De-Bugging The Happiness Formula: Happiness = Reality – Expectations

There’s a saying, “the formula for happiness is reality minus expectations.” The standard takeaway is that with a low enough bar, a lot of reality starts to look pretty darn good. While maintaining a state of Zen-like acceptance can be a shortcut to happiness, it doesn’t take Zen-like wisdom to know that not all cases of happiness are created equally. The formula holds, but like all formulas, we have to earn the right to use it. We have to understand the variables and their relation to one another. 

Let’s start with the formula’s answer, “happiness.” There are at least two types of resultant happiness we should be aware of:

1. Happiness as the result of a random outcome, and 

2. Happiness as the result of a deliberate outcome.

The happiness formula needs a footnote to accompany it, and that footnote should explain:

Depending on the type of happiness one is solving for, there are two primary scenarios that will influence the setting of the reality and expectations variables. Specifically,

1. When one has no control or influence over reality, set expectations at a minimum. Call this the “always look on the bright side of life approach.” 

2. When one has control or influence over reality, set expectations as high as possible without exceeding the potential reality. One must not be delusional, but also must recognize ambition as the driver of the results. Call this the “happiness through grit” approach.

Consider a client who wants some market forces to reward their positioning – is this good or bad? If the market force is truly out of their control, they should have a low bar for their expectations. The purpose is not to be deceptive or make an excuse for the selector of the exposure. Our goal is to make sure the client doesn’t tie their happiness to a random outcome. Whatever the market forces do, they should be able to say, “always look on the bright side of life.” This is easy to say and hard to do. 

Now imagine the same client. They want to apply their efforts to a strategy change with a specific and achievable result in mind. They’ve done the analysis, they know who has to be involved, and they feel like they are ready to tackle the challenge. The stakes are high, but so is the bar. In these scenarios, even when the project fails, they’ll often be proud they tried. Our goal is to make sure the client ties their happiness to the efforts. Whatever outcome, they should be focused on achieving “happiness through grit” as a reward in and of itself. This is also easy to say and hard to do. 

Professionally, we are always in a state of forward-looking expectation-setting and backward-looking reframing of what we expected to occur. It’s a noble pursuit to solve for proper alignment with the “happiness = reality – expectations” formula. We and our clients have to remember that the variables at play are variable. What we are trying to avoid is saying “always look on the bright side of life” when we actually had control and dropped the ball, and “happiness through grit” when in reality no one tried. What we are trying to achieve is finding a sense of happiness for the right reasons. 

Happy clients really are good clients. The key to success really is continuous expectations management. When we apply how happiness, reality, and expectations relate to one another, we can always know how to create value.