In the TED Talk below Dr. Daniel Kahneman, Inventor of Behavioral Economics, explains how our happiness is determined and sometimes distorted by what he describes as our two selves.
The Way a Story EndsIt's very important that we are conscious of the way a story ends in our memories. A bad ending can make our remembering self permanently unhappy about an otherwise very happy experience. Therefor it's essential to recognize and compartmentalize a negative ending to what's going to be a memory narrative. A personal experience: This year I took the coolest vacations of my life: While traveling from Central to South America, I spent 4 days in the surreal San Blas Islands (in between Panama and Colombia), it was a time of relaxation on sunny beaches, meeting the locals of the islands (and even learning a little of their language), eating great food, drinking fine wine and rum by bonfires, making new friends and snorkeling in clear waters. However it ended with two fairly disastrous events: 1) At the border crossing my passport was almost ruined by water damage 2) Our first night in Colombia we got robbed.
When these two events happened I made a conscious decision to categorize them as simply part of the risks of travel, and not include them in my mental narrative of the San Blas Islands vacation.
Memory Anticipation Feedback Loops - Our Remembering Self is the one in charge of making decisions, it makes decisions based upon future anticipated memories. We derive a lot of happiness from these 'self-fulfilling prophesies', so if there's a decision you need to make, imagine yourself being happy in the future reflecting on the decision.
Spend Time with People You Like - and who make you feel good about yourself. It's the most significant measurable factor of happiness.
Make it to $60K - It's turns out money does buy happiness, but the happiness-to-income correlation flattens out at $60K a year for Americans and other comparable countries. So do whatever it takes to get your income to $60K yearly but after that focus on other areas of your life to maximize happiness.
Thought Experiment: At the end of a vacation all your pictures are going to be destroyed and you will receive a drug that gives you amnesia. All your memories of the vacation are going to be destroyed. Would you choose the same activities? If so then it illustrates a significant difference between the way your Remembering Self and your Experiencing Self perceives happiness.