Morgan Housel | The Motley Fool Investor: Why we're bad at predicting happiness

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My wife and I used to live in Southern California. Now we live on the East Coast. Hardly a day goes by that we don't miss California's weather. Los Angeles is 70 in the winter and 80 in the summer. The East Coast basically has two temperatures: Repulsively hot and inhumanely cold.

Here's what's hard to come to terms with: We miss California's weather because we think it would make us happier. But there's no evidence, either for us or anyone else, that Californians are happier than then their East Coast counterparts. The happiest states in America are the Dakotas, Nebraska and Minnesota — home to some of the most insulting climates in this hemisphere.

Daniel Kahneman wrote about this paradox in his book "Thinking Fast and Slow." He and a colleague surveyed students from California, Ohio and Michigan. Here's what they found:

"As expected, the students in the two regions differed greatly in their attitude to their climate: The Californians enjoyed their climate, and the Midwesterners despised theirs. But climate was not an important determinant of well-being. Indeed, there was no difference whatsoever between the life satisfaction of students in California and in the Midwest."

Many variables

The short explanation is that when we think better weather will make us happier, we're leaving out the thousands of other variables that influence happiness. It's just hard to grasp that when you're in the moment dreaming about nice weather.

Kahneman summed it up with a powerful sentence: "Nothing is quite as important as you think it is while you're thinking about it, so the mere act of thinking about something makes it more important than it's going to be."

Here's a great example. The New York Times ran a recent story about California's most cherished I-wish-I-lived-there city, San Francisco:

"For every person who moves to San Francisco, another two start commuting to work here. Traffic is down to a crawl: The average afternoon speed on the roads feeding into the highways has dropped 20 percent in the last two years. And the BART trains are squeezed tight: Since 2012, average morning rush-hour ridership from the East Bay has risen 30 percent ... A one-bedroom apartment goes for a median $3,500 a month, the highest in the nation."

When someone from the East Coast thinks about how wonderful California weather is, they're probably discounting the dozens of other factors that quickly offset the benefits of sunny skies. Like long commutes. Absurd traffic. Expensive rent. A boring job. Life goals still unaccomplished. All of these things can be more influential on happiness than pleasant weather. And they're all as ubiquitous in California as they are in Maryland. The things that do generate happiness — family, friends, autonomy at work, working for something bigger than yourself — aren't biased by climate or geography.

Bigger than money

Money is similar to weather — something we dream about but overestimate when predicting happiness. Here's Kahneman again:

"On average, individuals with high incomes are in a better mood than people with lower income, but the difference is about a third as large as most people expect. When you think of rich and poor people, your thoughts are inevitably focused on circumstances in which income is important. But happiness depends on other factors more than it depends on income."

All of us invest because we have goals, and most of those are designed to make us happier. By and large, they will. But I'm often amazed at how much effort we put into chasing things that probably won't do us any good while discounting and ignoring the stuff that probably will.


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