Before you can make any financial plan, you must know why you are doing it and what you hope to achieve. Money is just a vehicle to help us along the journey. It can smooth the ride, or waylay us due to breakdowns without proper maintenance. A central goal for most people is to live “The Good Life”. Happy, satisfying, and impactful in the areas that matter most to us. That means something different to everyone.
Reflecting and concretely defining what that means to you is the first step. Followed by further reflection and refinement along the way. That seems a daunting task. Fortunately, there is a large body of literature that can inform us based on our biology and psychology. Even better, it has been distilled into practical models that we can use.
Lay back, relax, and join us for the first episode of The Money Scope. You won’t feel a thing. Well, except hedonic happiness. Or regret if you don’t.
[00:00:02] BF: Welcome to the Money Scope Podcast, shining a light deep inside personal finance for Canadian professionals. We are hosted by me, Benjamin Felix, Portfolio Manager and Head of Research at PWL Capital. And Dr. Mark Soth, aka The Loonie Doctor.
This episode of Money Scope is going to look deep inside what we’re calling the good life, which really means the life that is evaluated positively by the person living it. We’re going to shine a light on what makes people happy, what they regret, and how money fits into these relationships. Then, in our next episode, we’re going to discuss the money-happiness traps that people in general and professionals in particular fall into.
[00:00:40] MS: All right, so I think we’re ready for a look inside with the Money Scope, and we’re going to try to keep the sedation light for this first episode. So, one milligram of Versed?
[00:00:49] BF: One milligram of Versed is in.
[00:00:51] MS: Okay, intubating, here we go.
[00:00:56] MS: Great. So, we’re going to start off talking a little bit about what the good life is. And having this at the beginning of our podcast series, in the beginning of this episode is actually not accidental. All this is very purposeful. The reason why that is, is because if you know what your values are, what gives you purpose, and what is going to make you feel like you lived a good life, that acts kind of like your true north. So, it’s a compass you can use as you’re setting out on your journey.
Setting the goals that actually plot that course is the next step, which we’ll go into the next episode. And the rest of this series we’re doing is just about money. Money is really, is just a vehicle that we can use on our journey to help us smooth the ride out, or it can make the journey more challenging if we have some breakdowns, depending on how we use money. So, for the journey itself, we must know where we will want to go. So, that’s why we’re going to start off with talking about this.
Ben, you had written a white paper about finding and funding the good life last year. So, people should read that if they want to take a deep look at some of the psychology that we’re going to talk about today. I’ve also written a bunch of blog articles about it as well, in my core financial curriculum. But there’s some great exercises and self-exploration type of questions that are in that white paper, which is useful for people.
It is personal. But as you were writing this Ben, I bet you came up with lots of ideas about some of the key features, and would you be comfortable sharing some of that with us?
[00:02:13] BF: Let’s get into it. And it is personal. I think that’s really important because I’ll get more into this later. But none of this stuff is prescriptive. It’s not telling you exactly what to do. There’s no formula for that. It’s more descriptive for, positive is the way that it would be described, as a type of research. The good life, as I mentioned in the introduction, is kind of the best way that I can think to describe the ultimate objective of financial planning. Again, the good life is kind of a funny thing to say, because it makes it sound like there is a good life, there’s really just a bunch of ideas that can be strung together to create a good life for every individual. But every individual’s good life is going to be different. Because it’s the ultimate objective of financial planning, living a good life. That’s, as you said, Mark, why we’re talking about it at the front end of a podcast about personal finance.
People might be surprised. I remember, at PWL, we had somebody, an external consultant, come to our firm and start giving us training on this, on money and happiness. At first, I was kind of, I don’t know how to describe it. Not surprised. I wasn’t expecting it. It was just why are we talking about happiness? Because I’d come through all this financial education, about taxes and expected returns, and all this kind of stuff. Then, we start talking about happiness. But as you think through it, it just makes sense. Because to make financial decisions, you have to know what your objectives are, and your objectives should be anchored in living a good life. So therefore, we need to understand what contributes to a good life.
[00:03:44] MS: It’s funny, because when I started reading about personal finance, as well, like I really got into a lot of the math, the investing and the taxes of it. Then, when I took a pause, due to my job and working for the pandemic, and came back to it, I really just went back straight to the happiness piece, because that’s the whole point of everything else. If people get lost in the weeds, including myself, because I got lost in the weeds of some of the details you miss, actually, where you’re trying to go with it.
[00:04:09] BF: It’s super important, and we’ll talk a little bit about goal setting in our next episode. But we want to go through the basic information in this one. So, people want to live good lives. I think that’s universally true and understood. Thinking through what actually constitutes a good life is the hard part. But setting financial goals has to align with that, with living a good life for you.
Now, the research on a good life, as I mentioned, is positive rather than normative. That means that it doesn’t tell you specifically what to do. It looks empirically at what tends to make people evaluate their lives as good. Like I said before, calling it the good life is kind of funny because there’s no ‘the good life.’ We can figure out what all the ingredients are that tend to contribute to good lives, and then people can put that together for their own situation. Then that’s important because every person is different and there is not a single good life. We can’t make that prescription. All we can do is learn about what tends to contribute to good lives and then let people, the listeners, decide for themselves what their good life looks like.
Now, in assessing that –
[00:05:10] MS: I guess it’s kind of like cooking. You can have a bunch of ingredients in your fridge, but everyone’s going to mix those together to try to make something that fits their palate.
[00:05:19] BF: I love it. And if you don’t know how salt and fat mixed together to make stuff tastes good, you might make something that doesn’t taste very good.
[00:05:27] MS: Yes, or it tastes great, but you regret it later.
[00:05:31] BF: That’s even better. Okay, so in assessing that, in assessing what is the good life, I think that there are two lenses that I have found helpful. Like when I went through that paper that you mentioned, Mark. Two lenses that I think are very complementary. One is positive psychology. So, that is the empirical study of what makes people evaluate their lives positively. Then, the other one is regret, and that helps us understand what people tend to wish they had done differently in their lives. They’re two very different lenses, but they’re kind of two sides of the same coin. But I think they’re complementary because they do offer unique insights.
[00:06:04] MS: So, we can look at what tends to make people happy and consider how that fits into our own lives and our own tastes, I guess. And you also learn from what other people regret to then avoid learning that one the hard way, or even our own regret to avoid relearning the same lessons over and over again.
But I guess, a prerequisite to be using all of that data, then the first thing we need to do really is understand what it is that we’re trying to measure as happiness because all of this data is semi-quantitative social science, so we need to understand what it is that we’re trying to measure first.
[00:06:39] BF: That is very important. So, when we start talking about positive psychology, they’re typically measuring two types of happiness. One is experienced happiness, or what would be technically called hedonic happiness. And then the other one is reflective happiness, or what would technically be called eudaimonic happiness.
Now, you know hedonic happiness when you feel it. But it tends to fade away quickly and leave us wanting more, and that’s an experience that most people can relate to. Eudaimonic happiness is related to how you evaluate your life. So, one of the most well-known and common instruments for measuring reflective happiness is called Cantril’s self-anchoring scale1 or the Cantril Ladder, and people listening, like you can take a second to do the exercise when you hear the measurement tool.
It asks you to rate your life, your current life on a scale, where zero is the worst possible life for you, and 10 is the best possible life for you. It’s kind of a fun exercise to think about. I don’t know if I think about that every day, but I think about it often. It’s just kind of a neat thought experiment to do. But you can measure it. You can aggregate data on people to answer that question, and you can measure it.
Now, there’s a very clear distinction between feeling good right now, which is hedonic happiness, and evaluating your life as good overall, which is eudaimonic happiness. But both are very important to overall happiness.
[00:07:55] MS: I’m really glad you took that section so you could pronounce all the words for me. But really, you could have the life that you evaluate positively really when you step back, and that’s the reflective happiness. Or you could be stressed all the time and experience misery, which is kind of your experience happiness. So, that’s a good way of looking at it.
It can actually go both ways. You could also spend all day drinking beer in a hot tub, and you’re experiencing happiness all the time. But then you get out of the hot tub and reflect on your life, and you have misery about where you’ve ended up, probably a rash and a beer belly doesn’t help that much either. So, you can actually have both sides of that equation.
[00:08:33] BF: There is that tug of war between the two types of happiness or there can be a tug of war between the two types of happiness, and that’s something – it’s kind of a theme that comes up through this whole conversation. I think a model is important here because this field of positive psychology, like what makes people happy, it’s huge. There’s tons and tons of research. The leading model, I think, is safe to say. I mean, I don’t work in the field of positive psychology, but I’m pretty sure that people in that field would agree that the PERMA model is a very important model in synthesizing all the information in the field, even if it’s not perfect.
So, keeping in mind that the factors in the model don’t have optimal allocations for any individual, they just tell us in general what tends to contribute to well-being. The factors are positive emotion, so feeling good, engagement, relationships, meaning, and accomplishment. Positive emotion, as I just mentioned, is feeling good. You’ll know it when you feel it, the hedonic stuff that we were just talking about. Engagement is getting lost in a challenging task that’s in balance with your skills, which is a state known as ‘flow.’2 Relationships is having strong ties with friends and family.3 Meaning is belonging to and serving something bigger than the self, like being involved with your community.4 Or working on a project like this podcast that you and I are doing together, Mark. Accomplishment is like achievement and competence and success. And then that’s something the research on accomplishment is fascinating. But it’s something that’s pursued for its own sake, even when it doesn’t necessarily lead to positive emotion, meaning, or relationships.
It’s funny, when you look at the research on accomplishment, well, it’s like what I just said, I guess, people seek it for its own sake. But there’s interesting research done on mountaineers, like people who climb mountains, where there’s not a whole lot of reward for doing it, and it’s really uncomfortable and painful. But people do it for the feeling of accomplishment. Some interpretations of the PERMA model also include a V. So, it’s a PERMA V in that interpretation, which is basically like physiological well-being, like sleeping well, eating well, and exercising.
[00:10:31] MS: The V is for vitality.
[00:10:32] BF: Yes, right. Vitality.
[00:10:34] MS: Your physical and emotional vitality. I think that’s a great model. I hadn’t heard about it before I started reading about all these things. But when I look at a model, for me, biggest thing, is it practical? Can we actually use it to help with our decision-making? I think this model actually is useful.
[00:10:51] BF: Like I said before, there’s so much information on this, on well-being and happiness. So, I agree having a model is good.
On positive emotion, I think, this is one of the most challenging aspects of managing well-being. It’s challenging because we are programmed to seek pleasure, but we adapt to it, and we’re limited by how much pleasure we can experience at once. I mean, you gave the hilarious example of sitting in a hot tub, drinking beer all day. We’re programmed to do that. I would rather do that than sit down and do a bunch of really hard work for a long period of time.
[00:11:25] MS: In the short term.
[00:11:26] BF: In the short term. Yes, that’s the thing.
[00:11:28] MS: Yes, exactly.
[00:11:28] BF: It’s easier to decide to get into the hot tub than it is to decide to sit down and read a challenging textbook or something. I don’t know.
[00:11:34] MS: And our short-term brains are the ones that are the easiest for us to use. So, if we are left in a situation where we’re not consciously thinking about it, that is our default mode.
[00:11:43] BF: Yes, that’s the Kahneman system 1 and system 2, exactly. It’s literally hard to turn on the system 2 brain and decide to sit down and read the textbook than to make the easy decision and seek pleasure.
[00:11:57] MS: It’s even harder to affect the teenage brain to do that, too, as a parent.
[00:12:03] BF: Yes, I guess I’m not there yet. But it’s not so easy with little kids either.
[00:12:06] MS: No.
[00:12:07] BF: I guess the teenagers get more persistent, maybe? I don’t know.
[00:12:10] MS: Yes, they’re bigger.
[00:12:11] BF: Yes, they’re bigger.
The other problem is that our brains because they adapt to stuff, if we do something pleasurable, I mean, take this sitting in the hot tub thing. Sitting in a hot tub, there’s a limit on how much pleasure you can get from that. So, there’s a bit of a potential trap there where we try to continuously repeat the pleasurable experience of something, and we don’t get the same result. That can lead to problems with temptation as we chase pleasurable experiences.
Now, there are lots of ways to experience hedonic happiness that don’t involve sitting in a hot tub. Gratitude is a big one.5 Savouring small pleasures is a really big one.6 Mindfulness,7 hope, and optimism.8 They’re all little things to say, but they’re things that require conscious thought. Then, there are the other things, like the hot tub, like things like sex, drugs, rock and roll music, or music in general, and eating a really good meal with maybe too much dessert. Those are all sources of hedonic pleasure.
Then, related more directly to money, winning money,9 and spending money,10 and getting monetary rewards, and spending money. They can have similar hedonic effects to taking drugs like nicotine and cocaine, and there’s studies on that. But then also, similar to taking drugs like cocaine and nicotine, not all hedonic pleasures are going to mesh with our long-term goals.
[00:13:25] MS: I like that last part you mentioned there because a lot of us are physiologically inclined as part of what we do for our work. And for those physiologically inclined listeners, there is actually physiology behind this clinical phenomenon. It’s a lot of the same chemicals that are there with cocaine, and nicotine, and opioids. The one everyone talks about as dopamine. But there’s a bunch of other ingredients in the happy chemical cocktail that affect our pleasure.
But the thing is, it’s actually, pleasure and pain are actually both related to the balance of these and they’re a balance in our brains. And actually, too much pleasure can actually lead to pain as well.11 If we overstimulate the system, we can actually elicit pain. The other part which underlies what you were just talking about with our adaptation is neuroadaptation. So, if you have repetitive exposure to the same pleasure stimulus, you start to get weaker and weaker pleasure responses to that, and they’re shorter-lived, because your neurological systems actually adapted to that.
This is what biologically leads us to get on what people call the hedonic treadmill where you chase these repeated experiences. But as you develop more and more adaptability to them, you actually don’t go anywhere in terms of your baseline happiness. You have little bursts, but your speed doesn’t change, and you never really reached that vaunted destination of higher long-term happiness.
Yes, good analogy, maybe something like what you just mentioned, even from the physiological standpoint. I mean, you feel good while you’re eating it, all those pleasure centres get stimulated. But if you were to try to eat that meal again, right after you just finished it, you would probably not have the same experience. It wouldn’t taste as good on the way down, and you actually probably even feel uncomfortable. Even if you’re wearing your stretchy pants, it’s not going to be a pleasant feeling.
When the meal is over, you’re definitely not going to evaluate your life overall differently in any meaningful way, because you had an extra helping of the meal. In fact, you may actually have some lingering regrets and health issues if you make that a regular occurrence.
[00:15:20] BF: I love that example. We can relate to it – I mean, I can at least think about, maybe, you’re having not a great day, so you decided to have a piece of cake or something. It’s so good when you’re eating, and you are kind of lost in the hedonic pleasure of eating the cake. And then you’re done, and you feel kind of sick, maybe, and you kind of wish you didn’t eat it. You’re not evaluating your life any more positively. Maybe even worse.
[00:15:42] MS: No, I think after the pandemic, a lot of us are more familiar with what stretchy pants are. The new work attire.
[00:15:49] BF: Yes. I love that example. Now, so that’s kind of talking about this concept of adaptation. We adapt to our circumstances. Another problem related to that concept, as much as we may not want to believe this, we care a lot about how we compare to the people around us.12 That’s a funny one to think about, because I think most people, if you ask them, do you care about what this person thinks about you? Our inclination would be think, “Well, no. I don’t care.” But we do. We do, at least empirically.
[00:16:19] MS: Yeah, yeah. We all do.
[00:16:21] BF: Yes, we all do. It’s hard to avoid. But there’s always going to be someone wealthier to compare yourself to, which can lead to overspending or lifestyle creep in pursuit of a higher social standing.13 It’s like, there’s a bit of hedonic pleasure that you get from achieving social status, and we might continuously try and do stuff, like buy nicer clothes, or a nicer car, or whatever, to try and get that same feeling. But it’s one of the things that we adapt to.
Now, that concept of hedonic adaptation, has big implications for the concept of the good life, because it suggests that people hedonically adapt to their circumstances, both good and bad, and there’s fascinating research on this.14 But what it means, practically speaking, is that even common life goals like buying a bigger house,15 which is such a common goal, or buying a luxury vehicle,16,17 which I think is another very common goal when people start to get higher incomes. And there may be some other things that you get from that, like, I don’t know, self-actualization, or something like that. Some people really have a passion for luxury vehicles, which is fine. But anyway, these are the types of things that people might say, “I really want to achieve this thing”, expecting it to make them happier. At least what the data suggests is that it won’t because we adapt to our circumstances.18
Now, the other thing that contributes to, or that adaptation contributes to, is people being really bad at predicting what will make them happy in the future. Kind of like what I just mentioned with buying a big car and a big house, and not only how happy we will make them, but also how long that happiness will last. So, there’s two dimensions that people are bad at predicting that concept.
We talked about adaptation. This next concept is called weak affective forecasting. Affective, like A-F-F-E-C-T-I-V-E. It’s like happiness forecasting, I guess. That leads people to overestimate the intensity and duration of their emotions related to future events. Then, the other thing that contributes to that is that people fail to imagine the unrelated events that will affect their future happiness.
For example, when people imagine buying a cottage which again, I talked about bigger houses and luxury cars, cottages are another very common goal. People imagine buying a cottage, they will focus on sitting in the sun, with their kids quietly playing at the beach, not screaming at each other. But you ignore in that imagination, in that projection of the future, it’s common, at least, to ignore the sweaty drive and traffic to get out of the city on Friday afternoon, while the kids scream at each other in the backseat, and the time needed to maintain the cottage. Another big one. There’s the big nice image that we focus on. But there’s all the little details that actually matter to your day-to-day happiness that we will tend to ignore.
[00:18:53] MS: The stakes are higher when it doesn’t go as planned too, because not only do you have the discomfort of the sweaty drive and traffic, you’ve spent a lot of money to do it, and you want to get your money’s worth out of it and have it, make you happier. And the fact that you’ve done all that and you’re miserable in the moment, I think rings even harder on you.
I think that was a good example also, but how spending can beget more spending to deal with some of those unforeseen problems. I mean, we’ve seen those, like my first one I was hearing about your description of driving with the sweat, and the kids in the back fighting, and my wife and I have had that experience too. The first thing that jumped to my mind is we should just get a limo with like that glass separator between the front or the back seats. Or I’ve actually fantasized on drives about how I could actually install that into my 4Runner. You end up spending money trying to solve some of these problems that make you uncomfortable that you wouldn’t have had if you hadn’t spent the money on what you started off with, and I think that’s a pretty common parental fantasy.
The thing that I think that’s important though is to know that this biology of happiness, there’s wiring that’s there, but it doesn’t mean that we’re powerless to influence our wellbeing that we’re not. There’s a huge body of research on this and it was put together in 2005 with this pie chart of happiness,19 which was an attempt at reviewing all of that and attaching numbers to it, and it was all semi-quantitative, so you can’t say with precision what things are. But they did find that there were general proportions.
We have a certain genetic, heritable baseline happiness set point that no matter what we do, we’re not going to really change that much, and that’s about half of our baseline happiness level. But I think the other message is that that other half is actually this stuff we can affect and change things about. So, surprisingly, to a lot of people, the circumstances, the conditions that you’re living in, and your job, and then the other parts in your life that are fluid that can change, those are about 10% of the happiness. And the other 40% is actually the intentional activities that you do, or the way that you cognitively, and behaviorally think about things.
So, that other 50% that we can affect, some of its circumstance, which is actually a relatively small part, because even circumstances, it’s hard to affect some of them. We all have some advantages and disadvantages just by random luck. But we can try to change the way that we make decisions and how we behave, and that’s 40%. So, we can actually change that.
I think, to me, that’s the primary takeaway about the biology versus behaviour part of what makes us happy, and that’s important to know. Because even though the proportions of that data have been challenged here and there on the fringes over time, I think the main message is still there.20
[00:21:31] BF: Totally. The big takeaway that people can boost their long-term well-being through their intentional behaviours. That’s the big chunk that, like you mentioned, even if those exact proportions have been challenged, the general idea that we can affect our happiness through our intentional behaviours. That’s the big takeaway. But if you look at it, we’re kind of hardwired with a baseline level of happiness. But we can shift that short-term with pleasure hits to our chemical soup by hedonic pleasure, and we can boost a longer term with cognitive behavioural strategies.
[00:22:04] MS: That’s exactly right. I think the issue that we get with the hedonic treadmill is it’s really driven by our short-term pleasure-seeking brain. And as I mentioned, that’s really our default, easy mode to fall into. So, when we’re trying to aim strategies to getting off that treadmill or avoiding it, then I think the best way we can do that is actually to compete with that part of our brain too. So, we need to kind of short-term alternatives, more constructive goals or pleasures that are going to lead to our longer-term happiness. But we need to break them down into things that can compete in the moment. It’s hard to think about the long term when your short-term brain has something right in front of it and wants it really bad. It’s hard to overcome that.
There’s ways we can do that. We’ll talk a bit more about that in the next episode as well. But one is to try to decrease the unwanted stimulus. So, an example that I encounter on a daily basis, you don’t want to just passively surf the Internet. You want to use it to seek out products or information when you have a question rather than just kind of letting it feed you. That’s tough to take that type of intentional activity because it’s easy to fall into the default mode.
So, we really need to have other activities to occupy our time and compete for that. The strongest draw is if we can find alternatives that actually give us more pleasure hits. If we’re able to have an activity or an option that makes us both have a hit from our chemical soup, but also is in line with what we’re trying to do longer term, and that’s going to be the best thing we can do to try to control the speed on that treadmill.
[00:23:31] BF: That’s such an important point. Our chemical soup and its ease of manipulation is no secret to people who are trying to market products to us, or design social media algorithms to keep us scrolling. But of course, their incentives don’t align – they don’t necessarily align with our long-term objectives.
There’s an analogy that I read in a book years ago, that’s always stuck with me, because I think it’s really good. It’s a book by Jonathan Haidt, The Happiness Hypothesis, which is one of the first things that I read on this general idea of what constitutes a good life. So, I think it was a 2005 book, but it’s still relevant today, and the analogy is definitely still relevant today. He describes our brain as an elephant and a rider. It’s just such a nice analogy, I think. The elephant, the big animal, obviously, and it’s an animal, not a human, and it responds to its surroundings, and it acts on animalistic instinct, including wanting pleasure and wanting to impress others and then climb up in the social ranks.
Now, the rider can think into the future. It can plan and it can learn, but it does not have full control over the much larger elephant’s instincts. So, the elephant and the rider often have conflicting objectives. The elephant wants to go and eat a bunch of cheeseburgers or find a mate or something. But the pursuit of sustainable happiness requires the rider to use their effortful thought to control the elephant. So, they’ve got to try and sidestep the hedonic temptation, the elephant’s instinctual desires, and the hedonic treadmill problems, and we’ve got to find those, like you mentioned, Mark. The eudaimonic activities that create a steady flow of engagement, and like the stuff in the model we mentioned earlier. Engagement, and connection, and meaning, and accomplishment.
There was one thing that I wanted to say on these general ideas of adaptation and affective forecasting, and we’re going to get more into this in the next episode. But I just wanted to touch on it briefly. There are some circumstances that we don’t seem to adapt to. Being in nature, which is something that I know, Mark, is important for both you and I, that’s something that produces persistently positive effects. So, that’s a circumstance we don’t adapt to, but in a really good way. Then, on the other side of that, there’s just as another example, is commuting in. Commuting in traffic makes people less happy, persistently. It’s not something that we adapt to. So, we’ll get more into those in the next episode.
That’s kind of it for the positive psychology portion. Then now, I want to get into regret. To kind of augment, I think, I think they’re very complementary, as I mentioned earlier. To augment this view of the good life from a positive psychology perspective, with regret. Regrets like looking backward, what do people wish they could have changed? So, as opposed to looking forward, or in the moment, what makes people evaluate their lives positively? Regret is when you ask people what they regret. What do they wish they could have changed? So, I think those two lenses together give us a lot of information.
Now, regret is particularly interesting from the perspective of decision-making, which is ultimately what the whole podcast series is about. It’s like, how do you make a good decision? Regret is particularly interesting because it’s an emotion that requires having made a decision. You can’t experience regret without having made a decision. I think that’s really interesting. Most people will have some regrets.
One of my big takeaways and looking at the research on this, is that I don’t think it’s realistic to say that you’re going to live no regrets. Regrets are normal, they’re natural, but we can still learn about the type of regrets we want to avoid. Then, you mentioned this earlier, Mark, how we can learn from our own personal regrets. So, as opposed to saying, “I want to have no regrets.” It’s more like, “What can we learn from other people’s regrets and our own regrets.”
Now, it is important to note though, that having frequent episodes of regret, is associated with poor life satisfaction.21 I do think managing this emotion is important, which is why we’re including it here. So, knowing what people tend to regret, and the effect of regret on well-being, I think is super useful to making decisions about the future.
Mark, when you were on Rational Reminder, one of the most impactful parts of that conversation to me was when you talked about what you’ve learned about regret from your ICU patients.
[00:27:36] MS: Yes. I think when we’re talking about regret, and you’re going to have them throughout your life, I think one of the times where that really kind of comes into focus is that the end of your life, because that’s kind of the final chapter. And one of the privileges I have as an ICU doctor, is I get to see families and patients at that time pretty frequently. It’s interesting, because people, we talk about what’s happened with their family member, and what’s happening at that time. There’s a number of things that I had that I’ve found that are kind of big takeaways that I’ve seen from what separates having as good of a death as someone can have, with their family coping very well and adapting well to that, versus ones where there’s a lot of dysfunction there, and a lot of lingering problems that go on afterwards.
Three of the big takeaways that I’ve had, one is that the best cases, if there’s a bunch of family members, or even friends, or community there, and they’re usually gathered around telling stories about how the person had helped them, or funny things that they’d done, or other memorable things that they’d done. Those could excite – they’re often exciting things while the person was young, or more common, every day relationships and quirks. As they got older, it seemed to come more to the forefront. It wasn’t really about the stuff that people had bought them. That would often come out actually in some of the dysfunctional situations about what they bought them.
But the relationship, I think, was really important. So, I think regrets of not having that is major, and that’s part of the second regret, would be passed up opportunities. And at the end of your life, you have no more chances. That’s it. It’s done. If you put off spending the time, or the money on what you really valued, or the people that you really valued until it was too late. Then, you’d always figured you’d be able to come and do that later, but you didn’t, and then things happen in life and it just never happens, and you can’t wind the clock back and do that. Again, those are most commonly relationship-related, but it could be a job opportunity or a changing career, or moving somewhere. It could be other sort of big life milestones that kind of never got fulfilled and you never went down that branch.
The final lesson, which actually was really interesting to me, because here I was, particularly striving to be a top person in my field, and I think a lot of physicians really want to be the best that they can be in their areas. And I’ve looked after people who were giants in their field, and they were basically famous in their circles, sometimes even broader circles. And within a few years of them passing away, no one really actually remembers that much other than their families, and definitely not as well. I mean, even if they have a plaque on the wall of the building, or some award or something named after them, then the people that remember them the most are their family members.
So, when you’re seeking intrinsic satisfaction, that’s probably helpful because it’s going to be within. But if you’re seeking other achievements, that’s close as home to possible, and that could be the more enduring that legacy is likely to be, as opposed to going out and about but neglecting things closer to home.
[00:30:32] BF: It must have been when we had you on our podcast that I got thinking about that direction of regret as a way to frame a good life. But the research on that, I mean, there’s a book by author Dan Pink. He was a guest on the Rational Reminder Podcast in Episode 246, which I thought was a nice episode. His book came out way after you are on Rational Reminder, but his research findings line up generally with what you just said. So, he did a big regret survey. It’s not academic research and he’s – Dan Pink is very clear about that. But it’s still super interesting.
The biggest regrets that he found were related to family, in his sample 22% of people had regrets related to family. Partners, 19%. Education, 15.6%. Career, 15%. Finances, 13%. and health, 7%.22 Another interesting point there is that people regret inactions more frequently than they regret actions. We’ll come back to that later. That’s Dan Pink’s regrets study. And then there’s a 2011 paper that looked at a representative US sample. And this one, I think, I said is an academic study, and they found that regrets involving romance are the most common, followed by family, education, career, finances, and parenting.23
[00:31:45] MS: It’s a huge field. Even though one of those is an academic study, the other one is a larger gathering of data. I think they’re pretty congruent with each other. What I think really is useful is if you can take that and boil that down into actionable information, and Dan Pink with his work, including his research in the academic literature, boiled it down into four big regrets, which we’re going to spend a bit of time on, foundational regrets, boldest regrets, moral regrets, and connection regrets. Even though it’s not an academic theory, I think, it’s pretty useful for us to get some actionable insights from.
The first big group of those is the foundational regrets, and those are basically regrets that stem from some kind of failure and foresight, or responsibility, or prudence and following up with that. And it’s not just a failure. It’s a failure with a long-term consequence. This happens often with small decisions that are immediately enjoyable, but over time, they compound. And it’s interesting because compounding doesn’t just apply to money. We think about that with money all the time. But it also applies to how we use our time and our effort. And if we make all these little decisions, the effects of those compound over time into long-term consequences.
So, if you make a series of those decisions, with a long-term consequence, that’s a foundational regret. Some common examples of that would be overspending, and undersaving, which happens on a day-by-day basis. That’s when you make those decisions, or not exercising, or smoking, drinking excessively, not eating healthy foods, letting relationships slip away over time, and some of the big ones. Giving up on education too early, or some other opportunity that you had.
This can happen because people tend to favour the present, and they wait that much more in decisions than they do the future. The future seems a bit more vague. Again, that’s a harder exercise for our brain to actually do. Then maybe do this what’s called inconsistent temporal discounting. So, futureward are far away, and we discount them more aggressively than we do the ones that are closer to us in time.24 So, that’s the temporal aspect of it. And it’s not really consistent, because in the long term, the impacts might be much, much larger.
So, that can happen for a few reasons. One is that maybe we have a weak connection with our future selves.25 So, we’re making this decision to make our future self’s life better, or that our future self doesn’t regret it. But we don’t relate closely with that with who we are now. It’s like another person, basically. So, it doesn’t carry the same weight. Either way, the result is future regret. It can take years or decades to materialize. This is the nature of compounding at the very beginning of a time period that changes seem very, very small. But it’s not until something happens later, that it seems to come out of nowhere and hits you all of a sudden, even though it’s been there festering in the background.
Part of that’s because we as humans, we just mathematically and mentally have a very hard time grappling with exponential growth.26 I mean, we saw this with the spread of the COVID-19 virus when there was exponential growth there. We see this when we’re looking at money, and I’m sure you see it all the time in your practice. People don’t realize how big of a difference is until you show them a number at the end. When you show them that change over time, it’s that last little bit where everything separates out, but it was done by decisions at the beginning. It’s kind of like for us, hardening of the arteries in medicine. You can have all these things that harden the arteries over time, and lead to atherosclerosis, and it’s silent and there. You’d never know it’s there, until all of a sudden you have a heart attack or a stroke, and bang, big disaster. But it was slowly growing and compounding over time.
[00:35:16] BF: The foundational regrets are so important. The next big core regret from Dan Pink is what he calls boldness regrets. These are regrets that result from playing it safe. Followed by the counterfactual – that’s like the imagined alternative reality where taking that risk, instead of playing it safe, would have resulted in a better life. So, it could be things like missed romantic connections, not asking for a person’s phone number or something like that, or declining a big job opportunity that maybe you were really excited about, but you took it to play it safe. Or maybe not starting a business is another one that people could look back on and think, “If only I had done that.”
In the long run, this is an important piece of this boldness core regret is that people tend to regret things that they didn’t do, more than things that they did do.27 Inaction might be less painful in the short run. But it’s regretted more in the long run. So, there’s kind of a time structure of regret where you regret, well, that’s what I just said. If you regret inaction less, not doing something feels less painful in the short run. But the effects of that can get more painful in the long run, because it’s kind of related to foundational regrets, I guess. It gets harder to undo things that you didn’t do.
If you didn’t start the business 20 years later, it might be a lot harder to start the business and to have the same success that you imagine you would have had. It’s also important to note that counterfactual thinking has a whole bunch of its own problems, because we might imagine, maybe you wanted to start a computer consulting business in 1998, and then computers become a big thing and take off. You look back and think if only had started a computer business, I’d be so much more successful. But that imagined alternative reality isn’t necessarily reflective of what would have actually happened.
That’s kind of a – counterfactual thinking is a whole interesting thing to think about. But from the perspective of regret, it can still be uncomfortable. So, this isn’t about you would have actually been better off, it’s that you might think that you would have been better off which can cause discomfort.
[00:37:11] MS: I guess use it as a check to make you think twice about passing up on some opportunities, whether you’re going to regret that later.
[00:37:19] BF: That’s a good way to think about it. Will I regret not seizing this opportunity in the future, even if playing it safe feels better now? Another big one is moral regrets. So, I mentioned Jonathan Haidt for his Happiness Hypothesis Book. Dan Pink actually draws on Haidt’s research from his Moral Foundations Theory. In Dan Pink’s research, he finds that moral regrets fall into five categories. Hurting people through means like bullying or insults or ghosting a romantic interest, cheating in relationships in school or through theft of physical items, disloyalty by falling short of obligations to a group, subversion through disrespect to parents or teachers, and desecration or violating sanctity. Those are moral regrets that are common enough that Dan Pink included in his model of core regrets.
There’s a really smart economist named John Cochrane, who was on the Rational Reminder Podcast twice. I’ve got a lot of time for what John says, this stuck with me, when he said it. When we asked him how he defines success in his life, which is a question we ask all of our guests, he says that he thinks that one gains great satisfaction from trying to live an ethical straight-arrow life, and this is the part that always stuck with me. If it feels icky, don’t do it. It’s a nice principle to live by.
Then the last one in the core regrets is connection regrets. So, these arise from relationships that have come undone, or that remained incomplete. Given what we have learned about relationships and their importance to happiness, it shouldn’t be a surprise that this is a common core regret, and it’s another example of regret being kind of like a photographic negative of what makes people happy. Some researchers actually found that regrets involving primary social relationships like romance and family are felt more intensely than less socially based regrets, like work or education. That again, suggests that social connectedness plays a really important role in happiness, but it also contributes to what people will regret, most intensely.28
Okay. So, we’ve covered this big body of literature, a very brief overview, of course, but we’ve talked about the positive psychology side, and I think one of the big takeaways is that it’s not buying expensive stuff that makes people happy. We’ve also talked about what we regret. And again, as you mentioned, in your ICU experience, it’s not buying expensive stuff that people tend to regret.
[00:39:32] MS: Okay. So, I think we talked about some of the positive things that we can look at, that make people happy. We can see how we can apply that to our own lives, and we’ve talked a bit about regrets and how we can use that to try to get the opposite actions in our own lives to avoid those regrets. I think that’s probably about as far as we can get with the scope on this first procedure without causing too much discomfort. We’re going to take a pause there, and we’ll have to come back for a second look in the next episode where we’re going to talk about some of the traps that we can get ourselves into when we’re trying to pursue the above objectives.
