Daniel Kahneman: Moving to California Won't Make You Happy

If we talk about subjective well-being, there are two really different ways of looking at it. One is to look at people’s mood or state of mind as they live their life, and the other is to measure their satisfaction or their emotional reaction when they think about their life.

We know now that these two are really quite different, and they are sensitive to different factors. So the things that make you satisfied do not necessarily make you happy. People have very little idea of how their tastes will change.

They are susceptible, first of all, to what we call a focusing illusion, and that makes it virtually impossible to think straight about your own life. Nothing is quite as important as you think it is while you’re thinking about it, so the mere act of thinking about something makes it more important than it’s going to be.

So you’re thinking, "How much happier would I be living in California?" And you think you’d be a lot happier. Well no, you won’t be a lot happier. "How much happier would I be if my income increased by 30%," you think a lot. No, it wouldn’t.

So just about everything that people think about, they exaggerate its importance. If you look at life satisfaction and what makes people satisfied with their lives, most of which we know, it has a lot to do with people’s goals. When we ask people how important money is to them when they are 18 and we look at their income at age 45, we find that the people that said at age 18 that money didn’t matter to them very much, at age 45 money doesn’t matter to them very much.

So the correlation between their income and their satisfaction with life is really very low. The people who said that money is very important to them, those who made a lot of money are really quite satisfied with their lives and those who didn’t make a lot of money are really quite miserable. So goals are very important to life satisfaction.