Mastery over your Utility Function

Some things will add very little value to your life

The 3 Power tips below, if followed diligently, can transform your life.

Even if you are not thinking about it, you have a Utility Function of some kind. What is it? What should it be? What should it reflect, your preferences or your happiness? Should it be represented by your financial wealth or something else? In fact, should you be thinking about it at all? What happens if you do not? What should you think about if you do realize you should be thinking about it? And, even if you did not want to think about it, what is the most important feature of it that you should always bear in mind?

I received a phone call last week from a friend in his late 30s when I was out for my daily evening walk to see the sunset. He sounded disturbed. Familiar story. His colleague, aged 42, who sat next to him on the trading floor, experiences sudden chest pain, visits a reputed hospital – 97% blockage in 3 arteries – needs heart bypass surgery. For the rest of that man’s life, his lifestyle and that of his family will have changed considerably.

Did that 42-year-old care about his family? Yes! Did he want to live a joyful life? Yes! Would a casual observer pass by him in a shopping mall and think he was living some extremely unhealthy life? No! So, then what causes us to reach such states of existence without us wanting to?

And, what does this have to do with your Utility Function?

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1234Power Tip #1
The Birth of Utility
Existence without Definition
Thriving with Definition
1234Power Tip #2
The Form of your Utility Function
Preferences or Pleasure
The Happiness Paradox
The Wealth Problem
1234Power Tip #3
My Own Motivation
Evolution, Society and Your Utility Function
Constructing your Utility Function
1234Items to Include in your Utility Function
1234Items to Exclude from your Utility Function
Collective Illusions and Private Opinions
Manipulating, Moulding and Changing your Utility Function
The Process of Maximizing
Parting Message

The DNA [top]

My shortest description of your Utility Function – a measure of what you value in all that your life could offer.

Power Tip #1: Just as you can change the shape and structure of your DNA, you can change your Utility Function too.

Keep reading…

The Birth of Utility [top]

It was philosophers who first introduced the term “Utility” as a measure of pleasure or happiness. Then economists adopted the term, changing its meaning to be the value perceived based on choices made rather than on pleasure received. The logic was that even if I cannot directly observe your level of happiness, I can observe the choice that you make from the set of possible choices and that choice probably reflects what will make you happy, what it is that will maximize the value of your Utility Function.

Existence without Definition [top]

Your Utility Function exists even if you don’t think about it. Like your Internal Culture, it exists even if you do not define it.

Thriving with Definition [top]

Living life is about making choices under uncertainty. It is bad enough that the future is uncertain. To make it worse as a result of not thinking carefully about what you would like to have through your lifespan would be a waste of that life.

You could define your Utility Function as it is currently or you could specify what you think it should be.  Whether you are descriptive or prescriptive you would benefit from investing time in articulating a clear definition. Why?

Whether Socrates said it or not, it is true that “An unexamined life is not worth living.

Do not be among the millions who live unexamined lives, there are many intelligent people who are willing consumers of whatever the culture around them dishes up.

Power Tip #2: The more you try to define a prescription for your Utility Function, the less likely it is that external forces push you around in life against your best interests. [top]

If you prescribe a Utility Function for yourself and you plan your life accordingly, you will be on the path to maximizing the value of that Utility Function. Otherwise, it will be what maximizes the financial gains of shareholders of corporations sitting in comfortable corners of the globe, far away from you.

Perhaps you can start with a definition that is a description of how you are currently living your life, the choices you are making and what outcomes are likely from that. Then think about the outcomes you actually want in your life and work backwards to the choices you should be prescribing yourself based on those outcomes that you believe will give you the maximum pleasure over your entire lifetime. Of course, even if you were to Google and read tips about what actions would get you to your goal, the implementation gap exists.

[If you would like to learn how to close the gap between now and your dream life, you know whom to contact.]

The Form of your Utility Function [top]

Instead of being narrow-visioned like economists often are, we should avoid trying to simplify your existence via a detailed mathematical expression for your Utility Function. Instead of thinking of the word “function” as having its mathematical meaning, let us think of it as being more about why you function the way you do.

It is safe to assume that you would like the value of your Utility Function to be higher rather than lower. It is also safe to say that what would maximize the value of your Utility Function will be specific to you and what you want out of your life. It is highly likely to be slightly different from mine.

It is also the case that, for some things, the more you have of them, an additional unit of it won’t make you as happy as the previous unit you obtained. And for some things you may clearly not want that additional unit at all (e.g., a 5th child) as it reduces the value of your Utility Function.

There is a time dimension too. The further something is in the future, the less importance you give it. You would like to avoid pain and have pleasure in the distant future, but how much pain would you take on now or how much pleasure would you give up now to have the uncertain better future outcome? Delaying gratification is a strong marker of success in humans – not just academic and financial success but also when measured in terms of having a meaningful life. Once you have your Utility Function fairly well-prescribed, your typical day will also automatically have some clear prescriptions. The long-term is made up of many sequential short-terms!

Preferences or Pleasure [top]

When economists decided to use choices (preferences) made instead of pleasure (happiness) received it was because it was easier to observe. You can observe what someone selected (a job, a product, a service) even if you cannot observe the range of choices that they may have selected from or why they selected it. Someone can also tell you how happy they are but what does that really mean in terms of accurately comparing happiness with product A versus product B, or across time? Presumably, a preference expressed by you, e.g., a service purchased, and observed by me tells us more about what will make you happy? Presumably!

But, what should you do? Invariably, most humans make fairly suboptimal choices for the problem of maximizing happiness over the entire expected lifespan. You and I are no different from the rest – we just try harder to minimize the errors!

The Happiness Paradox [top]

It is now quite clear from research in the field of psychology that the more we pursue happiness itself, the less likely we are to be happy. Instead, a focus on processes such as a daily practice of gratitude, connecting with a community, giving often rather than only taking, and seeking out struggle rather than avoiding it – all of these can ultimately lead to joy on a daily basis.

The Wealth Problem [top]

Disclosure: I have a PhD in Finance. [quickie]

Because it makes the mathematical manipulations easier, a sinister simplification that many teachers of economics profess is to collapse the Utility Function into being simply a function of your wealth. I can see the logic behind that even if I don’t agree with it. We can all agree that $1 today is $1 today. In general, you and I cannot agree about your happiness today versus mine or versus your own happiness a year ago. Saying that your wealth represents your Utility Function appears to make life simpler but it probably only makes the academic wrestling easier.

Power Tip #3: When thinking about your Utility Function you must not think about Wealth as the measure of your Utility Function. [top]

This power tip is not me telling you that money is not important. Money is important. The problem with theoretically and practically collapsing the measure of value in your life into “financial wealth” is that we forget N other more important things. Money is to be earned to enable some aspects of a better life rather than being the purpose of life. There are many things that we value highly that money cannot buy. In addition, because it is easier for our limited brains to think of a single variable or number, “money” becomes what we find convenient to focus on for putting in effort for a better life. In comparison, there is so much more thinking involved if the variable is, for example, “good health”. Given that “good health” cannot be collapsed into a single number, how does one think about it? And we don’t just want good physical health. We want good mental, emotional and spiritual health too! Unfortunately, in practice, we follow the short-sighted easy way out and so it actually happens that we collapse all that to “if I have enough money, I can pay for fixing my health disasters – my aches and pains, my mental health issues, and my relationships with others”.

My Own Motivation [top]

In my 20s and 30s, I was heavily groomed both academically and professionally with the objective of financial wealth maximization and saw that such an objective was often grossly inappropriate for a satisfying life. I decided that rather than try to maximize financial wealth which was serving as a poor proxy for maximizing the value of my Utility Function, I would go back to the drawing board and focus on the appropriate design of a Utility Function that would be wiser to maximize the value of given what I could learn about the nature of the universe and the resources available to me. Doing anything other than that would be a sure way to NOT have the happiest life possible! The logic was simple, correct and could be mathematically elegant.

Today, I have a pretty good handle on what my Utility Function is. It will continue to evolve at a very slow rate from its current level of maturity. My typical daily life stems from that Utility Function being defined.

Evolution, Society and Your Utility Function [top]

Like other animals, we have brains that allow us to function to survive long enough to pass on our genes to the next generation along with nurturing for that generation. Yet, other wild animals seem to live happier lives compared to so much of the human population. Their Utility Function is basically hardcoded by nature. As humans, we use our more evolved brains to create both heaven and hell for ourselves. We have that choice about what we’d like to create for our future. Thanks to the Unholy Trinity, more often than not, we create future hell for ourselves through our present actions.

If you do not think about your life and act for a better future but instead just lived from one day to the next, bouncing like a ball between the walls of society, with the passage of time, your list of regrets will get longer.

By thinking about your Utility Function and what to include in it, and what to exclude from it, you will have a better idea of how to construct each day, week, month, year and decade of your life.

Animals, typically the male of the species, try to gather resources to signal to potential mates about their ability to provide for the offspring they hope to produce. Humans are no different from other animals and the resources we try to accumulate tend to be predominantly financial. Money can buy medicines but not good health. Money can buy books but not intelligence. Money can buy drugs but not deep relationships and healthy emotions. Money can buy a place at the front of a temple crowd but not created profound spirituality. So, do you still want to chase money?

Many animal species look for the ability of the mate to provide nurturing for their young, e.g., teaching them how to hunt or gather. Your circle of influence might be your friends, your colleagues at work, employees who report to you, or your children and other members of your family. The Utility Function that you are consciously or accidentally maximizing the value of will impact the lives of others. Living life well has positive knock-on effects on others.

Constructing your Utility Function [top]

Assuming you want to construct your Utility Function that will give better shape to the rest of your life, here is how could you go about it…

Very few of us know when we will die. Nevertheless, it is extremely useful to think about how you wish to live the last decade of your life. And, correspondingly, you need to think about what you need to do now to have that wish come true.

Start with the last decade of your life. Specify how you would like it to be. No one expects extensive detail but take the time you need to think about what you want the big pillars to look like. Write down all that you can about those pillars!

Next, think about the decade prior to that last decade and write what that must be like especially if it is to be in sync with the next decade i.e., your last decade.

Working backwards, as you get closer to today, keep narrowing the window from a decade to a day.

We tend to plan and live life forward when, in fact, we should be planning it backwards and living it forward. That is why we must advocate Time Optimized Living rather than work-life balance.

For heaven’s sake, in doing the above, do not ask yourself “OK, so how much money should I have N years from now?”. I will address that part in 2 minutes.

The first complaint you may have might be “But how do I know when I will die?”. You have to work assuming that you won’t have a sudden accident that leads to death. Then, make an educated guess that is optimistic, and not based on a bad lifestyle even if you have had one thus far. If you happen to still picture yourself incapacitated after a stroke because of, say, a lasting memory of a parent or grandparent having one, good – it will help you revise what you should do today instead of continuing your current lifestyle. Lifestyle diseases happen because of one reason – lifestyle!

Remember, it’s not about getting to the top of Everest, it’s about being prepared throughout your life to do it at any time, but be cool enough to never actually do it. Now that is wisdom!

Items to Include in your Utility Function [top]

  1. Good physical health – with a drug-free pain-free existence until the day you die.
  2. Good mental health – with almost no loss of memory until the day you die.
  3. Good emotional health – so that others want to be around you until the day you die.
  4. Good spiritual health – starting today, until the day you die.

You cannot deny that anyone who has all of the above has maxed out and led a good life!

In addition, you may want to minimize the harm you do to the planet and other creatures on it, including other human beings.

Let’s call this the Include List.

Items to Exclude from your Utility Function [top]

Fame, immense wealth and power or even prestigious jobs are not what we’re naturally engineered to have. If you’ve managed to be on the path to get all the things in the Include List above then it might not be a bad idea to also have fame, immense wealth and power if you will do good things with them. Just don’t foolishly reverse the priority – you must give top priority to the Include List.

The amount of wealth you need to ensure you’re safe and not falling prey to the diseases of the dirt poor is much lower than you have been made to believe. You do want each day to be busy with many fulfilling tasks whether in your own business, someone else’s business, in your home or in your hobby spaces.

If you find that you are on a treadmill chasing fame, wealth or power, ask yourself what your motivation is for doing that and don’t accept a superficial answer from yourself. Choose from the correct end of the Courage-Strength-Fear-Weakness Axis.

And, for heaven’s sake, don’t think you should include a financial legacy in your Utility Function. If, by chance, you make a lot of money, sure, give most of it away to a good cause well before your death.

Collective Illusions and Private Opinions [top]

A collective illusion is a belief wrongly held by a majority of people that the majority believes in something when in fact they don’t. A simple example is “fame”. If you believe that the majority of people want fame then you are thinking just like the majority of people. However, that is in fact a wrong belief. When getting the private opinions of the public, the majority of people do not want fame for themselves. It actually ranks extremely low on the list of things people want from their lives. Yet, we think most other people want fame. That’s an example of a collective illusion.

A dangerous possibility is that uncorrected, a collective illusion can actually turn into the private opinions of the next generation – an illusion in your generation becomes their normal. Perhaps that is how God, an invention of man (do other animals think there is a God?) continues to have an existence in the minds of individuals.

When constructing your Utility Function, you must be incisive during introspection and not simply accept the superficial or what first comes to mind.

Manipulating, Moulding and Changing your Utility Function [top]

Teachers of religion, therapists, and philosophers have been relying on us to change our behaviours to have more worthwhile lives. This amounts to gradually moulding your Utility Function to something that will be better for you eventually.

Whether we trust religious teachers or others, Power Tip #1 is probably the most important one to remember. It is also a reminder to us to have a “growth mindset” – a personal philosophy, an internal culture, a belief that you can change anything that is within you if you put your mind to it.

Of all the things that one can change, perhaps the most powerful one that can be easily mastered if one is simply consistent with the attempt for a few days is our preference or dislike for certain foods. Here is a practical example to illustrate that you can implement for yourself. Let’s say you believe your life’s joy is maximized if you can eat as much processed, sugary junk made of refined carbs and animal products. Let’s say you don’t think much of fresh fruit and vegetables when it comes to your happiness. You thus believe that your Utility Function hits a maximum value if you can carve out a path for eating as much crap as you can. Of course, you know you are lying to yourself and harming your current and future self in the bargain. But now, what if you did not have to think that the crap was what it is, i.e., crap, but instead just focused on the Utility you gain from eating just a tiny bit more fruit and vegetables. Doable right? Now, stick with that tiny tweak consistently for a few days. You will notice with each passing day that the tiny bit is becoming a little bit more than it was on day zero. You will also notice that the acceptability of fruits and veg is much more than it was on day zero. Over time, if you allow this behaviour to compound, you will automatically squeeze out the junk from your meal because your stomach is limited, even if your greed is not.

I used food as an example, but you could do the same with most other aspects of life too. Two common areas that take up most of our lives: [1] Avoid junk on screens by actively watching what makes you a better person. [2] Stay away from friends who are like junk in your life by seeking time with those people who leave you feeling good about the present and your future.

The Process of Maximizing [top]

Most of today’s conversation so far has been about defining an objective. We have not delved into the details of how you could achieve that objective.

Your Utility Function as prescribed to yourself is ideal and what actually transpires is unlikely to be that perfect ideal. Your goal should be to stay focused on your daily life to minimize the Implementation Gap between the ideal path and the actual path. Investing time in constructing your Utility Function is an important first step. But, if you leave it with just that thinking part, then you will have gained some knowledge about yourself but not used it intelligently. Knowledge may be power but knowledge without action is useless.

To close the Implementation Gap you will have to nurture your Internal Culture, being Purunoid to have the appropriate balance between acquiring external wealth at the expense of internal wealth. Refusing to think is evil because it will cause you unhappiness in the end. Death is the only guarantee in life – good to approach it with dignity.

Parting Message [top]

Mastery over your Utility Function is about introspection, projection, moving backwards through time and then living life forwards in a systematic manner. Others can guide, help, cooperate and collaborate with you but, in the end, from today onward, the real work has to be done by you.

If everything you do is consistent with your core beliefs and desires, then a long and healthy life of joy is pretty much guaranteed to be yours. If you want to be guided in detail, you know how to reach me, and if you found this useful, please do share it with others.



Dr Purnendu Nath spends his waking hours focusing on helping individuals and organizations reach their goals, to make the world a better place. He speaks, writes and advises on topics such as finance, investment management, discipline, education, self-improvement, exercise, nutrition, health and fitness, leadership and parenting.

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