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Feb 15, 2012

10 questions: Rakesh Sarin on money and happiness

If only you had gobs of money —a cool car, big house, non-stop vacation — you’d definitely be happy, right? Don’t be so sure, says Professor Rakesh Sarin, Paine Chair in Management at UCLA’s Anderson School of Management, who has spent more a decade studying what makes people happy. In addition to his own studies exploring the correlations among money, time and happiness, Sarin has delved deeply into the World Database of Happiness and the World Values Survey. He found, for example, that American millionaires living in maxi-mansions are barely happier than Masai warriors living in huts. Next month, Sarin, who trained as a mechanical engineer as well as in business, shares what he has learned in a new book, "Engineering Happiness: A New Approach for Building a Joyful Life" (UC Press, March 2012), co-authored with his former graduate student and co-investigator, Manel Baucells, now on faculty at Universitat Pompeau Fabra in Barcelona. Sarin recently talked about his work with UCLA Today senior writer Judy Lin.
 
You’re a business professor with a background in mechanical engineering, as is your co-author. How is it that you ended up studying happiness?
 
We had been working for a long time on preference theory and decision analysis — how people make choices about business plans and investments, for example. We looked at the research on happiness — why people choose A over B because A will make them happier or more satisfied. At that point, we were not looking at the mechanism that creates happiness or unhappiness.
 
But then we started thinking that maybe there were some general principles that pull all of these together. There’s lots of information out there about how to be happy, but it’s haphazard and disorganized. That’s where engineering comes in — quantifying things, with the goal of setting happiness as a well-formulated decision problem that employs analytics for solutions.
 
You define happiness mathematically, and you’ve invented "happydons" as a unit of measure. But can the complex state of happiness really be measured this way?
 
Being happy is all about making choices, and describing happiness mathematically helps us see this. We define happiness as the total sum, over time, of momentary emotions, feelings and states of mind. Moment-happiness — pain or pleasure in a particular moment — is very volatile, prone to outside influences and not a good measure. To truly get a sense of overall happiness, we need to measure the intensity and duration of moment-happiness over an extended period of time, similar to the way a seismogram measures ground motion over time.
 
Stated simply, total happiness is the sum total of pleasures minus pains. Happydons, while they’re not really precise, are still a good unit of measure for all those "How are you feeling right now?" moments over time. Let’s say, using a 10-point scale for happydons, I’m having a good conversation: I’ll rate that as nine happydons. Later, I’m having a stressful time dealing with an agitating email — I’ll give that a five. Viewing your happiness like a 24-hour seismogram — the numbers above the midpoint of the graph and the numbers below — the question then becomes, "How can I improve the total sum of happiness? How can I increase the frequency and duration of the positive and reduce the negative?"
 
You put a big emphasis on happiness as a choice. Why this emphasis?
 
Some people think they don’t have choice. Happiness is like a pendulum, they’ll say — some days you are happy, some days not, and there’s not much you can do to change that.
 
Some people even consider happiness genetic. Psychologist David Lykken, who did extensive studies of twins and concluded that most psychological traits are largely based on genetics, said that "trying to be happier is as futile as trying to be taller."
 
I believe that each person, wherever they are in the world or in their lives, can choose to improve their happiness. When I say, "Happiness is a choice," it almost seems like a trite point. But frankly, many of us don’t make a choice. Life is like a river with many different branches you can choose to follow. But often we just go with the river’s main flow, which, for most people, is their profession. We say, "My job is to advance in my profession to earn more money." We go along with social expectations while other aspects of life — our relationships, our health — get short-changed. Sometimes, especially when an important decision comes along, you really have to pause, think and make a choice that’s consistent with what youwant to do.
 
What a lot of us want is have a ton of money and live happily ever after. But your book cites the cautionary tale of the $315-million Powerball lottery winner Andrew Jackson "Jack" Whittaker, Jr. What happened?
 
In 2002, Jack and his wife made headlines as America’s richest lottery winners. Before that, he was already happy, running a successful plumbing business he had built. Two years after winning the lottery, he had been arrested twice for drunken driving and involvement with gambling and prostitution schemes. Five years later, his wife left him, and the downward spiral continued.
 
What happened? When too much money unexpectedly comes your way, happiness depends on making wise choices about what to do with that money and how to maintain your family life and relationships with friends.
 
We are not against people improving their standing, even monetarily, but if that becomes an exclusive focus, then you lose sight. So people have to think a little bit about what is it that makes them happy and create a balance in their life.
 
You say that balance begins with understanding the difference between "basic goods" and "adaptive goods." What are these?
 
Basic goods meet the needs of the body, mind and heart — and they do this consistently. In a poor country where people don’t have food, a basic good, they will be unhappy. If they get more money, they can buy more food and be happier. In the United States, while most of us have enough to eat, food is still a basic good: If you skip a meal and you’re really hungry, food is still going to meet that need. Basic goods that meet the needs of the mind and heart are things like spending time with friends and family and listening to music we love — things that consistently make us happy.
 
Sarin graphs income and happiness levels in the United States, Great Britain and Japan from 1950 to 2000, when a five-fold increase in income didn't improve happiness levels at all.
And adaptive goods?
 
Adaptive goods satisfy our needs, but not consistently over time the way basic goods do. For a short while, you will be happy with that new iPhone, but then you will get adapted and not be so happy anymore.
 
This disappointment has to do with our expectations. In mathematical terms: Happiness equals reality minus expectations. By "reality" we mean things like your job and your salary. Expectations are your ideas about how, for example, having a better job and a higher salary to buy more expensive gadgets will improve your life.
 
An example I am intrigued by is that, between the years 1950 and 2000, income levels in the United States, Great Britain and Japan increased fivefold, but happiness in those countries hasn’t budged much at all. That is because, along with income, expectations have also gone up. Expectations of the Japanese and Americans in the 1950s were very different from expectations in 2000.
 
You talk about the influence of "relative comparison" and "social comparison" on expectations. How do these figure into happiness?
 
We compare ourselves with others — trying to keep up with the Joneses — perhaps more than we would like to admit. This is expressed in our formula: Happiness equals "what I get" minus "what others get." Our book cites a research study conducted with students at Harvard who were offered a choice of living in one of two hypothetical worlds. In World A, they would earn $50,000 while other people earned $25,000. In World B, they would earn $100,000, but their peers would earn $200,000. The majority of the research subjects chose World A, preferring the lower income of $50,000 because their relative income would be higher than that of their peers.
 
Our consumer society tempts us with things that give us quasi-happiness and invite us  compare ourselves with others. If you think you need to own more conspicuous items to be happy, maybe you’ll work two jobs to earn more money, but end up stressing out and neglecting your family. No amount of success can increase your happiness if your expectations and social comparisons remain unchecked.
 
It becomes a vicious cycle. Can we sidestep it?
 
You can reframe your expectations — view them from a different perspective. When those comparative thoughts come — and they will — it is our choice to either brood on them and make them toxic or to see other aspects of life and be thankful that where we are is wonderful. I might think, for example, "My friend who works in a private-sector company makes more money than I do." Instead of brooding over that, I can remind myself that here at UCLA, I have more flexibility with my time than my friend does, and that I work on a beautiful campus with very pleasant people who are not out to get me.
 
We can also train ourselves to stop comparing. Happy people are those who don’t worry too much about what others have or think. John Wooden said: "Don’t worry about being better than somebody else, but never cease trying to be the best you can be. You have control over that, not the other." If you practice this, it becomes second-nature after awhile.
 
So who’s the happiest?
 
Studies in the World Happiness and the World Values databases suggest that, around the world, happiness is high among people with lots of friends; the young and the old, married or cohabitating, healthy and self-employed. Income has a moderate effect, but relative income matters the most.
 
The main message is that when it comes to the acquisition of material goods and money, beware: It’s not going to make you happy. Companionship, friendship, relationships with your friends and family, doing something you enjoy, hobbies — these are the things that will make you happy, because these are basic goods. When you’re enjoying a meal with a friend, you don’t care whether other people are noticing you or not.
 
Should happiness be considered in public policy – including rethinking the concept of the Gross National Product (GNP) as a measure of a country’s progress?
 
Robert F. Kennedy said in 1968 that the Gross National Product "measures everything … except that which makes life worthwhile." While that’s an exaggeration, because income also improves happiness to a certain extent, the problem is the GNP’s single-minded focus on income. Countries have begun to think about this. In 2002, Bhutan switched from Gross National Product to Gross National Happiness, indexing things like education, health, psychological and emotional well-being, and good governance.
 
Recently, leaders from Britain and France created a committee to look at people’s well-being. And in the U.S., the Gallup Poll started collecting data on people’s well-being about two years ago.  I believe that, ultimately, policymakers do want greater well-being for people, but they have to think about it explicitly. It’s not about giving up on economic growth, but we should look at well-being as well as economic growth. The assumption that more money will automatically make people happy is not correct. We need to look at other dimensions that improve the quality of life for all citizens. 
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For more, see Sarin in a video discussing "Does more money buy you happiness?"