Attitude is one of the many, if not the primary component that determines your behavior. Your behavior affects how you deal with the markets. More importantly it can affect your views and beliefs on “Happiness.”
A study done by the University of British Columbia and Harvard Business School, published in The Journal of Positive Psychology [i], has shown that a person who earns more money, isn’t necessarily a happier person. Meaning that if happiness was measured as a positive value of ten, where ten relates to absolute blissfulness, and one relates to absolute misery, people who make more money do not get any closer to the holy grail of happiness.
I won’t go over the study line by line, but here is a quick review of the study’s main points.
People who are making $25,000 landed on the scale of happiness at 7.000 and people making five times as much ($125,000) landed on the scale at 6.705. One would assume that people making five times as much should be happier, but it doesn’t seem to be that way.
Here is an example to illustrate why I feel people making more money slide down the scale.
Meet Bob. Bob lands, his first job and is making $25,000 a year. Say we can quantify Bob’s happiness for the year, where 10 is absolute blissfulness and one is absolute misery. Bob lands on the scale at 7. Bob is a hard worker and gets an even better job because he goes to night school and gets a bachelor’s degree. Bob lands an amazing job because of his higher education, and can now afford a larger place and a nicer car. This all happened within several years. Bob is now making $125,000 a year before taxes. Bob is doing a lot better than the average person in terms of monetary wealth. Now let’s say we can quantify Bob’s happiness again. It hasn’t moved up at all. Actually, it’s even lower than before. It now stands at a 6 on the same scale. Bob makes nearly five times more money than he made before, but he isn’t happier. Why? My opinion as to why Bob isn’t any happier; Bob suffers from “Survivorship Bias”[ii]. This means he compares himself to the other “survivors.”
Bob sees successful people around him and is constantly hearing stories of grand vacations and amazing trips on yachts. He is constantly seeing people buying expensive cars. Bob regularly attends networking events to further his career. These networking events are great for furthering his career but there is one problem. Again he is privy to stories of exotic vacations, automobiles and expensive worldly possessions. Bob’s attitude starts to shift. He is starting to see only the people that have survived and prospered in life. He doesn’t see all the people that haven’t made it, like some of his old co-workers and classmates. Even though Bob has done tremendously well in terms of a western lifestyle. He makes more than two times as much as the average American in terms of salary and is amongst the top 10% earners in America.[iii] He is also in the top 0.49 percentile of world average income earners. He has accomplished a lot in his life, but he considers himself a failure. He continually measures himself against winners. He only sees the survivors. He has forgotten about all the non survivors.
Bob needs to be reminded of his accomplishments in life. A simple suggestion to all people, for every goal that you accomplish in life, just place a simple sticky note on your bathroom mirror reminding you of what you have accomplished. Also have another set of written goals somewhere else in your house. Anytime, you complete one just move one to your bathroom mirror to remind yourself of what you have accomplished.
I also want to clarify that there is nothing wrong in wanting more. Wanting more in my books is an excellent attitude to have. However, along the way to wanting more remind yourself of what you have wanted and already obtained, this way you can avoid the pitfalls of the “Survivorship Bias.”
[i]Aknin, Lara B., Norton, Michael I. and Dunn, Elizabeth W.(2009)’From wealth to well-being? Money matters, but less than people think’,The Journal of Positive Psychology,4:6,523 — 527