Ep. 11 - The hedonic treadmill.

The treadmill effect. Ever heard of it? If not, that’s alright, because you’re likely living it anyways. Effectively, the treadmill effect is when one’s income rises in value, so do the desires, wants, and ‘needs’ of that individual. Then, another raise occurs, and those wants and needs change and increase yet again. And so goes the hedonic treadmill. It goes faster and faster until the point of exhaustion, and the realization that you’re still no happier than when you started.

It’s a hard trap to avoid, especially as a young professional when you see peers and acquaintances buying, sorry, *financing, new cars, going on luxury vacations and dining out seemingly every night. The worst part? The treadmill only spins one direction.

We constantly crave more

How do we tame this insatiable appetite for more? It’s more difficult than you think. Humans are incredible at adapting to environments, which is both an advantage, and sometimes, as you’ll see, a disadvantage. To illustrate, take the classic example of purchasing a new car. One thinks, “ah, once I get that new car I’ll be happy because [fill in the blank]”. But, that new car comes and within two weeks the 'new car smell' has worn off, just as the novelty has worn off. And you realize it's just a car.

This, however, becomes your new baseline. And going back to your previous standard of living is much, much more challenging. The treadmill continues spinning.

How do we combat this?

Again, I defer to the stoics. One strategy used by the stoics was Negative Visualization. Imagine losing multiple things you love - your spouse, family members, your house, your ability to move freely and pain free. The stoics believed that this imaginative practice would allow them to appreciate what they currently have.

I’ve used a similar strategy called ‘fear setting’ coined by Tim Ferris. Basically, I write down the worst possible outcome of a certain situation, decision, or what the next quarter could look like (professionally, financially, personally). It sounds dark, but it's an amazing exercise in appreciation, and also confidence. Because I always realize that I will be fine.

Some people think negative visualization will create those circumstances that you're actually imagining (i.e. "you are your thoughts"). But, know that this is just an exercise, and just as you exercise to improve muscle strength, this exercise will improve your gratitude and happiness, which in turn may help turn off that need for more.

What’s in your control?

Worrying, stressing, and even thinking about things out of your control gets you back on the treadmill. Although there are certain items you can control with your employment, the reality is that there is still the strong majority that is out of your control. You can be laid off in a moment's notice, you can have a salary decrease, and/or you can be forced into a new role. There is a perception that you’re in control, but you’re actually not.

Nassim Taleb makes a great argument about the hidden risks with employment. He argues that employment provides the façade of security but is actually fragile in comparison to self-employment. Take this argument from his book ‘Antifragile’:

“Artisans, say, taxi drivers, prostitutes (a very, very old profession), carpenters, plumbers, tailors, and dentists, have some volatility in their income but they are rather robust to a minor professional Black Swan, one that would bring their income to a complete halt. Their risks are visible. Not so with employees, who have no volatility, but can be surprised to see their income going to zero after a phone call from the personnel department. Employees’ risks are hidden”

So, again, going back to negative visualization. What is the worst case scenario? Write it down. Now hedge against this. What do you need to do? More savings? More income streams? Start building your hedge, as this is in your control.

Living within or below your means

This is simple in theory but challenging in practice. I don't use a budget. I don't use any fancy apps to track spending, and I don't review my credit card for transactions. I have a general idea of what it should be each month and that's it.

Instead, I think about every purchase. Will this bring me joy? Is it necessary? That's it. Obviously, buying a coffee is different than a car, but the same principle applies. Follow these simple rules and you'd likely live within your means:

• If you can't buy the new car with cash today then you can't afford it.
• If that dinner bill makes you sweat then you can't afford it.
• If you're shuffling money around every month to meet rent then you can't afford it.
• If you don't pay your credit card in full every month then you can't afford your current lifestyle.

Conclusion

I'm sure we're all to blame for this phenomenon. Social media is a breeding ground for comparison culture. However, the goal is to not be in the minds of others, but be in the mind of yourself. Ask yourself hard questions:

• Do you actually want this? ('this' can be anything)
• Do you need that next raise that brings about more and more work?
• What are your actual needs?

Happiness doesn't come from 'more', it's usually just the ego that craves it. I've found more happiness in less. It's my first step off the treadmill.