Like my fellow economists, I am good at dripping Doom and Gloom. No, it’s not a recession, I’ve been writing — it’s a Global Depression. World stock prices have fallen much faster and steeper than in 1929. GDP is collapsing in Japan, U.S. and Europe. Unemployment  is soaring. Israel is plunging into a deep recession.

But, if the economy is so depressed, why aren’t people depressed? During a recent visit to London, I found this amazing city bursting with energy and vitality. Same for Toronto. Same for downtown Tel Aviv. Of course, I know many people who are suffering — high tech engineers who lost their job and can’t find another, retired people who lost half their savings in declining capital markets —  but I also know people whose lives and wellbeing show no evidence of the global crisis or its impact, even though they have suffered losses. 

Why?

I found the explanation in the work of a brilliant Harvard University cognitive and social psychologist, Daniel Gilbert.  To sum up his findings, in a single phrase: Synthetic happiness is real. 

What does that mean?

Natural happiness is what happens when we get what we want. We want cars, houses, TV’s, clothes — and when we get them, we are allegedly happy. 

Synthetic happiness, according to Gilbert (in his wonderful new book Stumbling on Happiness: Knopf, New York, 2008) is how we adapt and adjust, when we do not get what we want, when we get, sometimes, the worst outcome rather than the best.  

Natural happiness is what life gives us. Synthetic happiness is what we make of it. Guess which is more important?

Natural happiness generally disappoints. We tend, Gilbert shows, to exaggerate the happiness that ‘stuff’ will bring us.  A huge costly mechanism —  the foundation of capitalism, known as ‘marketing’ — exists, only to persuade us that more new ‘stuff’ will make us happy when deep down we know it will not, and inevitably find it out does not. I think this is the fundamental fallacy of economics — that more is better than less. Often it is not. 

Synthetic happiness is real. That is, people have incredible abilities to adapt to their circumstances, even awful ones,  and to make the best of what they have. We have the ability to make ourselves happy, ‘synthetically’, even when we should be miserable. 

The most striking research in this area, cited by Gilbert, was done over 30 years ago, by Brickman, Coates and Janoff-Bulman*. They showed that a year after winning,  lottery winners are no happier than paraplegics (those whose limbs are paralyzed), a year after the paralysis. Why? Natural happiness disappoints. Lottery winners take less pleasure in ‘ordinary’ daily pleasures because they pale compared to the ‘high’ of the lottery win, and because of habituation — the pleasure of buying new stuff quickly dissipates. Paraplegics learn to accept their circumstance and adapt to it, taking pleasures in ‘mundane’ daily life.

A key part of synthetic happiness is what I call the Stalinist brain. Under Stalin, history was rewritten in U.S.S.R. encyclopedias to conform with Communist doctrine. Our brains do the same. Suppose I  ask you to rank your preferences for six Monet prints, best to worst. Then I give you your worst choice. A day or two later, when asked again to rank the paintings, guess what? The one you got, ranked worst, comes up as your first choice. We have rewritten history. We have adapted.   

What emerges from Gilbert’s work is a powerful conclusion — the secret to happiness. Not, accumulate more wealth, clothes, assets, houses, cars, and stuff. But rather, build your skill at synthesizing happiness — allowing what you have to make you happy in new and wonderful ways.  

Gross Domestic Happiness, it seems, may easily move up though Gross Domestic Product moves down.

*”Lottery winners and accident victims: Is Happiness relative?”, P. Brickman, D. Coates, R. Janoff-Bulman, J. of Personality and Social Psychology, 1978 (36, 8, pp. 917-927).