The boom-bust model and how to use it to maximise your happiness

A simple economic model can be used to hack your brain. This is the economics of happiness.

Our level of happiness tends to fluctuate throughout the day. A variety of factors can cause a dip in “feeling good” throughout the day: negative events which catch us off guard, spikes in sugar and too much screen time are to name just a few. It is impossible to be on a permanent high, although it would be nice. Mood swings are a natural cycle and it is how we react when we are feeling down which is the most important. Being aware of this and accepting it is key to being the master of your mind and being able to manage your response to these slumps to get back to feeling good as soon as possible when the dips inevitably arrive due to life’s challenges and hardships.

The economic cycle (also known as the business cycle) is the fluctuation of the gross domestic product (GDP), or the total value of goods and services produced within the economy, around it’s long term growth trend, and is often known as the boom-bust cycle. The long trend is increasing growth, or in layman’s terms the economy will produce more goods as time passes. However, GDP very often decreases in the short term, but the sum of the increases is always more than the dips, leading to long term growth.

Many economists argue that the economic cycle is a natural part of our economy. The negative periods in the economic cycle are known as recessions, and can be caused by a variety of factors, economic shocks (such as changes in interest rates), environmental disasters or a loss in consumer confidence. A recession is followed by a economic recovery and upturn in GDP growth. An economic recession can be ended by speculation. In other words, the very act of people and the media being positive and believing that the future is bright causes a return to long run economic growth by stimulating spending on goods and services.

If we replace GDP with happiness in the above model, it soon becomes apparent that even when we are feeling down, there will be a time when everything will seem more bright and this could just be round the corner. If we learn to remember that it ok to not be on a permanent high, then our overall time spent feeling good is bound to increase. Therefore, stay positive even during the tough times and you will soon find that you care less when feeling down as you wait for your next period of happiness with impatience. Life is a challenge but it is how we react which ultimately defines us.