Nat Ware on Why We're Unhappy: The Expectation Gap at TEDxKlagenfurt (Transcript)

Nat Ware, founder and CEO of 180 Degrees Consulting, presents Why We’re Unhappy: The Expectation Gap at TEDxKlagenfurt conference.

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I remember being shot the first few times I went to Africa. I was shocked when I met a one-legged taxi driver in Kenya. I was shocked when I met Sonia, an orphan schoolgirl in Rwanda. And I was shocked when I met a disabled subsistence farmer in Mozambique.

What shocked me wasn’t their poverty, but their happiness. I found their happiness confronting — far more confronting than poverty. Of course, not everyone was happy, but of those above a basic subsistence threshold level, I was surprised at how genuinely content many of them were. And I became fascinated in this notion, this idea of happiness.

And since then I’ve researched it, I’ve worked on it, I’ve thought about it. I’m interested in it from an economics perspective. It’s one of the things that I research at Oxford. And I’m interested in it from a social enterprise perspective, because happiness is after all the ultimate social outcome.

And I think it’s particularly appropriate that we talk about happiness today, because we have with us the Prime Minister of Bhutan, the very man who pioneered, who introduced and who championed the idea of gross domestic happiness, rather than GDP as a way of tracking country’s progress, as a way of monitoring how governments are doing.

But before we go into that, I want to begin with a little quiz — a little game. It’s just a simple multiple-choice quiz and I’ve invited some other participants to join us on stage. So I want you to just raise your hand, I want you to answer honestly when I give the questions.

So the first question: imagine that you’re competing in the Olympic Games, imagine that you’re representing your country, what would you prefer out of the following: Would you prefer to come second, to come third, or to come second last? Answer honestly; who would prefer to come second.

Raise your hand. Excellent! Who would prefer to come third? And who would prefer to come second last? Excellent.

Well, it seems like a large chunk of the audience wants to come second last. I’m not sure that I’d be selecting you for my Olympic team. But the monkeys — they select a third, a third, a third — they don’t quite understand the question, but they knew that there are three options. It’s probably no surprise that amongst the general population most prefer second.

So that’s question one. Question number two: imagine that you’re given one of two options — either you win the lottery and you get $10 million, you can spend it however you want; or option B, alternatively you get a very small payment tomorrow but you get gradual payments throughout your lifetime — increasing payments, and in total you’d get $8 million over the course of your lifetime. If I gave you that option right now, what would you pick? Who would pick option A? A lot of people. Who would pick option B? Excellent.

Amongst the general population, most people seem to be quite short-sighted; most people like the $10 million tomorrow. Again the monkeys 50:50. They did recognize there were two options, not three.

Third and final question, you get to choose your salary, what you pick? You get 50,000 and everyone else you know gets 50,000, you get 50,000 and everyone else gets 60,000 — or you get 40,000 and everyone else you know gets 30,000; who would pick option A? Who would pick option B? Virtually no one. Who would pick option C? I think there’s one person in an audience of about 200. You’re pretty consistent with the general population, most go for option A. The monkeys, no surprises there.

But let’s now think about what the actual answers are. Let’s look at what the research says about what actually makes us content? What actually makes us satisfied? What actually makes us happy?

The question one: The answer is actually to come third, which I think was the lowest of the three options that you all gave. There’s no shortage of silver medalists who appear unhappy. So that was question one.

Question two: I think you did better on. You picked option B, you went against the general population and I think you beat the monkeys on this occasion; they beat you on question 1, you won question 2.

And for question 3, the correct answer was actually C, which I think only one person got correct. And so the monkeys beat you on two out of three on those in terms of what actually makes us content, satisfied, and happy as the research has shown.

So I think it’s fair to say that in general you’re slightly better predictors of happiness than the general population, but you’re still pretty pathetic; I’m sorry to say. I think the monkeys beat you, maybe that’s why they’re smiling, but if they won two out of three.

And what’s interesting is that it’s not only us that’s bad predictors of happiness. The macro data actually supports this as well. We’re wealthier than ever but unhappier than ever. We’re more prosperous but more depressed. We’re less satisfied. I mean, we have faster and faster transport, but we’re faster and faster to complain about it. In many countries, there are now more suicides and homicides. We now have more goods and services than ever before. We have technology improving exponentially but we don’t see a corresponding increase in our life satisfaction, in our happiness. It’s perhaps one of the great paradoxes of our time.

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And I think the obvious question is: why is it that governments and individuals are such bad predictors of happiness? Why is that we get it wrong so often? And I think it’s because we don’t really understand why it is that we’re often unhappy.

And so the obvious question is: Why is it that we’re unhappy? What’s the explanation? Now it’s not an easy question to answer, but it’s one that I’ve thought about, that I’ve researched, that I’ve dealt into. And through my research over the years, through thinking about it, I think there’s one explanation that I find far more compelling, far more plausible, far more persuasive than any other. And that explanation isn’t that we have so much choice that we get stressed; it’s not that we’re economically worse off. In many cases, we’re economically better off. It’s not that we just have great reporting of depression and suicide; that’s true but it only explains a small portion of the data. It’s not due to family breakdowns or reduced freedom.

You know, the reason why we’re unhappy — the most compelling reason as shown by the data, as shown by research relates to expectations. At a very basic simple level, we’re unhappy when our expectations of reality exceed our experiences of reality. When our expectations exceed reality. And I’d like to call this an Expectation Gap when our expectations are greater than reality.

It’s a very simple concept but it’s a hugely important concept to fully understand, to fully get our head around. And to help us get our head around it, I’d like to think in terms of three different types of expectation gaps — three different types of gaps based on the different ways in which we form expectations.

I think we form expectations based on our imagination, based on those around us, and based on our past experiences. So to this first type of expectation gap, the imagination gap which occurs when our imagination exceeds reality. You see when we choose to buy goods, we choose from a range of options. When we choose where to travel to, we often choose from a range of options. When we choose which leader to elect, we often choose from a range of options. And how do we make that decision? What we do is that we choose the one that we think will be the best. We choose the one that we imagine will be the best of all the options.

And so what we do is that we try to maximize our utility at a given price, that’s how most people make decisions. To do otherwise would be to choose an option that we didn’t think would be as good, which seems a bit counterintuitive.

Now the problem here is that the very act of choosing the thing that we think will give us the greatest happiness, that very decision-making process is the thing that actually undermines our happiness, because what it means is that when we then see reality, when we then experience that, whether it’s the goods or the place we travel to, or the leader that we elect, it’s highly likely that that reality won’t live up to our expectation. And that leads to disappointment.

And technology makes this so much worse. What technology has loused is things that are actually unrealistic to appear real, things that aren’t even on the happiness scale and made to seem as though they are actually possible. We photoshop things in, we airbrush things out, we digitally enhance photos. And what this does is it makes us romanticize travel and makes us come up with fantastical ideas about places that reality simply can’t live up to.

So we think Sagrada Família looks like this when it actually looks like this. We think the Taj Mahal always looks like this, when actually often it looks like this. We think that the Mona Lisa looks like this, when actually if we go and visit it, it’s more likely to look like this. What technology does is that it skews our vision and distorts reality and makes the unreal seem real.

Indeed, many of the times that when we’re happiest, when we go traveling, they are actually the times when we stumble across things we didn’t expect, when we discover things for ourselves where we don’t have preconceived notions of different places. And what also makes this worse is selection bias. Many content-based algorithms whether it’s Google search or Facebook News Feed, the way that it presents information is that it prioritizes those things that are the best images, the most shared images, the most liked images. You’re more likely be shown a photo on Facebook if it has 200 likes than if it has two. And so we come to think of the best images as being normal, as being average. And this also plays with our imagination — that selection bias.

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Then there’s persuasion, because politicians often get elected on the basis of promising things that they can’t deliver, by raising our expectations. I mean who would you be more likely to vote for a politician that says, ‘I’ll fix your problems if you vote for me’, or someone who says perhaps more honestly things will probably be the same whether you vote for me or not? You’re probably going to vote for the former but you’re probably going to be disappointed as well.

And so we’re in this constant cycle of expectations being raised and hopes being dashed. It’s the same with companies. I mean, companies are more likely to tell us that watchers have never performed tasks so quickly. They’re probably not going to tell us batteries have never run out so quickly, both of which are true.

And so when you have technology, when you have persuasion, and when you have selection bias, what that means is that we imagine and demand and expect more than reality can provide. And when the limitless potential of our minds is met by the confined nature of earth, we’re disappointed, we’re unhappy. Expectations and disappointments irrevocably intertwined.

In terms of beauty, it’s no wonder that self-esteem levels are so low. I mean, advertisers learned long ago that if you can make people hate themselves, you can sell them things. Now they’re applying it time and time again and we see this. What we see is advertisers showing only the best before and after photos, what we see is pictures of models who are made to seem perfect even though they’re not. We’ve become a society of complainers, of perfectionists, of counterfactual historians — people who always imagine different and better outcomes for ourselves, the people whose imagination can’t be satisfied.

So that’s the Imagination Gap. That’s why our imagination exceeds reality, and that’s the first main reason why we’re unhappy.

The second main type of expectation that we have, I like to call, the Interpersonal Gap. That’s where we compare our reality to the reality of others. Put simply, we judge ourselves based on what we experience around us. If you earn $50,000 and you’re in a poor neighborhood you’ll feel rich. If your earn 50,000 and you’re in a wealthy neighborhood you’ll feel poor. If you get a small pay rise but everyone around you gets a large pay rise, you’ll be disappointed. Your gain is someone’s pain; someone’s pain is your gain. Unfortunately, it’s a bit of a zero-sum game, or so it seems.

And it’s not only relative income that matters; it’s also relative appearance that matters. One person’s plastic surgery is another psychic loss. Indeed research has shown that we’re actually happier when we’re with worse looking people, because we’re perceived by others to be objectively better looking. So now when your friend asks you to come to a bar or to a club with them, you know why. And what’s particularly interesting about this is that we have an asymmetry of emphasis — we prioritize, we focus on one end of the spectrum. We focus on the rich, the famous, the beautiful, and pay less attention to the other end. And so we’re made to seem poorer; we’re made to feel poorer, made to feel less successful than we actually are. It’s almost as though we’re running on a hedonic treadmill, constantly striving to be happy but getting no closer, because when our standard of living improves, if everyone else’s standard of living improves as well, we don’t always feel happier. So that’s the second way in which we form expectations based on others around us.

The third and final way is based on our past — based on our past experiences, I call this the Intertemporal Gap. And we’re unhappy when our past reality is better than our present reality.

Take two people who have the same average lifetime income. The person A whose income decreases over their lifetime; person B whose income increases. Now research shows that you’re always happier if you’re person B, if you have that increasing income, even though the average might be the same. Why is this? It’s because of something that psychologists refer to as anchoring. We compare to our past and if you’re constantly improving, constantly exceeding expectations, constantly moving forward, you’re generally happy. The reverse is true if you’re person A.

And so what this means in terms of raising children? I think often we tend to spoil children; we tend to give them everything to want to give them the best start in life. But often the best intentions don’t always lead to the best outcomes. Yes, we should support children, but if we give them everything, then it’s much harder for them to have what I call a positive intertemporal gradient. It’s harder for them to improve over time throughout their life and that actually potentially undermines their happiness.

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And while I’m talking about parenting, I think another problem in our society is that we tend to tell children that they’re special, that they’re unique, that they’re one-of-a-kind, that they’re amazing. We told them that they can be Prime Minister or President, that they can be the next Mark Zuckerberg. We told them that they’ll be Beyonce one day. What this means is that we raise their expectations. And so when that child gets a normal job, when they start a business and it fails like most do, when they’re seeing career picks with a rendition of single ladies in the shower, they’re disappointed, they’re unhappy: their expectations haven’t been satisfied. Yes, we want to give children self-belief, but we don’t want to delude them and we don’t want to delude ourselves.

So what we see is that our happiness is largely determined by expectations. Our expectations are largely determined by what we consider to be normal. And what we consider to be normal is largely based on our imagination, based on others around us, and based on our past. And so we have these constant battles – the battle between our imagination and our reality, the battle between the reality that we experience and what we think or perceive that others experience, the battle between our reality and our past reality.

How can we win these battles? Well, I think the first challenge, the challenge for entrepreneurs and businessmen, for parents, for legislators, for magazine editors is to take happiness seriously, to take expectations seriously. I think often we relegate happiness to the world of art, not science. We dismiss it, we think of it in terms of hippies rather than businessmen. What we want is for entrepreneurs to focus on actually improving contentment, not just increasing consumption.

In terms of winning the imagination battle, I think it’s important that we make it known to content providers the importance of actually having realistic representations of images, people, and places and events. And we might even go so far as to ban things like digital enhancement in ads.

In terms of winning the interpersonal battle, I think it’s important that governments prioritize income equality and that we learn to compete against ourselves rather than against others.

And in terms of that intertemporal battle, I think it’s important that we support kids, encourage kids but also make them realize when it’s impossible and not to give them completely unrealistic expectations.

Let me conclude: we seem to have been seduced into a way of life that almost conspires in every way against the most basic level of contentment. We’re terrible predictors of what will make us happy. I mean, anytime monkeys beat you, you know there’s a problem. We’re terrible predictors of happiness, because the way in which we rationalize, the way in which we make decisions is optimal on the basis of actual levels, absolute levels, but the way in which we feel is based on relative outcomes, based on expectations.

It’s expectations that explains why a bronze medalist can be happier than a silver medalist, because the silver medalist imagines coming first, the bronze medalist imagines coming fourth. It’s expectations that explains why often lottery winners aren’t that happy; their happiness doesn’t last, because they don’t have that increasing level of satisfaction throughout their life.

It’s expectations that explains why you can be happier with an income of 40,000 to an income of 50,000. We often think of happiness in isolation in a vacuum, when in reality our happiness is far more complicated. It’s far more intertwined with our community, our imagination, and our past.

And it’s important that we think carefully about how our minds work, how our feelings work, how our expectations work. And it’s important that we change the way in which we make decisions so that our thinking process matches our feeling process.

Ladies and gentlemen, for entrepreneurs that want to improve the lives of others, as well as for people that want to be happy, I think the first step is understanding why we’re unhappy. And I hope that the next time if ever it happens that your decision making prowess is compared to that of monkeys, I hope you come out on top.

Thank you.

Nat Ware on Why We’re Unhappy: The Expectation Gap at TEDxKlagenfurt (Transcript)

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