Mental Immunity and Joy are good for achieving Financial Security

By Bob Peters || August 4, 2022

A Less Stressful Life

When I started this blog in mid 2021 my objective was to help young people with topics that would improve their financial literacy and to help them live less stressful lives.  I’ve had close personal relationships with adults who have had great stress, in large part, due to financial insecurity and my hope is that this blog might help some younger folks avoid the same difficult circumstances.

Behavioral Finance:  A field of study

As my blog journey began, I started reading a number of behavioral finance books authored by well respected participants in the field including Daniel Kahneman, Morgan Housel, Brian Portnoy and others.  Behavioral finance as an area of academic research seems to have started in the 1980’s.  The field of study attempts to explain what purely quantitative finance models could not explain; specifically, how the human brain impacts financial decision making. Since so much financial insecurity is caused by poor decision-making, I was drawn to learn more.

Decision-making on all matters, financial and non-financial, are heavily influenced by the evolution of the human brain.  The “fight or flight” response that caused humans to survive external threats negatively influences good financial decision making as when we sell investments when the price declines out of fear, thereby locking in permanent losses.  A significant element of achieving financial security is acknowledging that we all look to make decisions that will make us happy. What is happiness?

The Dali Lama and Joy

In April 2008, the Dalai Lama visited Seattle and I was able to attend a lecture he gave at McCaw Hall.  His visit to the United States was prompted by his desire to join a Seeds of Compassion conference that drew over 150,000 attendees over a five-day period.  It was quite the event and, I recall, that he had a quick sense of humor and exuded the utmost humility, peace and kindness.

Eight years after I saw the Dalai Lama, he and Archbishop Desmund Tutu, co-authored, The Book of Joy.  Both men suffered great personal tragedies in their lives but came together to communicate the need for compassion and the ability for all of us to achieve joy.  It’s a must read and does not require you to adhere to either religion of the authors.  I’ll come back to some takeaways a bit later.

My friend Pete

A few years after the Book of Joy was released, I was talking with a colleague and friend, Pete.  Pete had a “default” smile and a demeanor that matched.  He stood out by being friendly to everyone.  I thought highly of Pete’s character.  One day, when Pete and I were shooting the breeze, I made some comment about the need to pursue happiness.  With virtually no pause, Pete exclaimed there was no such thing as happiness which, coming from a guy who seemed happy most of the time, seemed odd.

We had many more banters about happiness, and I was sure that it must be our different use of semantics.  Surely, “happiness” must exist.  It was not until I started to read more from behavioral finance researchers and psychologists studying the human brain, did I come across coherent explanations of different types of happiness.

Experienced Happiness/Fast Brain vs. Reflective Happiness/Slow Brain

In Brian Portnoy’s book, The Geometry of Money, he contrasts two different types of happiness: Experienced and Reflective.  Experienced Happiness has characteristics of hedonism (i.e., short term gratification), and is effortless.  Eating ice cream, experiencing a blockbuster movie, shopping and other worldly activities that deliver a shot of dopamine to our brain.  Daniel Kahneman, 2002 Nobel Prize Economic Sciences and author of Thinking Fast and Slow, would characterize these as System 1 Fast brain activities.

In the Book of Joy, Archbishop Desmond Tutu states that “happiness is often seen as being dependent on external circumstances” and his co-author, The Dali Lama, adds that he equates happiness to mean satisfaction.  Experienced Happiness (Portnay), System 1 brain (Kahneman) and Satisfaction (Dali Lama) are part of the short lived, dopamine filled moments all of us know so well.  In contrast, Joy is a much greater and fulfilling feeling.

In contrast, to our dopamine fed, System 1 Fast brain, we are also equipped with a System 2 Slow brain that allows us to reduce mental stress, enhance our decision making abilities and “smell the roses.”

The Dalai Lama’s definition of Joy

What Portnoy describes as Reflective Happiness, Tutu and the Dalai Lama would say is Joy.  Joy “is much bigger than happiness.”  The Greek philosopher, Aristotle, might equate Reflective Happiness to eudaimonia which is a deeper sense of fulfillment.  Portnoy goes on to say, “this (Reflective Happiness) could be building deep relationships with others, honing excellence in a favorite craft, demanding liberty to make one’s own choices, or finding purpose in the greater good.  Getting at the contentment of these experiences requires (Kahneman’s) System 2 thinking insofar as they involve deliberate introspection.”

Joy is better and cheaper

If you want to learn more, read the books mentioned above but I will try and short cut this a bit and bring it back to financial literacy and achieving financial security. 

We know that our human brains are wired through evolution in a “fight or flight” manner, Kahneman’s System 1 (Fast) brain.  This brain gives us short lived dopamine hits that protected us from predators and drove us to seek immediate gratification in hunting whatever game we could capture. The System 1 brain does not allow for delayed gratification.  The System 2 (Slow) brain allows us to think beyond the immediate.  It controls our spending activities, allows us to invest wisely rather than acting emotionally and, is necessary to achieve Reflective Happiness.  It allows us to find contentment and joy over hedonistic, dopamine filled Experienced Happiness activities.

If you want to achieve financial security and joy you will be well served to learn more about Reflective Happiness.  An added bonus…Experienced Happiness activities often require spending money while Reflective Happiness has no monetary expense.  Reflective Happiness/Joy is better and cheaper!

The worthy path towards Mental Immunity and Joyfulness

In the Book of Joy, the Dalai Lama reflected that so much unhappiness comes from within and how each person reacts to life events.  He said,

Financial Security, Mental Immunity and Joy

Financial literacy is a necessary building block to achieve financial security.  Education beyond high school (whether technical or university) improves your ability to earn income that would allow you to build wealth over your lifetime and help you avoid financial stress.  Having a knowledge of financial products such as credit cards, personal loans, insurance, mortgages will give you tools to avoid financial mistakes.  Knowing the difference between Speculation and Wisely Investing will equip you with the tools necessary to have more time and freedom.

All of these points in the preceding paragraph I believe are very important but without building mental immunity and pursuing Reflective Happiness the feeling of Joy will be elusive.  As the Dali Lama says, “the best solution to our suffering is mental immunity, but it takes time to develop.”

A final note:  Coach John Wooden

One of the most successful and revered college basketball coaches of all time, John Wooden, framed it well when he said,

Coach Wooden had an unbelievable career having won 885 games and 203 losses for a record 81.3% winning percentage.  He was relentless about the need for his players to perform drills over and over again.

There is an opportunity every day to build your mental immunity and find joy.  It takes a lifetime, but it is worth it.  Enjoy the journey.