The Hindu Business Line : Don’t compare, be happy…

In a recent meeting with one of his clients, my friend, a money manager, learnt a lesson in human behaviour. His client earned 65 per cent in one year but was unhappy when he found that his neighbour earned 80 per cent during the same period. This client till a year back was earning less than 8 per cent, as he had moneys parked in fixed-deposits. His wealth had gone up substantially in one year. Yet, he seemed unhappy. Why?

Classical economics tells us that we should be only concerned with the absolute size of the return or reward that we get. But we do not measure reward or return that way. Studies in neuro economics have documented that our happiness is dependent on what we get relative to others.

Pay hikes

Shift to the labour market and you will understand it better. Suppose you and your three colleagues are expecting a salary hike this month. Come pay-day and you find that you have been given a hike of Rs 25,000. You are overjoyed because your company normally gives an annual hike of not more than Rs 10,000. You then ask your colleagues how much they got. Two among them got a hike of Rs 35,000. Would you still be happy with your pay hike?

Happiness levels

If you are an aggressive person, you may storm into your boss’s room and demand a similar hike. If you are not, you may ruminate on it for sometime and console yourself that Rs 25,000 is better than the usual Rs 10,000 hike. Your happiness level, however, would be substantially lower than what it was when you initially saw your salary statement.

You may argue that our happiness is solely dependent on us. And it is. As John Milton says in Paradise Lost, “The mind is its own place, and in itself can make a Heaven of hell, a hell of Heaven.” We choose to make our mind hell, by comparing our wealth with that of others. Just like my friend’s client.

(The author is a Chennai-based financial analyst.)

More Stories on : Economics | Simple Economics | Human Resources

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page