Economics of happiness

For almost as long as I can remember, economics has been under fire both from within and outside. From within, as attempts were made by economists to record the peculiarities of human behaviour and document the various decision-making models that run in our heads, this subject eventually came to be known as behavioural economics.

From outside, the attacks came from the users of economic models. Like angry users of defective cars, they castigated the economics establishment for presenting the wrong service to meet a specific need or for meeting the wrong need with the service that they have. So on the one hand, many economic models were flawed in their construction, and on the other hand, the economics objective of trying to 'maximise utility' had the wrong definition of utility.

Utility started out as a measurable concept, an odd simplification of the concept of understanding and measuring human motivation. This was because of the rather odd obsession that economics had with being a 'higher' science. Hence, it was mathematical in its language. It looks comical today that anything that concerns itself with human behaviour would at all try to be mathematical, precise or even logical in construction, but the historical process of evolution takes us through strange pathways.

One of the very interesting offshoots of this very interesting evolutionary pathway is the replacement of the concept of utility with a new definition of happiness. It is not mentioned much in the mainstream media because it is just an incipient trend, but if the objective changes, then the ramification of that will eventually be to change the entire body of underlying knowledge, transforming the entire body of economics.

To start with, what is happiness? Only after you have defined it well will you be able to check how much of the current economic decisions and their modelling is actually even devoted to the pursuit of happiness. Just being provocative, but when is there going to be a parliamentary discussion on whether the Indian woman is getting her orgasms, as part of her marital (or sexual) rights?

But I must explain myself, and to do that, I must first proceed to define the meaning of 'happiness', at least, as much as I have understood it myself. The basic dictionary definitions are many, and I will leave you to do the research yourself, but Wikipedia has a page on happiness economics, which says, "The economics of happiness or happiness economics is the quantitative and theoretical study of happiness, positive and negative affect, well-being, quality of life, life satisfaction and related concepts, typically combining economics with other fields such as psychology, health and sociology. It typically treats such happiness-related measures, rather than wealth, income or profit, as something to be maximised. The field has grown substantially since the late 20th century, for example, by the development of methods, surveys and indices to measure happiness and related concepts. Its findings have been described as a challenge to the economics profession.

Prof. Raj Rangnathan runs perhaps one of the most popular MOOCs (massive open online course) in the world on www.coursera.org, and he defines happiness as having seven elements. He conceptualises happiness as a dynamic concept, like a balloon that inflates when your behaviour pursues happiness and deflates when you choose other priorities. The surprising conclusion is that happiness is not always a priority. In fact, it is at the top of a pyramid that is made up of lower building blocks like survival, security and ego. And these lower-level needs always take precedence, not necessarily in that order. For example, a large number of impulsive irrationalities are seen when the ego takes precedence over happiness.

Consider the need to be right. There are two partners A and B. Partner A is fat and unhealthy. Partner B has been admonishing Partner A, cajoling him to take care of himself. Many years into this, Partner A meets a young, attractive girl who tells him to look good, and on her advice, this guy becomes a health faddist.

Does Partner B just smile and let it pass? After all, Partner A has come to the right conclusion, even if it is due to someone else's advice. No. The need to be right is paramount, so Partner B has to say, "I told you so."

When people were asked what Partner B should do, 86 per cent said that she should gloss it over, while 14 per cent said she should mention that she has been saying this all along. But when people were asked what they themselves would do, the first number came down to 76 per cent. Twenty-eight per cent people chose to be right rather than effective.

This brings use to Prof. Rangnathan's seven deadly sins of happiness. They are
as follows:
Devaluing happiness: As mentioned above, the lower-level priorities of security and ego needs take priority in most of our micro behaviours. Happiness has to be understood, defined properly and then prioritised before it can be enjoyed. Half of all happiness is available to the person who makes conscious choices.

Chasing superiority: The need to be 'superior' creates a constant stress, which allows the ego to take over your personality. This ego state is a constant treadmill, which wears out your mind space, leaving no space for peace and tranquillity, without which happiness cannot take root.

Being needy/avoidant or asocial: Extreme behaviour towards both needing social support and avoiding it creates the same tension/stress, leaving little space for happiness. The former is an ego state that needs constant reinforcement and validation, while the latter is an egotistical, judgemental state that looks down on people. Both are dysfunctional, the ideal middle being a state of detachment that allows your mind to be independent of social outcomes.

Being overly controlling: Constantly worrying whether things are 'in control' is like the Gauls (of Asterix fame) constantly worrying that the sky is falling on their heads. 'Control freaks', as these people are called, get onto the treadmill of trying to control the uncontrollable. They turn to constant nagging, which affects their social relationships.

Distrusting others: Trustworthiness is a public good, like civic consciousness or traffic safety. Learning to proactively trust works in two different ways: mistrust is insidious and pernicious and trust is really the bedrock of love, which is almost a necessary condition for happiness.

Distrusting life: To live a life where you are detached from outcomes also empties out your mindspace of stress. Notice that vacating mindspace from the treadmill of 'caring' often frees up the mind for happiness. The obsession with the future gives way to an existence with the here and the now. For this, a particular skill has to be developed and that is called mindfulness.

Ignoring the source 'within': Mindfulness/ meditation is a big tool for stress relief, now made famous by yoga.

Habit overcomes the sin, and exercise reinforces the habit - it's like dieting. You have to control your intake of calories (eating) and increase your offtake (exercise). Similarly, good habits reinforce happiness, while bad habits reduce it. For example, you can be right or you can be happy.

There is no correlation between academic and career success, and even less correlation between career success and life success. Economics is finding that many of its users are now defining success beyond money and tangible things. For the intangible, even spiritual objectives, you need flexible models that incorporate all the complexity that is embedded in human behaviour.

The proverbial genie asked for three wishes and only 6 per cent of the people said they would ask him for happiness. Most ask for money, fame/success and relationships.

As it embraces this complexity, economics will come down to be the most important of all professions, a life skill that you simply cannot do without.