Money and Happiness

"The Wealth of Nations," published in 1776, "gave birth to the field of economics" and made its author, Adam Smith, "the father of capitalism." Economics is about much more than just math; reducing it to numbers limits its insights. Think of economics as the study of choices, of "being aware of how choosing one road means not taking another."

In his less-famous first book, "The Theory of Moral Sentiments," written in 1759, Smith explores how to live a good life instead of focusing on markets. In this book, the Scottish moral philosopher examines the sources of morality in a selfish world.

He writes in an easy, accessible voice "on the futility of pursuing money with the hope of happiness." Smith wrote "The Theory of Moral Sentiments" in "intellectual competition" with other authors of his time, including Bernard Mandeville and Francis Hutcheson, who had different ideas about human nature. Smith's contemporaries also included his close friend, philosopher David Hume, and Voltaire, "who ushered us into the age of reason."

Being œLoved and Lovely

Self-knowledge involves recognizing that self-interest drives many, but not all, of your choices. Some choices are selfless sacrifices. People restrain their selfish impulses by considering an imaginary œimpartial spectator who judges the moral nature of their actions. This neutral observer™s judgments emphasize humility and remind you that you œare little and the world is great.

Smith writes in The Theory of Moral Sentiments that œman naturally desires, not only to be loved but to be lovely. By œlovely, he means being worthy of love. Being loved and knowing you deserve it brings great happiness. For Smith, œloved means being noticed, liked, respected, and honored, beyond just romantic love. Being lovely œis an end in and of itself. For instance, a couple is likely to be happily married if they support each other because that™s the kind of spouse they want to be, not for transactional reasons.

People who get unearned praise may see it as a œreprimand, reminding them they missed a chance to do something truly praiseworthy. Smith advises against seeking love without being lovely. Though rejecting flattery is tough, a wise person ignores false praise.

The Illusion of Self-Deception

People often see themselves as more lovable than they truly are. This is self-deception. They focus on memories that confirm their loveliness and ignore less complimentary moments that might be more revealing. While some think deceiving others is easy, deceiving yourself is even easier.

Smith discourages the egotistic and ambitious pursuit of happiness. He doesn't oppose success but argues against the relentless chase for material riches, which should not be œpursued with that passionate ardor which drives us to violate the rules of either prudence or justice.

Avoid ambition “ œthe desire to become rich or famous or both “ because it will ultimately leave you unsatisfied. The road to success can be filled with many immoral actions you'll regret.

Live a Fulfilling Life

Some people think that being rich or famous automatically makes someone admirable, but true happiness comes from being virtuous and wise. Happy people are both loved and loveable, earning praise and respect. When asked if more money leads to more happiness, Smith simply states that being healthy, debt-free, and having a clear conscience is the ultimate happiness.

People who constantly seek attention and promote themselves would be happier and more morally upright if they recognized their negative behaviors and worked to control them.

Peter Buffett, the son of billionaire Warren Buffett, chose to pursue a career in music instead of inheriting his father's wealth. He sold his shares of Berkshire Hathaway stock for $90,000 to support himself. If he had kept the stock, it would have grown to $100 million over 35 years. Despite this potential fortune, Peter wrote in his memoir that he has no regrets about his decision to live life as a musician.

Grief and Joy in Relationships

In music, when two notes are exactly the same, it's called "unison." If two different notes sound good together, they're "concordant." Relationships work a bit like this, especially during tough times like grief. When strangers offer condolences at a funeral, they may not feel the sadness as deeply as the ones grieving. To cope, mourners hold back a bit on their grief.

People react differently to joy and sadness. Other people's happiness usually brings joy, but their sadness affects us less, even if they're close friends. Think about it: we feel more excited at weddings than sad at funerals. For instance, if a wife's brother dies, her husband may not feel her sadness as strongly. But by trying to understand her sorrow and share it, he can help ease her pain, showing love in action.

Social Norms and Moral Virtue

Knowing how to act in tough situations, like comforting a grieving friend, is guided by something called propriety. It's like a rulebook for fitting into society and behaving the way others expect us to. It's about playing our part in the human drama. But just following propriety doesn't always win us praise.

On the other hand, there's virtue. Virtue is like a magnet for admiration and celebration. Think of it as having three main parts: being smart about your choices (prudence), treating others fairly (justice), and doing good deeds (beneficence). Being prudent means looking out for yourself in terms of reputation, health, and money. Justice is all about not causing harm to others. And beneficence is about doing good things, like saying thank you or helping out those in need. There are many ways to be kind, like being a good friend, sharing, being compassionate, and welcoming others.

Justice operates with clear rules, while beneficence doesn't play by the same strict guidelines. Think of behaving virtuously like learning to write well: it's tough to teach but easy to recognize. The rules guiding beneficence are described as "loose, vague and indeterminate." This lack of precision is what makes being good seem so challenging.

Charity: A Practical Perspective

When it comes to charity, there are plenty of questions to consider. Should you give money to someone you don't know who's asking for help? And if so, how much is the right amount? But what if they spend it on things like alcohol or drugs? Are some requests for help better than others? These are tough questions, but if you want to be a truly generous person, you've got to think about them.

Society loves to talk about being kind and compassionate. These are all part of what we call "doing good." But trying to make laws about being nice or honest would be pretty much impossible.

The Power of Individuals

Every single person, though just a small part of the bigger picture, has the potential to make a significant impact. Take the evolution of language, for example. Each English speaker, including you and me, plays a role in how our language changes over time. It's a process that's not controlled, hard to predict, and a bit mysterious. Yet, from all our individual choices emerges a pattern that shapes the language's future.

This concept extends beyond language. Economics teaches us that the choices we make as individuals add up, leading to outcomes that can be both surprising and orderly. Understanding these interactions is crucial for grasping how the world operates.

Think about it this way: just as our collective actions determine what's considered good or bad English, they also shape societal values. By being outstanding in our roles as family members, friends, or employees, we contribute positively. But we also have the power to influence others by recognizing and applauding virtue while condemning immorality. Our opinions guide what's seen as acceptable by society.

Adam Smith's Insights

In our daily lives, we're bombarded with opinions and judgments from family, friends, and coworkers. These opinions shape how we behave and interact with others. This constant feedback loop builds trust among strangers, making it easier to engage with them without fear of being deceived. This trust is the backbone of civilization, allowing us to interact socially and economically, even when our natural instinct is to look out for ourselves.

In "The Wealth of Nations," Adam Smith argues against government interference in industries. He warns against the idea that the government can guide us in making the best use of our skills and resources. Smith believes that individuals, not governments, are best equipped to determine how to use their labor and capital.

In "The Theory of Moral Sentiments," Smith criticizes leaders who try to impose grand visions on society. He calls these leaders "men of the system" and cautions against their ambition and arrogance. Smith believes that society is better off when individuals are free to pursue their own interests rather than being dictated to by those in power.

Two Worlds: From Personal to Commercial Life

In "The Wealth of Nations," Smith delves into how people behave when dealing with strangers in a world of impersonal exchanges. Back in the 18th century, jobs became more specialized. Smith might have known the butcher who sold him beef, but not the farmer who raised the cow or the wagon driver who delivered it.

F.A. Hayek, in his book "The Fatal Conceit," pointed out how modern folks often try to apply the same rules from their close-knit family life to their business dealings. It's like needing to live in two different worlds at once.

If folks understood more about how labor specialization and trade work, they'd likely cut each other more slack and work harder to protect their own interests. But, instead, many folks have a dislike for the messy, unplanned ways that make a modern economy tick.

"The Theory of Moral Sentiments" isn't about meeting strangers; it's about how our friends and family shape our thoughts and actions. It digs into our "inner life" and how we behave, while "The Wealth of Nations" is more about looking out for yourself in business. "The Theory of Moral Sentiments" focuses on what makes us selfless in our everyday relationships.