The Secret to Happiness: Where Buddhism and Behavioral Economics Meet

Lower Expectations, Higher Happiness

Vivekananda Das
4 min readJan 9, 2022
Photo by Kamesh S S on Unsplash

Humans often disagree on most things: from arguing over the best restaurant in town to the greatest footballer ever. However, most humans — ancient or modern, from the East or the West, living in the mountains or deserts — would agree that the ultimate purpose of any human endeavor is to find “happiness.”

And sometimes, we do find happiness from both individual and collective successes. But, as Buddha suggests, the fundamental predicament of life is that happiness derived from worldly successes does not last forever.

In fact, contrary to our expectations, suffering — the exact opposite of happiness — often pervades our lives. Once back in college, one of my friends, while referring to the sine wave on an oscilloscope, said, “If we could plot happiness over time like the voltage, it would follow a similar pattern!”

Regardless of the true shape of happiness over time, my friend, at least in philosophy, was not wrong after all! None of us knew about Daoism back then, but he was on the right track: happiness and sadness often come in phases.

This is what my friend was referring to (but I have no idea how happiness evolves over time!)

Buddha apparently found a solution by identifying the cause of suffering and proposing an intervention. According to Buddhist philosophy, “unfulfilled” expectations cause suffering. Given the causal assumption is correct, logically, if we do not have any unfulfilled desires, we cannot suffer; in other words, we find something we may call “happiness.”

But how can we avoid the trap of unfulfilled desires? Buddhist suggestion is quite simple: just avoid any desires. No desire would lead to no unfulfilled expectations, which, in turn, would lead to no suffering (happiness).

The above pathway may seem radical and extreme — perhaps it only makes sense for monks and nuns. How about us ordinary humans: the ones not necessarily “aspiring” for nirvana? Can we do something to maximize our happiness?

Last semester, as part of one of my courses, I found this amazing paper by Medvec, Madey, and Gilovich (1995). The authors investigate the emotional reactions of silver and bronze medalists at the 1992 Summer Olympics. According to their findings, despite finishing behind the silver medalists, the bronze medalists appear to be happier!

But how is that possible? The authors argue: the level of expectation makes the difference — silver medalists are more likely to have the expectation of winning the gold, whereas bronze medalists are more likely to consider the possibility of finishing fourth and winning nothing.

Long story short: the happiness we derive from any outcome depends on the relative difference between the actual and expected outcomes. If we achieve more than we expected, we find happiness; if we achieve less than our initial expectation, we become sad.

Working with a simple equation illustrates the point:

Let’s assume someone's happiness can be described using the following expression:

If Actual Outcome ≥ Expected Outcome,

Happiness = Actual Outcome - Expected Outcome

And, if Actual Outcome < Expected Outcome,

Happiness = -2 * (Expected Outcome - Actual Outcome)

You may have noticed that I am multiplying the difference by -2 for the second condition. This is to account for “loss aversion,” which purports that we experience greater unhappiness when we lose something compared to happiness when we win the same thing (Tversky and Kahneman, 1991).

Many empirical studies indicate that if people find X amount of happiness by winning something, typically, they will experience about 2X amount of sadness by losing the same thing (Merkle, 2020).

Let’s think about some real-world scenarios to explore the equation’s implications.

Let’s say I get a 90 on an exam. I expected to get a 93. Then, my happiness = -2 (93-90) = -2*3 = -6 (meaning 6 units of negative happiness)

In case I had a lower expectation, for example, an 87, with the same actual score of 90, my happiness would have been = 90–87 = +3 (meaning 3 units of happiness)

This simple example implies that the lower someone’s expectation is — regardless of the actual outcome of an event — the greater will be her happiness!

Presumably, Buddha is right. Happiness, then, is not necessarily about conquering the world but rather about training ourselves to avoid expectations or, at least, to keep them low.

A relevant practical question is: How far down can we put our expectations without puncturing our motivations? As Daoists may argue, the solution is to find the right balance between expectations and no expectations to make us “sufficiently” happy.

References

Medvec, V. H., Madey, S. F., & Gilovich, T. (1995). When less is more: counterfactual thinking and satisfaction among Olympic medalists. Journal of Personality and Social Psychology, 69(4), 603.

Merkle, C. (2020). Financial loss aversion illusion. Review of Finance, 24(2), 381–413.

Tversky, A., & Kahneman, D. (1991). Loss aversion in riskless choice: A reference-dependent model. The Quarterly Journal of Economics, 106(4), 1039–1061.

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Vivekananda Das

Sharing synthesized ideas on Data Analysis in R, Data Literacy, Causal Inference, and Wellbeing | Ph.D. @UW-Madison | More: https://vivekanandadas.com