People want economic security and to be left alone

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In a recent interview, Chamath Palihapitiya said, “people just want economic security and to be left alone”. The ‘left alone’ part needs no explanation, but what exactly does economic or financial security mean?

Economic security or financial security is the condition of having stable income or other resources to support a standard of living now and in the foreseeable future. It includes:
– probable continued solvency.
– predictability of the future cash flow of a person or other economic entity, such as a country.
– employment security or job security
Wikipedia

To have economic security, you need to have and maintain a reasonable standard of living. Beyond the basic needs of shelter, warmth, and food, this standard tends to be heavily comparative and determined by the living standards of those around you. Someone who has a standard of living near or above the average of those they interact with will feel like they have economic security. However, this standard of living must be sustainable through continued solvency, a predictable future cash flow, and job security.

Continued solvency means that you have more assets over time than you have liabilities, so the total value of equity in your house and car and the amount you have in savings and investments is greater than the value of your mortgage, loans, and credit card debt. The predictability of cash flow means that you have a good idea of your income over the next few months to a year, either through a reasonable promise of continued employment as an employee or entrepreneur and/or a stable investment income from stocks, bonds, or a pension. Employment security refers to the confidence that if you continue to do your job, you will keep it and that you have control of your continued employment.

Anything else?

Beyond a comfortable living, what other factors are essential in living a happy life? Since early 2019, the Office for National Statistics (ONS) has been identifying and tracking metrics that the government can use as a measure of prosperity separate from the financial measurement of Gross Domestic Product (GDP).

According to this well-being study, you are happier in Britain if you have a high level of perceived health, are married, employed, own your home, and earn slightly above the average household income of £29,900 per year. You are also happier if you are female. Multiple studies show that self-reported life satisfaction is heavily age-dependent following a U shape, with a dip in happiness in your late thirties and early forties.

So if you want a safe bet at happiness, you need to find a stable job that pays just above the national household average, live below your means, avoid unsecured debt, build security with additional income streams, stay healthy, get married and buy your home.

If you are a government, you should focus your efforts on getting as many people as possible to the situation described above and then leave everyone alone.

Happiness by Design

I was looking through my bookshelf and came across a book on happiness I had almost forgotten. Paul Dolan, an LSE Professor of Behaviour Science, a government policy advisor, and a bodybuilder, wrote Happiness by Design: Finding Pleasure and purpose in everyday life. The book is full of science-based facts about happiness and practical advice on exploiting this to become happier.

Outstanding, cutting-edge, and profound. If you’re going to read one book on happiness, this is the one.
Nassim Nicholas Taleb

Here are ten of my favourite lessons from the book:

Happiness is a noble and serious pursuit for all.
Happiness is all that matters in the end, happiness also causes a range of other good outcomes, and it is contagious.
Happiness should be measured according to feelings (experiencing self) over time rather than from the constructed evaluative self; listen to your real feelings of happiness rather than to your reflections of how happy you think you are or ought to be.
Love, life, and the universe are about the pleasure-pain principle. We should all be seeking to maximise the sentiments of pleasure and purpose for ourselves and all those we care about. We care about the suffering of the worst off in society.
If you are not expecting to benefit from your current course of action, and don’t expect others to, either, then the answer is actually quite straightforward-change course; giving up happiness now for later happiness that never comes is truly tragic.
Your attention (‘reach forward’ in Latin) is the allocation of a scarce resource (economics); your attention will be unconsciously pulled around by specific contexts as well as being allocated consciously (psychology). The production process of happiness allows you to reallocate your attention to become happier by deciding, designing, and doing.
It is easier for you to nudge yourself happier in small but effective ways than it is to try to “shove” yourself into becoming a whole new person or adopting a wildly different lifestyle.
Much of what we do is governed by contextology and not just your own internal psychology; you can approach situations that will make you happier and avoid those that make you unhappy. We have some control over the situations we place ourselves in and much less control over our predisposition to act in particular ways once we are in those situations.
The more time you spend attending to the things that make you happy, the happier you will be. And stop doing things that make you miserable. Change what you do, not how you think. You are what you do, your happiness is what you attend to, and you should attend to what makes you and those whom you care about happy.
Future happiness cannot compensate for current misery; lost happiness is lost forever. Powered by your own supercharged attention production process, there is no better time than now to crack on with finding pleasure and purpose in everyday life.

I highly recommend that you pick up this book and give it a read.

Social norms

Social norms are incredibly impactful on our behaviour and happiness, and a person’s social network creates these. The impact of social norms can help us understand why people behave the way they do and have adverse outcomes counter to their goals. Deliberately cultivating your social network allows you to create social norms to help you live the life you want.

Research carried out on the Framingham Heart Study, covering 12,000 people over 30 years found that obesity, smoking, and happiness levels appear to spread through social ties. The researchers wanted to know how social factors affected the spread of behaviours friends, siblings, spouse, and neighbours. The research found substantial impact, not only in a person’s immediate network but also across three degrees of separation in social networks.

In the study of the spread of obesity, researchers found clusters of obesity that could not be explained by overweight people selectively choosing to be in networks with overweight individuals. The study suggested that your chances of becoming obese increase by 57% if you have a friend who becomes obese. The effects did not appear to be related to the levels of obesity in neighbours or people in the same geographical location. Interestingly the influence was more substantial when the social connection was with a person of the same sex than from someone of the opposite sex.

Follow up study looking at the person-to-person spread of smoking behaviour concluded that social ties had a similar effect on smoking. The study suggested that whole groups of people were quitting together, a person’s chances of quitting were improved by 67% if their spouse stopped, 25% if a friend stopped, and 34% if a coworker stopped smoking. Again, the effects did not seem to be impacted by neighbours. Education levels did affect smoking behaviour changes, clusters of more educated friends having more influence on each other.

The same researchers then used a subset of the data to ask if changes in happiness spread within social networks. The study found that an individual’s happiness depends on the happiness of people in their network. The effect was again seen up to three degrees of separation, meaning your happiness is impacted by the friends of your friends’ friends. Changes in happiness are affected by your social network within your immediate geographic location and are reduced time and geographical distance.

People around us have an enormous impact on our behaviour due to the social norms created by members of this group. Social norms are the collective behaviours we perceive as acceptable, both in the actions people in our social group show us and the group’s approval in reaction to that behaviour. If people in our friendship group normalise behaviours like weight gain, smoking, or happiness, then it changes how we think and what we feel we should do. This can help explain why some people find it hard to lose weight, save money or exercise even when they know it is the right thing to do and desperately what to do it.

It is important to note that we are an active part of the social networks we belong to. We should make deliberate choices in all aspects of our lives to create social norms that align with what we want in life by selecting the groups of people we interact with most and our reactions to their behaviours.