The secret to happiness

One of the best sessions I attended today presented the ultimate formula for achieving happiness:
Expected happiness = Odds of gain X Value of gain
Unfortunately, Daniel Gilbert (of Harvard) spent the rest of his presentation revealing why this formula can't possibly work.

First, we humans aren't so good at calculating odds. We overestimate things that are easy to bring to mind or that are covered vividly in the media, such as the number of tornado deaths or the likelihood of winning the lottery. Meanwhile, we underestimate the stuff we don't hear about as much, such as asthma deaths. (If each lottery loser were given as much media time as each lottery winner, imagine how lottery ticket sales would decline.)

Second, we're not any better at estimating potential value. This happens largely because we compare things with the past rather than with the possible. Compared with past experience, a $25 Big Mac is ridiculous. But compared with being on a plane for 20 hours and starving with nothing else to spend $25 on, it starts to look like a good deal. There are many studies that reveal that humans judge value contextually, and that we're primed to react to change more than absolute values. He had an array of psychological studies that blew my mind.

In other words, our human instincts for decision-making generally suck. But an awareness of exactly how we suck can help us see past our limitations and ultimately make better decisions - and thus be happier. Ain't that sweet?