Sunday, February 15, 2015

How to be happy and build socialism (for real this time)

Recently a couple of friends started a mail discussion on where to live. Some people like to choose places with interesting work opportunities but I think that approach maximizes the wrong thing. I think that happiness should be the ultimate factor. When it comes to happiness the more important question is how to live instead of where to live.

So how should you live? I think science, namely psychology, can now offer an excellent answer. In the last couple of decades psychology evolved from a "quackery" into a solid science. The Happiness Hypothesis book by Jonathan Haidt does an excellent job of presenting the latest research on happiness. I particularly like Haidt's thorough scrutiny of known facts. For example, it is known that married people are happier. But are they happier because they are married or are they married, because they are happy and thus more attractive to others?

Here is my short summary of the book.
  • Perhaps the most important factor is how well socially connected you are—your family, friends or local community are very important. When it comes to a local community, I have been a member of various sport clubs or volunteering groups and many of my happiest memories come from these communities. And don't let me started on all the memories with friends.
  • Some people mistakenly equal comfort and pleasure with happiness, but it doesn't work that way. If you derive happiness from drinking wine, after a while it wears off and you would need to upgrade to a more expensive wine or find something else instead (see hedonic treadmill). Stoics and Buddhists were right: go ahead and take a cold bath!
  • Nietzsche was right when he said "That which does not kill us makes us stronger". In the last 4 years I have struggled with health problems, but I think I'm happier as a result. I really appreciate ordinary things like a good friend or a day without pain. Also, lack of adversity is one of the reasons why overprotected kids end up being less happy adults.
  • Money only buys you happiness until a certain level of income and then they don't matter anymore. If you want to use money to increase happiness, use them on other people or buy experiences instead. There is also new evidence that saving might be the best option.
  • Altruism is a great source of happiness. Giving a gift is more beneficial to the person giving the gift rather than the one receiving it.
  • Work is not as important as most people think, but it has a measurable effect particularly if you have some autonomy in your work. Also, many people experience flow when they are immersed in a challenging exercise. I remember countless nights when I barely drank or ate until a particular math or programming problem was done.
  • Genes and early environment are an important factor in happiness but they are the thing of the past, so there is little you can do.
  • The place where you live is not as important as people think. You'll be as happy in sunny California as in cold and dark Tromsø. Although there are some environmental factors that stress you out and make you less happy, like commuting or high noise levels. Stress in general is a bad thing and not just for happiness.
  • Some sense of morality and meaning of life are important too. Traditionally these have been provided by religions but atheists also need them to be happy.
If I were to sum up the book in one sentence, it would be "Relationships matter the most and career, money and comfort are overrated." Your grandma would probably tell you the same thing, but it's good when scientific findings agree with reality for once.

Live like my parents

My parents have lived their life as preached by Happiness Hypothesis even though they haven't read it. They have very strong social ties, spend money mostly on travelling and don't work a lot.

For example, my father is a doctor but he is better known as the head of an orienteering club. He doesn't have an impressive professional career but he has a spectacular career as a volunteer. Did you know that Pezinok once hosted the World School Orienteering Championships? Alright, you have probably never heard of the small town Pezinok, but still...

When it comes to money, they spend most of it on experiences. My brother and I didn't have a lot of fancy things while growing up, but by the time I was 10 years old I have been to half of Europe. They still travel a lot with their small community of 20–30 people, doing things like biking for a week in the Alps. Most people my age wouldn't dare to go on the bike tours these almost retired people manage to do.

Economic systems

Do you know what is absolutely essential in capitalism? Reputation and trust. When you buy a meal in a restaurant, you trust the employees that they will not serve you spoiled food that makes you sick. If they did that, you wouldn't come back and you would tell all your friends to stay away from the restaurant. The reputation of the restaurant would get damaged, people would trust them less and the restaurant would get fewer customers. They might lower their prices as a result.

If this happened repeatedly, you would mistrust restaurants altogether and stop eating out. This would then lead to an inefficient outcome: you could be doing your normal job instead, get a higher salary for that and then use it to buy an excellent meal. Instead you forgo your salary and cook a mediocre meal at home, while the restaurant decreases its revenue. When people don't trust companies, everyone is worse off—the regular people as well as the companies. By the way, high level of trust (and capitalism) is one of the secrets behind the Scandinavian success.

Sometimes capitalism doesn't lead to good outcomes. People near a major tourist attraction just come and go, so the owner of a restaurant might not care about reputation and serve bad food (word of advice: don't shop near tourist attractions). In a closely knit community you can't afford cheating like that, because people would gossip about you and maybe even exclude you from the community. Evolutionary psychologists theorize that our obsession with gossip makes a community well-functioning. Gossip is a great tool, you quickly get to know who's a cheater and who's honest.

When you are doing transactions in a community, you rarely pay the market price, if you pay at all. When you help a friend move, you might get a lunch as a reward. Even a friendly outing to a bar is a transaction: you trade your time and company in exchange for theirs.

Being a member of a community gives you access to goods that capitalism is bad at providing. Only a friend's hug feels like a friend's hug. Only your grandma can cook a pork knee exactly like your grandma. Only your friend can plan a vacation tailored for your small gang taking into account everyone's preferences. No company can ever do those things, although the Japanese would disagree.

The economic system I just described is very similar to socialism. Socialism and capitalism have both its place in a society and both have advantages and disadvantages. Once you start applying them where they don't belong, you'll get into trouble. If you charge your partner each time you have sex, your relationship won't last long. If you make a whole country use socialism, it will also end in a disaster, because it takes enormous brain power and gossip to track reputation in a huge community. The people who founded the Soviet Union overestimated the capacity of our brains by a factor of about one million.

A small community has a cultural advantage in addition to an economical one. You can ignore your country's culture, since you spend most of your time in your own subculture. You can also ignore politics to a large extent. When a politician messes up unemploymeent benefits, you stay calm, because you have 10 people who would help you if needed.

Work is less important

Apart from work not being the main factor in happiness, I see many other problems with prioritizing work over everything else. For example, if you move to a different place solely for work, you severely cut your social ties. Most people think they will find new friends in the new place, but that rarely works out. Most expats end up befriending other expats and only integrate with the locals very slowly. If you really want to prioritize work, choose a place with more expats.

I also realized that where and what I work with doesn't matter that much. I like to do many things and most of them can be done almost anywhere.
  • I really enjoy writing and people seem to enjoy reading my articles. My most successful post I wrote for Spotify has been viewed 49 000 times until now.
  • I also like to organize vacations for my friends and they trust me that I pick good places. In the summer I can barely focus on regular work and I often procrastinate by planning vacations.
  • From the jobs I have actually been paid to do, I have enjoyed teaching the most. That is another option that can be done almost anywhere.
All jobs mentioned above—writer, travel guide and teacher—usually don't offer high salary, but that is not an issue if you don't care about money, as I explain below.

Early retirement

My life turned around by 900 degrees (that's 360 + 360 + 180 for the mathematically inclined) when I started reading about saving, investing and early retirement. Did you know that you can retire in 17 years if you manage to save half your salary every month?

What happens when I save enough to retire? I won't start laying around doing nothing! I might just do something else than before, like starting a travel agency specializing in bathing in ice-cold lakes all over the world. Perhaps I could write books or teach courses about bathing in those ice-cold lakes. These ideas might not be very profitable but that doesn't matter, since my investments would provide enough income anyway. Interestingly, I achieve flow more often when working on hobby projects than in regular jobs, so doing this should also increase my happiness. And I would also like to work less than 40 hours a week to have times for activities and people that make me more happy.

You might think that saving 50% is impossible, especially in this economy. This is nuts, because you have it 10 times easier than your great-great-grandmother. People in the US spend less than 13% of their income on food, while in 1950 it was 30% and I bet similar development has happened all over the world. A couple of centuries ago sometimes even 100% of your income wasn't enough during a famine. People are so poor that whenever I go to a shopping mall in any modern country, it's always full of people. With such enormous economic prosperity and wealth people still have trouble surviving from paycheck to paycheck and happiness is not increasing. Everything is amazing right now and nobody is happy.

Buying expensive things doesn't make you happy, so why would you waste money on them? If you imagine yourself retiring in 15 years and having more time to do things that make you truly happy, getting rid of your expensive habits becomes a piece of cake.

The rise of the robots and artificial intelligence is also a very good reason to save as much as possible, because we will all lose jobs sooner or later.


The message of all the knowledge about economics, stock market and the science of happiness is crystal clear to me. Use capitalism to get wealthy, retire early, embrace the power of socialism and increase your happiness in the process. Marxists used to say that socialism is the next step after capitalism and I guess they were right. I still think that Marxism is a dangerous ideology that killed at least 100 million people, but deep inside of it lies a bit of truth.
A good place to look for wisdom is where you least expect to find it: in the minds of your opponents. – Jonathan Haidt in Happiness Hypothesis