two people, one decision
for sake of explaining my probably somewhat abstract thoughts and the nature of economics, i will use two different people as guiding characters, hanni and nanni.
hanni and nanni are both 32. they live in the same city, work in similar jobs, earn roughly the same amount of money, and spend an arguably unhealthy number of hours staring at their laptops.
both are ambitious. both are successful. both have sacrificed a considerable amount of their twenties to get where they are. they work roughly 65 hours a week.
ask either of them why they work so much, and you'll probably get a similar answer. they enjoy what they do. they like the challenge. they're building something. they want to achieve things.
good enough. but there's a difference between hanni and nanni.
hanni works because working makes her happy. nanni works because not working makes her unhappy.
at first glance, that might seem like a distinction without much difference. after all, they behave almost identically.
but i think it's a distinction that tells us something fundamental about how people make decisions, what drives them, and ultimately what they're optimizing for. which brings me to utility functions.
i studied economics, so i spent way too much time learning about and suffering through them. the basic idea is relatively simple: people have preferences, and a utility function is a mathematical way of representing those preferences.standard microeconomic theory generally models individuals as making choices that maximize their utility, subject to constraints.
the price of one more
one of key concepts in economics is marginal utility. it's quite useful in reality as well. the utility you derive from consuming or obtaining something can change depending on how much of it you already have.
consider pizza. the first slice when you're starving is wonderful. the second is still pretty good. the third is enjoyable. by the sixth, you're probably starting to question your decisions.
d²U / dx² < 0
the rate at which utility increases becomes smaller as consumption increases. and i think this applies really well to achievement.take the illustrative function U(A) = 100·ln(1+A). its marginal utility is 100 / (1+A): the first unit contributes much more than the tenth.
imagine hanni receives her first promotion. she's thrilled. she calls her parents. celebrates with friends. feels proud of what she's accomplished.
two years later, another promotion. still exciting, but perhaps not quite as exciting as the first. then another. and another.
nanni receives the same promotion. but for her, the emotional experience is different. she doesn't necessarily feel enormous satisfaction. she feels relief.
are you pursuing success because success makes you happy, or because not being successful would make you unhappy?
i'm not convinced most of us know the answer.