What Is The Hedonic Treadmill
I came across the phrase Hedonic Treadmill today. It seem quite alien to me and I looked up the meaning.
Investopedia defined it as “The tendency of a person to remain at a relatively stable level of happiness despite a change in fortune or the achievement of major goals. According to the hedonic treadmill, as a person makes more money, expectations and desires rise in tandem, which results in no permanent gain in happiness”
The theory behind Hedonic Treadmill is not all that hard to understand. Human beings adapt to changes in the surrounding environment. So when your financial environment change, we quickly adapt. For example, if you are making say $ 5,000 a month and you can pay all your bill with some left over, if your income doubles to $ 10,000 overnight, you will be happy initially. After sometime, you get used the the $ 10,000 income per month lifestyle and the level of your happiness reverts back to the level when you are making $ 5,000.
Another way this works is if you have upgraded to a Mercedes Benz. You feel rich when you still frequent the place you used to frequent in your Honda. However once you park next to someone with a Ferrari, your Mercedes won’t give you the same prestige it gave you!
The Hedonic Treadmill theory is related to the Easterlin Paradox. Easterlin, an economist researched and found that international comparisons that the average reported level of happiness does not vary much with national income per person, at least for countries with income sufficient to meet basic needs.
So if more money doesn’t make you happier in the long run, then happiness is not something to be pursued. It is something the ensued from something else. The alternative is to be contented with what you have. Now, this can be a frightening thought.
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