominant driver. Inequality too seems to play a very negative role in happiness. The one thing that stood out to me in this research was that material goods did not play as dominant a role.


So what does this mean for happiness? On one hand, we make very predictable errors that make us focus on the short-term or on monetary possessions. On the other hand, setting goals, being secure, and coming close to meeting them, based on this research is the best way to achieve happiness. If there is a misalignment of your life goals, then no amount of material wealth will be able to compensate for that.


I think then that the answer is to look at who you are, what you stand for, and work from there.


  1. Benjamin David Steele

    “The one thing I will say is that although happiness does not come with money, this is not a justification for inequality, as that appears to be negatively correlated with happiness.”

    This is where Maslow’s hierarchy of needs would fit in. Having your basic needs met will definitely help with the happiness factor. And meeting those needs are dependent on a minimal degree of wealth. But the higher needs can’t be bought.

    It relates to something like IQ gains. It’s easy to improve the average IQ of the poor. It only requires minor investments in healthcare, education, and environmental conditions. OTOH it is extremely difficult to improve the average IQ of the wealthy, no matter how much money is invested.

    Also, the issue with inequality isn’t just about wealth. It is also inequality of opportunities, rights, freedom, justice, power, influence, political representation, etc. Simply having less money than others is the least of one’s worries in a society where a plutocracy rules.

    This is why people are happier in more equal societies. Even the wealthy experience fewer problems where inequality is lower. No amount of wealth can make up for having to deal with all the problems of a high inequality society. Happiness, if nothing else, is freedom from worrying about major social problems (e.g., high rates of violent crime).

    1. Chris Liu (Post author)

      Interestingly, more recent research has suggested that Maslow’s Hypothesis might actually be flawed.

      See here:

      It has become a huge issue because Maslow’s hypothesis is entrenched in the world of business.
      95% of Managers Follow an Outdated Theory of Motivation

      Actually, this might mean that living in an egalitarian culture is more important than initially thought. In that case, our happiness may be very heavily tied towards our ability to live in an equal society.

      Political conservatives in particular often try to argue that there is a trade-off between economic growth and inequality. The hard research says otherwise. So too does other research from the IMF. I will note that none of these are sources with a left wing leaning – quite the opposite actually. It further corroborates the ideas that Joesph Stiglitz, in his books has described.

      To me, reducing inequality is a win-win. People will be happier, including the very wealthy. The economy will have the potential to grow faster. Social problems win vanish. The problem I see is that people, particularly those on top, don’t look at the evidence and set policy. It is counter-intuitive for those on top especially.

      1. Benjamin David Steele

        I’ve never looked into the research on Maslow’s Hypothesis. It is just a simple model that gives one possibility of a basic framework. There are other similar models. Spiral Dynamics is actually a more interesting model and might better fit at least some data, although I don’t think there has been a ton of research in this area.

        I’m not entirely sure how inequality might relate to any of these kinds of models. I do know that in Spiral Dynamics that some value memes are described as emphasizing hierarchical inequalities. But I don’t know how it could be scientifically studied at the societal level. Or to what degree studying it at the individual level could imply anything about he collective level. If you’re curious, here are a couple of papers that might be of interest:


        It’s just food for thought.


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