Lessons for Mental Wealth

What is synthesised happiness and how do we achieve it? Rory Sutherland considers our perceptions of value

Royal Potato Head: Frederick The Great, King of Prussia; Painting by Franz Dudde/Mary Evans

Here’s a piece of advice for you – if you are planning to go on a family holiday, and you are thinking of spending a week in a rented house followed by a few days in a hotel, don’t. Do it the other way around instead.

I don’t know why this is, but psychologically the two transitions are very different. Somehow, moving from the spaciousness of a house to the confines of a hotel room just doesn’t work. The other way round is great – not only is there the space, but after a few days of club sandwiches, you may even look forward to making your own food for a change.

This kind of advice fascinates me because it enables you to have a better holiday without spending a penny – or generating a single extra gramme of CO2.

It’s what you might call synthesised happiness, since is allows you to enjoy life more while consuming the same. All it takes is an astute rearrangement of what already exists.

In a better world, there would be books full of this advice. I know only one – You Are Really Rich, You Just Don’t Know It Yet – by the advertising creative directors Steve Henry and David Alberts. This book encourages its readers to look less to material wealth as a measure of success by encouraging them to attach a putative cash value to intangible benefits that enjoy in life, such as friendships and stable relationships. It may seem odd that such a book emerges from two eminent advertising figures, and from a profession traditionally assumed to be busy inciting us to ever greater levels of consumption. Actually it’s not as strange as all that.

Amongst all the hucksterism of advertising lurks a useful concept called “intangible” value. It is the idea that value is as much (or more) a function of subjective perception and context as it is of actual material form. If we want a world where happiness resides less in how much you own and more in the emotional value you derive from owning it, this is an important concept indeed.

The problem is that, outside marketing and advertising, few people seem comfortable with the idea of subjective value. Certainly hard-headed businessmen don’t like it much. Nor do politicians or economists. Somehow it is more acceptable (see below) to spend money on faster trains than to make longer train journeys pleasanter or more enjoyable.

“The doctor, it was asserted, does not himself produce; he makes a living from what other people produce, he is maintained by carpenters and tailors”

Ludwig von Mises spotted the persistence of this false dichotomy between real and tangible value in his book On Human Action:

It was once customary to distinguish between the production of tangible goods and the rendering of personal services. The carpenter who made tables and chairs was called productive; but this epithet was denied to the doctor whose advice helped the ailing carpenter to recover his capacity to make tables and chairs. A differentiation was made between the doctor-carpenter nexus. The doctor, it was asserted, does not himself produce; he makes a living from what other people produce, he is maintained by carpenters and tailors. At a still earlier date the French Physiocrats contended that all labour was sterile unless it extracted something from the soil…

Present-day economists laugh at their predecessors for having made such untenable distinctions.

However…the way in which many contemporary writers deal with various problems – for instance, advertising and marketing – is manifestly a relapse into the crude errors which should have disappeared long ago.

That was written in the 1940s. But we seem to have made little progress since. Or perhaps a little.

Recently I opened a newspaper and experienced the novel sensation of being heartened by an initiative from the Department of the Environment, Food and Rural Affairs. Called “Fishing for the Market”, this clever idea aims to harness the influence of leading chefs and large retailers in order to kindle desire for the many kinds of fish (eg pollock, coley, puting or hake) that abundantly stock the waters around Britain but which are currently discarded because of a lack of demand. By making these long-stigmatised

fish fashionable, consumption can be shifted from diminishing reserves (such as haddock and cod) toward stocks which are plentiful and self-sustaining. I wish this initiative all success. There are many precedents to support it: simply re-branding a fish can transform demand. What restaurants would want Patagonian toothfish on its menu? Renamed as Chilean sea bass, on the other hand…

What the government is doing here is unwittingly following the royal precedent of Frederick the Great of Prussia who, eager for his subjects to cultivate the potato, declared that the potato was a royal vegetable and that none but the royal family could eat it. By this crafty piece of reverse psychology, based on the insight people always want what they cannot have, Frederick rebranded an odd-looking tuber into the food of kings – changing German eating habits (and reducing dependency on grain) in just a few years.

“What restaurants would want Patagonian toothfish on its menu? Renamed as Chilean sea bass, on the other hand…”

By using psychology in this way, DEFRA is rediscovering an old and vital role for any intelligent ruler: that of setting fashions and establishing norms. Enlightened monarchs were, in many ways, the marketing directors of their nations, wielding influence – rather than just power – to seed and accelerate the adoption of new foods, technologies and behaviours. There would be far more such ideas if only organisations could acknowledge that a large part of economic value is subjective, rather than material. It is through this realisation that people will learn that the act of encouraging someone to attach new value to a thing (or fish) which already exists is a form of value creation no less valid than making (or catching) something new.

Yet almost all organisations, private and public, seem to be fixated with internal metrics which assume value is created only in the tangible and the material. Boards of companies rarely contain a marketer, a designer or a psychologist. To solve a problem with infrastructure or process is regarded as far nobler than to create value through renaming a fish.

As I write this, our cash-strapped government plans to spend £15bn on a high-speed rail link from Birmingham and London. Is this really a great use of £15bn? Unsurprisingly a lot of engineers who stand to benefit will tell you it’s a brilliant idea.It is, however, psychologically moronic. The best way to attract people from cars to trains on journeys of this duration is not to make trains faster, but to make trains and stations pleasanter – adding wifi, onboard video and so forth – or parking. Restoring the Euston Arch and running an ad campaign for Birmingham would work better and would cost 99 per cent less than a high speed railway which at prodigious cost will merely allow people to travel at unnecessary speed to a place they don’t want to go.

Rory Sutherland is Vice Chairman of Ogilvy Group UL