Review of “The Happiness Equation” by Nick Powdthavee

Your happiness probably lies outside this book.

Fund management

If you think this topic remote from fund management, I think you’re wrong.

Suppose that we deliver a lot of wealth to a person as they retire.  We’ve done well in terms of wealth management.  Now, suppose that we made the world an undesirable place in our pursuit of that wealth.  Have we delivered what the person wanted?  I don’t think so.

We are used to thinking that fund management is in the Wealth Management business.  I think it is in the Future Happiness business.  Our investors are really seeking happiness.  Our mission should be larger than maximizing money.

Some results

  • Relative wealth produces happiness
  • Absolute wealth produces little happiness
  • Happiness is contagious

The happiness model

If we think of The Happiness Equation as if it were a statistical model, it is almost all noise and hardly any explanatory power.

It is only late in the book that the idea emerges that happiness is at least two dimensional (mood, fulfillment).  That idea is never developed, and the ambiguity haunts the entire book.

The title is not metaphorical — the book introduces a statistical model that casts happiness (or its lack) into monetary terms.  The author attempts an explanation of the model.  I couldn’t figure out what was going on, so I suspect that some small percentage of the intended audience won’t understand either.

Alternative books

Conveniently the book includes a list of some competing books about happiness, along with Amazon rankings as of April 2010.

Author Title Rank
Rubin The Happiness Project 116
Hanson Buddha’s Brain 371
Thaler & Sunstein Nudge 870
Danzinger & Birndorf The Nine Rooms of Happiness 973
Gilbert Stumbling on Happiness 1367
Belliotti Happiness is Overrated 6,941,674

I haven’t read any of those, so I can’t make any comparisons.  (However, see below for a peek at Dan Gilbert.)

Steal this happiness

In deference to Abbie Hoffman it is possible to get the best parts from the book without actually buying it (or performing an illegal act).  Here are my recommendations:

  • The first 3 paragraphs of Chapter 2.
  • The section “The enlightened prince” about Buddha that concludes the book.

(It amuses me that the third item of my search for “steal this book” is ‘Shopping results for “steal this book”‘.)



Here is a 21-minute video that highlights some quite interesting aspects of happiness:
Dan Gilbert asks why are we happy?


The current issue of New Scientist includes the article Be happy. This discusses the theory that evolution selected us to be fairly happy because happiness enhances creativity.


To watch his woods fill up with snow

— Robert Frost Stopping By Woods on a Snowy Evening

Subscribe to the Portfolio Probe blog by Email

This entry was posted in Book review, Fund management in general and tagged . Bookmark the permalink.

One Response to Review of “The Happiness Equation” by Nick Powdthavee

  1. Pingback: Review of “Obliquity” by John Kay and “Drive” by Daniel Pink | Portfolio Probe | Generate random portfolios. Fund management software by Burns Statistics

Leave a Reply

Your email address will not be published. Required fields are marked *