The Structure Of Happiness : Understanding The New Objective Of Economics



For almost as long as I can remember, Economics has been under fire both from within and without. From within, attempts were made by economists to record the peculiarities of human behavior and document the various decision-making models that run in our heads. This subject eventually came to be known as Behavioural Economics.

Declaimer: This article was originally in October 2017, and some of the data points may be outdated

The Definition of Utility

From without, the attacks came from the users of economic models. Like angry users of defective cars, they castigated the economic 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 of the economics models were flawed in their construction, and on the other hand, the Economics objective of trying to ‘maximize utility’, had the wrong definition of Utility.

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

The Concept of Utility

One of the very interesting offshoots of this exciting 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 Economics.

To start with, what is Happiness? Only after you have defined it well, will you be able to check how much of current economic decisions and their modeling, is 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?

The Meaning of Happiness

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 treats such happiness-related measures, rather than wealth, income, or profit, as something to maximize. 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 in the world on, and he defines Happiness as having 7 elements. He conceptualizes Happiness as a dynamic concept, like a balloon that inflates when your behavior pursues Happiness and deflates when you choose other priorities. The surprising conclusion is that Happiness is not always a priority 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.

For example, the Need To be Right.  There are 2 partners, and one of them is fat and unhealthy. The other partner has been admonishing, and cajoling the first one to take care of himself. Many years into this, the first (unhealthy) one meets a young, attractive girl who tells him to look good, and on her advice, this guy becomes a health faddist.

Does his partner just smile and let it pass….after all, he has come to the right conclusion, even if it is on someone else’s advice.

No, but the need to be Right is paramount, so he has to say, “I told you so”. When asked what the first partner should do, 86% said he should gloss it over, while 14% said he should mention that he has been saying this all along. But when asked what THEY would do, the number came down to 76%, i.e. from 14%, the number doubled to 28% choosing to BE RIGHT, rather than effective.

So Prof. Rangnathan’s Seven Deadly Sins of Happiness are:
  • Devaluing Happiness: as mentioned above, the lower-level priorities of necessities, security, and ego need to take priority in most of our micro-behaviors. 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 constant stress, which allows the ego to take over your personality. This ego state is a constant treadmill, that wears out your mind space, leaving no space for peace and tranquility, without which Happiness cannot take root.
  • Being needy/ avoidant, or a-social: extremes of behavior towards either needing social support or 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: Another pattern of behavior that fills up mind space and therefore, creates stress. 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 into another treadmill of trying to control the uncontrollable, they turn into nags, which otherwise affects their social relationships.
  • Distrusting others: Trustworthiness is a public good, like civic consciousness or traffic safety. Learning to proactively trust, works in 2 different ways: mistrust is insidious and pernicious, while trust is 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 your mind space 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. I won’t deal with this, for lack of space.

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

The Correlation between career success and life success

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

The proverbial Genie is asked for his 3 Wishes: and only 6% 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. It will not be simple, and cannot be dealt with in a single column, but I will try and bring home to you a commentary on this journey, if not a primer on how to make your life more successful, if not happier.



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