March 11, 2025 • 26 mins
Understanding Hedonic Adaptation in Behavioral Finance with Dr. Bryan Foltice
Welcome to the Bryan Foltice Behavioral Finance Podcast! In this episode, Dr. Bryan Foltice dives deep into the concept of hedonic adaptation, also known as the hedonic treadmill. Dr. Foltice shares his personal journey, transitioning from the corporate world to academia, and illustrates how we often adapt to both positive and negative life events. He further discusses the impact of this adaptation on financial decisions, the pitfalls of lifestyle inflation, and the importance of aligning financial goals with personal values. Learn practical advice on practicing gratitude, spending on experiences, and aligning your finances with life goals for long-term happiness. Tune in for an insightful discussion on making smarter, more informed financial decisions.
00:00 Introduction to the Podcast
01:33 Understanding Hedonic Adaptation
02:14 Personal Journey: From Investment Banking to Academia
07:13 Achieving Tenure: The Emotional Rollercoaster
14:08 Hedonic Adaptation in Financial Decisions
19:51 Strategies to Overcome Hedonic Adaptation
24:02 Aligning Financial Goals with Life Purpose
26:17 Conclusion and Final Thoughts
Bryan Foltice Behavioral Finance Website - www.bryanfoltice.com
Money Strong Program - www.moneystrong.net
Instagram - www.instagram.com/bryanfoltice
Linkedin - https://www.linkedin.com/in/bryan-foltice-2578a116/
Disclaimer: www.bryanfoltice.com/cv
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:04):
Welcome to the Brian FoltisBehavioral Finance Podcast,
where we unravel the mysteriesof behavioral finance and unlock
the secrets to making smarter,more informed decisions with
your money.
Now, here's your host, Dr.
Brian Foltis.
Hello and welcome to the BrianFoltis Behavioral Finance
Podcast.
(00:24):
My name is Brian Foltis, andtoday we are going to unpack
what is called Hedonicadaptation or what we know as
the hedonic treadmill.
So thank you very much forlistening today.
If you are liking what you'rehearing from the podcast, please
make sure you like and subscribeso you never miss another
(00:46):
episode.
Also tell a friend that's how wespread the word and by leaving.
Nice kind reviews.
It also opens up the door fornew ears to listen to this
podcast.
So thanks everybody.
Wherever you are.
I am very pleased to see thegrowth and the spreading of the
(01:10):
downloads that I'm seeing herefor this podcast.
So thank you very much.
Even if I don't hear from you.
But if you do have any comments,I would love to hear from you.
You can find me at brianfoltis.
com, B R Y A N F O L T I C E.
com, or you can find me onInstagram or YouTube.
(01:30):
I've got content out there foryou as well.
So today we are going to belooking at this hedonic
adaptation.
So this Hedonic adaptation orhedonic treadmill.
We're going to use those termsinterchangeably.
It's our tendency to return to astable level of happiness after
(01:54):
experiencing positive ornegative changes in our life.
Something really good happens toyou.
That's good.
but very quickly we adapt and itchanges.
Similarly, if something reallynegative happens to you, yes,
it's bad, but then we also adaptto this.
And so whenever I think about,we're going to talk about
(02:17):
behavioral finance, how thatworks, but In my everyday life,
I always think about thishedonic adaptation and I'll
never forget the day that I gottenured to become a tenured
finance professor and All theway back to, we gotta go back
(02:38):
now to 2009 or 10, 2009 or 10,when I decided to leave my job
at an investment bank and wasworking as the manager of
basically the settlements teamfor derivatives at a large
(02:58):
investment bank and.
Hey, I'm going to pick up, getback in shape.
I'm going to sell all of mypersonal belongings.
Everything that my ex wife and Ihad at the time, we're able to
pack up into a small minivan andwe're going to sell everything
(03:19):
else, drive up, put it instorage and move ourselves, our
13 month old son and our dogover to Germany.
To do the PhD program and toplay basketball at the same
time.
So we sold everything moved overand lived in Germany for five
(03:41):
years trying to get the PhD andthe idea or the ultimate goal
that I had in mind was I had apretty strong sense that I did
not after the PhD want to goback into investment banking.
I didn't get a lot of purposeout of there.
It was a bit soul sucking forme, although it's.
(04:02):
I know some people like it.
They get a lot of purpose fromit.
Like I said, just wasn't not forme.
I wanted to have more of adirect impact, even if that
meant taking a little bit lesspay.
Nevertheless, five years going,living in a foreign country,
going through the ups and downsof what that live is like living
(04:23):
as a foreigner in a foreign landwhere you're not definitely
speaking your mother languageand all of that in order to get
to this point where I said, man.
Wouldn't it be awesome?
My goal is to get a good job asa tenured, or to get on a
tenured track field for afinance professor.
(04:44):
And man, if I could just gettenured and In this job, then I
have job security for the restof my life and I would have to
do something really crazy inorder to get fired.
So this whole goal that I had inmind had this whole job security
and all this great stuff inmind.
(05:04):
And so I were working for thisand there were days where it's
like, Oh man, this is.
Very uncertain and even as I wasworking through my doctorate to
try to get publications and gothrough that process in order to
get the doctorate was basicallyuncertain all the way to the
last day.
Just making sure you're finallyand finally walking away from
(05:27):
Germany with what I came here todo.
And that was.
Getting my PhD, having mydoctorate, and walking away with
those letters before my name.
Doctor.
I always say I don't give a shitwhat you call me.
But if you happen to call medoctor, it's man, I worked my
ass off for that thing.
(05:48):
It wasn't something that my, mydissertation chair just gave to
me just for completing a little,program or something like that.
I basically worked.
As a researcher and teacher atthat university in order to get
that, basically my dissertationwas, I could basically get
(06:09):
tenured from that dissertation.
That's a fucking hard.
It was in order to get thatdoctorate in Germany and to do
it in a foreign land where Ihave to update my visa every
year and prove my existence andhave that uncertainty.
All the way to the end was justa lot.
And so I always felt I walk alittle bit taller after that
(06:31):
experience.
Because we made it through, butit wasn't without its
challenges.
And man, we really fought forthat.
And some, there are someprograms where you can go
through, do your little threeyear program, and you'll,
somebody will just, rubber stampyour doctorate.
That was not the program that Iwas in, friends.
I was in a hardcore researchschool doing some interesting
(06:56):
work with some, Absolutelybrilliant people, and I made it.
I got to the other side.
So now, the next step.
I've got five to six years.
Six years is usually thetimetable in order to get
tenured.
And so now I found myself atButler.
We went through all of thatinterview process to get to
Butler.
And there we go.
(07:17):
We're at Butler University inIndianapolis, Indiana.
Love that school.
And now, what do we do to gettenured?
Alright, don't do anythingstupid, Brian.
Come on.
I bring it every day.
Don't do anything stupid, andyou go through this process, and
we, at Butler, we do a two yearreview and a four year review,
(07:38):
and at that four year review,was getting some really good
signals from those around me inthe business school saying, hey,
you might, You can think aboutgoing up a year early if you
want to, and it's looking likeyour stuff is looking really
good.
You're doing awesome in theclassroom.
Your research is great.
Your service is on its way.
Like you can, green light to dothis.
(07:59):
So I thought certainly, thatgives me one less year to do
something stupid, and I've gotall my ducks in a row, I'm going
to do this.
So I put my tenure up in myfifth year, and go through this
process.
Now the process, even if you putthe most rock solid dossier
together.
So we call it the dossier.
(08:20):
For me, it was almost twobinders worth that were probably
about three to four inchesthick.
So think monster binders.
I was the last person to do thepaper based version of the
dossier.
I told my whole life storyliterally in paper version.
It was two binders, four inchesalmost for each.
(08:43):
And then you submit that onOctober 1st and then you wait
and it goes through all thedifferent channels and you still
don't know.
if you're tenured.
Don't know if you're tenured andyou get some levels go, Oh, I
passed this level.
(09:03):
Now it's moving up to the Deanand that path.
Now it's moving up to theProvost, that path.
But every single time it's underscrutiny for this procedure.
And then if all goes well, youfinally get, it got signed off.
At the board of directors levelthey're the final level to take
(09:25):
a look at it.
They're more or less signingoff.
If it's all green lit up untilthen sign off on it.
And then you get that email thatsays, congratulations, you've
been 10 or actually, I'm sorry,I take that back.
I didn't get an email.
I said it was me and anotherguy.
Who is going through the sameprocess.
And now this is April of 2020when this happened.
(09:49):
So we are in lockdown for COVIDand I get an email from the
acting director at the timeacting Dean who said can you
guys jump on a quick call ateight 30?
I think you're going to likewhat.
I have to tell you.
So of course we're like, yes,this is it.
830 we jump on this call and weget the news, everything we've
(10:12):
been working for now for 11 oractually 10 years.
So five years in Germany.
Five years at Butler, everythingI've been working for finally
pays off.
And I get the call says,congratulations, you've been
promoted to associate professorand are now tenured.
(10:32):
I said, Oh, great.
Thank you very much.
Thank you.
And then it was a very shortconversation.
And as we were wrapping up, thiswas now at 837, 837.
We got done with that phonecall.
It was a seven minute phonecall.
I'll never forget it.
(10:52):
And I asked the question as wewere jumping off that call.
I said, do at least we get apiece of paper or a certificate
saying, what we accomplished?
And the dean said no, we don'treally have anything like that.
She said you can go and updateyour email signature.
I said, okay.
(11:12):
So I updated my email signature.
And then.
That was it.
By 8.
45, I got a shit pile of anemail that I had to put out,
fire, and I had to put out at 8.
45, and I was right back towhere I was before, right before
(11:33):
that news came shoveling thesame shit.
And I thought, what is this?
Now friends, I have a longstory, but painting this picture
of hedonic adaptation where youget this great news, but then
all of a sudden reality strikesand you go right back to where
you were.
(11:53):
And so think about it in yourlife.
You've had that big moment andit happens and then you walk
away and go, Oh, that was it.
I went, I was so excited forthis.
And when it happens now, all ofa sudden.
It's gone, I don't have any,what's left?
What's very common In academiais what I've gone through is you
(12:15):
have this and then you get itand it's very underwhelming and
then you have almost thisexistential crisis.
Of course, this existentialcrisis for me in 2020 coincided
not only with.
but also going through a divorceand all the transactions that
(12:36):
come with it.
And it was literally like, okay,I got this now from a career
standpoint, what am I, what'sleft?
What am I doing?
I have the security, but nowthere's really not much left to
do.
So how do I get motivated to.
do more research or to do a goodjob or not do anything stupid
like all these things andrealize that this is our
(12:59):
tendency after something goodhappens to just reset and adapt
had the same thing with Alwayslook forward to my summer
paychecks.
You see that and you're like,Oh, I can't wait till that day
because then I get an extrapaycheck for my summer work in
addition to my regular salary.
And I always realize once thatnumber hits, it's such a
(13:22):
fleeting feeling where it's goodand then you go right back to
where you were.
And nothing really changes.
And so I'd like you to thinkabout that.
What that looks like in yourlife.
And we're going to have to talkabout now, how do we, if this is
actually happening, how can wemake something good out of this?
Or how can we do good decisions,especially when it comes to
(13:45):
finances.
Okay.
So let's bring hedonicadaptation into the world of
finance here.
So once again, you get a raise,you get a bonus.
This feels awesome.
It's great, but it's veryfleeting.
So that's my experience too.
That extra money it's thatfeeling that you see when you
see basically on a computerscreen is very fleeting and
(14:09):
then.
We also have, after this, wealso have spending habits that
can creep up.
Now we're going to, this is ourlifestyle creep or our lifestyle
inflation that can come with it.
So if you get that extrapaycheck, you go, hey, I'm going
to, if I have this bigger houseor if I have this nicer car,
(14:29):
then I'm going to be happy.
And then you get that biggerhouse, you get that bigger car
and you feel very underwhelmedby it.
And so perhaps you double downand you chase a bigger house or
a bigger car, a nicer car fromthat.
This is our hedonic treadmillthat we're following and it
leads to unhappiness,dissatisfaction and some cases
(14:55):
this is what can lead peopleinto overspending.
high amounts of debt, whichcauses high amounts of stress.
So the opposite of wellness, theopposite of happy is what
happens when we're running onthis hedonic treadmill.
Another example here of thishedonic adaptation we've seen
(15:16):
with lottery winners.
Once again, they get thislottery winner and then their
lifestyle.
it and they find themselves veryunhappy.
So this reminds me of the quote,I'm going to quote Michael Brady
from the old school Brady bunch.
It says, wherever you go, thereyou are.
And now this is starting to movea little prelude into the bigger
(15:39):
picture here.
So if you are happy with a smallhouse, you're going to be happy
with a big house.
If you are unhappy with a Bighouse, you're gonna, or a small
house, you, wherever you go,there you are going to be
unhappy in that bigger house.
(16:00):
And that house size or that caris not going to make you
satisfied or happy.
I've seen this with people whohave highly stressful jobs.
They think that they are goingto give themselves some relief.
around their stress by buyingsomething.
And so they, or maybe they'reworking a lot.
(16:22):
I've seen this with some lawenforcement agents and different
service people who are workingextra hours to make extra money.
But because of that, they arealso missing their family and
their family time.
So in order to compensate forthat, They will buy extra shit
for them and hopefully thatappeases them.
But once again, that just, theyadapt, the happiness level
(16:46):
adapts and the issues remainpersistent.
But when we talk about that, butwhat about on the flip side
here?
What if something bad happens toyou?
So if you have this negativesetback, and this is where I
think we often, we overlookthis, but.
If something bad happens, wealso adapt.
(17:08):
So that's good news.
We will reset, we'll recenter.
You get a pay cut, you get a jobloss.
We will survive, we will adapt.
Now, of course, when thisnegative thing happens, we have
what is called the negativitybias, which means we will recall
that negative event four timesis more than we will any
positive events, butnevertheless, when that happens,
(17:30):
We resettle our reference pointand we adapt.
So we're going to talk abouthere.
Some of the dangers, if we areconstantly seeking these
financial upgrades.
So whether that be incomethrough higher salaries, we're
going to work more, work harderin order to get that bigger
salary, or if it's on a spendingside to get that bigger house or
(17:52):
the fancier items.
Remember if that's all we aredoing, once we get there.
It is going to be a very shortamount of satisfaction and it's
going to be fleeting and we'regoing to have to reset the
goalposts.
The goalposts always reset.
So whether you're trying tobecome a multi millionaire, once
(18:13):
you get to that multimillionaire standpoint or area,
once you get there, what do youthink is going to happen?
You're going to be totallysatisfied?
No.
You're going to get off thatseven minute Zoom call like I
did.
And you're going to need thatnext goal, or you're just going
to fall into this existentialcrisis until you figure out what
your next goal is.
(18:35):
This is where this chasing ofmoney can be more problematic
than we often think.
And along those lines, when, ifwe're having that spending
problem, trying to find theshort term things.
And then this is where we'regoing to differentiate between
(18:57):
things and experiences here.
We're just trying to spendthings on things in order to
give ourselves that happiness.
Meanwhile, we might want toconsider this long term.
Financial security compared tothe short term pleasures, what
each one can give.
And so now we're going to startto work on the overcoming
(19:20):
process, trying to tie this alltogether and close the loop.
But we first, before we do this,if we were trying to remain
happy, may I offer a practice ofgratitude?
This is.
A really important thing thatI've adapted or adopted in my
life.
And, oh my god, it goes a longway.
(19:44):
Now I struggle sometimes withsome of these things because as
a researcher in a math brain, Iwant to quantify this.
So I want to quantify this with,gratitude, with happiness in
numbers.
At this point, what I can dothough, is I can use my own
anecdotal evidence of how I feelwhen I have done my gratitude
(20:11):
practice.
So for me, if I am really doingwell on this, that means it is
the first thing I do before Iwake up and grab my phone.
Think about three things thatI'm grateful for.
It is the last three things Ithink about before I go to bed.
And those things set thismindset of gratitude.
(20:35):
And again, I can't quantifythis, but it increases your
happiness and sets your day offon such a different note and a
different level.
then wake it up and grabbingyour phone, which is, otherwise
going to be the default.
So anytime I can practicegratitude, sometimes I'll do my
gratitude meditation, 10minutes.
(20:56):
Man, then I start reallyclicking around this and it
suddenly increases that.
That base level of happinesswhen you start contemplating and
thinking about all the greatthings that you have and you're
actually putting some thoughtinto it instead of having that
one moment and then letting itgo and constantly searching for
that happiness.
You're actively finding yourgratitude and your happiness
(21:19):
because it's around you, but youhave to just carve out some time
and some intention aroundgetting there.
Another thing.
Around our spending is let'sconsider spending on
experiences, not things.
So these are what we callexperience dividends.
(21:40):
Now buying a thing has verylimited experience dividend.
And sometimes if you're usingit, I've noticed sometimes with
the furniture, the decorationsaround the house.
So we get to experience that cancause a little bit of a gray
area, which I'm, I now I'm infavor of.
But some of these things thateither get put in a closet or in
(22:02):
the garage that we don't useconsider spending on experiences
if you're going to spend, so thetrips that constantly give us
memories, give us experiences,we can come back to those and
those will give us that lifetimeof happiness.
Which is opposed to that sevenminute Zoom call, which was a
one drip and then done.
(22:24):
And sometimes that's what athing is.
You try to buy something or someclothes or in my case it's a
nice pair of shoes and you thinkthat's gonna make me happy and
it gives you that dopamine burstwhen you pay for it.
And then it goes in your closet.
You might wear it a couple oftimes.
So that's where we say, let'stry to spend on experiences, not
just things.
(22:45):
Pay yourself first.
This is one way we can avoidthat spending trap.
If we have that new money, makesure it has a name and a place
to go.
And is going to help you achieveyour financial goals instead of
getting if you don't have thatset in place and this kind of
goes to what we said before orwhat we try to do with our
financial plan is pay yourselffirst, set it up automatically.
(23:09):
So it goes.
So not only do you have to, youdon't have to step in and
intervene, but you also get ridof the temptation to spend it on
something.
That money that you've designedto save is still sitting in your
checking account.
You just want to get that onestep away from you as quickly as
possible and through thatautomation You'll be able to get
(23:31):
there and then finally to thebigger picture here as we're
trying to set our financialgoals I want us to think not
just in numbers.
So the numbers are helpful.
That means we can quantify it.
That is, a part of our SMARTgoals.
A good way to measure, a goodway to be specific around having
(23:54):
our financial goals.
But we also realize now that weknow about this hedonic
adaptation and the hedonictreadmill, reaching your
financial goals is not going togive you long term happiness.
What you might be able to dowith that money when you hit
your goals is something that canhelp you with long term
(24:15):
happiness, whether it's savingfor your future or investing to
give yourself financial freedom,financial independence, create
the life you want.
So now all of a sudden ourfinancial goals are aligning
with something else, aligningwith the experiences that we
(24:36):
want to have.
The purpose that we want to livewith now, our money is in
alignment with the, that purposeand those goals, those
relationships, your overallhealth, physical, and mental.
This is where it all sinks intoplace.
(24:57):
And this is where I finally.
I have realized in my own lifethat it is not about hitting a
number.
It is about having your financesaligned with what you want to do
with your life and using themall in conjunction with each
other.
So if I put all my effort intojust hitting a number and all my
(25:19):
relationships go to shit, all myphysical health is trash and I'm
doing a job that I don't like.
I'm totally miserable, but I'mhitting that number.
It's not worth it.
And that's where we want to takea step back and think about how
can we do how can we get ourfinancial goals to align with
that purpose?
(25:40):
With that friends, I am going torelent.
So thank you very much.
If you've made it this far ifyou have any questions or any
comments, we'd love to hear fromyou.
You can find me at BrianFoltis.
com or on Instagram or YouTube.
That's your best bet.
Otherwise, have a wonderful day.
Thank you very much.
(26:01):
We will see you on the nextepisode.
Thank you for tuning in toanother episode of the Brian
Volti Behavioral FinancePodcast.
We hope you found ourexploration into the fascinating
world of human behavior andfinance, both enlightening and
thought provoking.
Be sure to subscribe for futureepisodes and until next time,
stay curious and financiallysavvy.
Welcome to the Brian FoltisBehavioral Finance Podcast,
where we unravel the mysteriesof behavioral finance and unlock
the secrets to making smarter,more informed decisions with
your money.
Now, here's your host, Dr.
Brian Foltis.
Hello and welcome to the BrianFoltis Behavioral Finance
Podcast.
(00:24):
My name is Brian Foltis, andtoday we are going to unpack
what is called Hedonicadaptation or what we know as
the hedonic treadmill.
So thank you very much forlistening today.
If you are liking what you'rehearing from the podcast, please
make sure you like and subscribeso you never miss another
(00:46):
episode.
Also tell a friend that's how wespread the word and by leaving.
Nice kind reviews.
It also opens up the door fornew ears to listen to this
podcast.
So thanks everybody.
Wherever you are.
I am very pleased to see thegrowth and the spreading of the
(01:10):
downloads that I'm seeing herefor this podcast.
So thank you very much.
Even if I don't hear from you.
But if you do have any comments,I would love to hear from you.
You can find me at brianfoltis.
com, B R Y A N F O L T I C E.
com, or you can find me onInstagram or YouTube.
(01:30):
I've got content out there foryou as well.
So today we are going to belooking at this hedonic
adaptation.
So this Hedonic adaptation orhedonic treadmill.
We're going to use those termsinterchangeably.
It's our tendency to return to astable level of happiness after
(01:54):
experiencing positive ornegative changes in our life.
Something really good happens toyou.
That's good.
but very quickly we adapt and itchanges.
Similarly, if something reallynegative happens to you, yes,
it's bad, but then we also adaptto this.
And so whenever I think about,we're going to talk about
(02:17):
behavioral finance, how thatworks, but In my everyday life,
I always think about thishedonic adaptation and I'll
never forget the day that I gottenured to become a tenured
finance professor and All theway back to, we gotta go back
(02:38):
now to 2009 or 10, 2009 or 10,when I decided to leave my job
at an investment bank and wasworking as the manager of
basically the settlements teamfor derivatives at a large
(02:58):
investment bank and.
Hey, I'm going to pick up, getback in shape.
I'm going to sell all of mypersonal belongings.
Everything that my ex wife and Ihad at the time, we're able to
pack up into a small minivan andwe're going to sell everything
(03:19):
else, drive up, put it instorage and move ourselves, our
13 month old son and our dogover to Germany.
To do the PhD program and toplay basketball at the same
time.
So we sold everything moved overand lived in Germany for five
(03:41):
years trying to get the PhD andthe idea or the ultimate goal
that I had in mind was I had apretty strong sense that I did
not after the PhD want to goback into investment banking.
I didn't get a lot of purposeout of there.
It was a bit soul sucking forme, although it's.
(04:02):
I know some people like it.
They get a lot of purpose fromit.
Like I said, just wasn't not forme.
I wanted to have more of adirect impact, even if that
meant taking a little bit lesspay.
Nevertheless, five years going,living in a foreign country,
going through the ups and downsof what that live is like living
(04:23):
as a foreigner in a foreign landwhere you're not definitely
speaking your mother languageand all of that in order to get
to this point where I said, man.
Wouldn't it be awesome?
My goal is to get a good job asa tenured, or to get on a
tenured track field for afinance professor.
(04:44):
And man, if I could just gettenured and In this job, then I
have job security for the restof my life and I would have to
do something really crazy inorder to get fired.
So this whole goal that I had inmind had this whole job security
and all this great stuff inmind.
(05:04):
And so I were working for thisand there were days where it's
like, Oh man, this is.
Very uncertain and even as I wasworking through my doctorate to
try to get publications and gothrough that process in order to
get the doctorate was basicallyuncertain all the way to the
last day.
Just making sure you're finallyand finally walking away from
(05:27):
Germany with what I came here todo.
And that was.
Getting my PhD, having mydoctorate, and walking away with
those letters before my name.
Doctor.
I always say I don't give a shitwhat you call me.
But if you happen to call medoctor, it's man, I worked my
ass off for that thing.
(05:48):
It wasn't something that my, mydissertation chair just gave to
me just for completing a little,program or something like that.
I basically worked.
As a researcher and teacher atthat university in order to get
that, basically my dissertationwas, I could basically get
(06:09):
tenured from that dissertation.
That's a fucking hard.
It was in order to get thatdoctorate in Germany and to do
it in a foreign land where Ihave to update my visa every
year and prove my existence andhave that uncertainty.
All the way to the end was justa lot.
And so I always felt I walk alittle bit taller after that
(06:31):
experience.
Because we made it through, butit wasn't without its
challenges.
And man, we really fought forthat.
And some, there are someprograms where you can go
through, do your little threeyear program, and you'll,
somebody will just, rubber stampyour doctorate.
That was not the program that Iwas in, friends.
I was in a hardcore researchschool doing some interesting
(06:56):
work with some, Absolutelybrilliant people, and I made it.
I got to the other side.
So now, the next step.
I've got five to six years.
Six years is usually thetimetable in order to get
tenured.
And so now I found myself atButler.
We went through all of thatinterview process to get to
Butler.
And there we go.
(07:17):
We're at Butler University inIndianapolis, Indiana.
Love that school.
And now, what do we do to gettenured?
Alright, don't do anythingstupid, Brian.
Come on.
I bring it every day.
Don't do anything stupid, andyou go through this process, and
we, at Butler, we do a two yearreview and a four year review,
(07:38):
and at that four year review,was getting some really good
signals from those around me inthe business school saying, hey,
you might, You can think aboutgoing up a year early if you
want to, and it's looking likeyour stuff is looking really
good.
You're doing awesome in theclassroom.
Your research is great.
Your service is on its way.
Like you can, green light to dothis.
(07:59):
So I thought certainly, thatgives me one less year to do
something stupid, and I've gotall my ducks in a row, I'm going
to do this.
So I put my tenure up in myfifth year, and go through this
process.
Now the process, even if you putthe most rock solid dossier
together.
So we call it the dossier.
(08:20):
For me, it was almost twobinders worth that were probably
about three to four inchesthick.
So think monster binders.
I was the last person to do thepaper based version of the
dossier.
I told my whole life storyliterally in paper version.
It was two binders, four inchesalmost for each.
(08:43):
And then you submit that onOctober 1st and then you wait
and it goes through all thedifferent channels and you still
don't know.
if you're tenured.
Don't know if you're tenured andyou get some levels go, Oh, I
passed this level.
(09:03):
Now it's moving up to the Deanand that path.
Now it's moving up to theProvost, that path.
But every single time it's underscrutiny for this procedure.
And then if all goes well, youfinally get, it got signed off.
At the board of directors levelthey're the final level to take
(09:25):
a look at it.
They're more or less signingoff.
If it's all green lit up untilthen sign off on it.
And then you get that email thatsays, congratulations, you've
been 10 or actually, I'm sorry,I take that back.
I didn't get an email.
I said it was me and anotherguy.
Who is going through the sameprocess.
And now this is April of 2020when this happened.
(09:49):
So we are in lockdown for COVIDand I get an email from the
acting director at the timeacting Dean who said can you
guys jump on a quick call ateight 30?
I think you're going to likewhat.
I have to tell you.
So of course we're like, yes,this is it.
830 we jump on this call and weget the news, everything we've
(10:12):
been working for now for 11 oractually 10 years.
So five years in Germany.
Five years at Butler, everythingI've been working for finally
pays off.
And I get the call says,congratulations, you've been
promoted to associate professorand are now tenured.
(10:32):
I said, Oh, great.
Thank you very much.
Thank you.
And then it was a very shortconversation.
And as we were wrapping up, thiswas now at 837, 837.
We got done with that phonecall.
It was a seven minute phonecall.
I'll never forget it.
(10:52):
And I asked the question as wewere jumping off that call.
I said, do at least we get apiece of paper or a certificate
saying, what we accomplished?
And the dean said no, we don'treally have anything like that.
She said you can go and updateyour email signature.
I said, okay.
(11:12):
So I updated my email signature.
And then.
That was it.
By 8.
45, I got a shit pile of anemail that I had to put out,
fire, and I had to put out at 8.
45, and I was right back towhere I was before, right before
(11:33):
that news came shoveling thesame shit.
And I thought, what is this?
Now friends, I have a longstory, but painting this picture
of hedonic adaptation where youget this great news, but then
all of a sudden reality strikesand you go right back to where
you were.
(11:53):
And so think about it in yourlife.
You've had that big moment andit happens and then you walk
away and go, Oh, that was it.
I went, I was so excited forthis.
And when it happens now, all ofa sudden.
It's gone, I don't have any,what's left?
What's very common In academiais what I've gone through is you
(12:15):
have this and then you get itand it's very underwhelming and
then you have almost thisexistential crisis.
Of course, this existentialcrisis for me in 2020 coincided
not only with.
but also going through a divorceand all the transactions that
(12:36):
come with it.
And it was literally like, okay,I got this now from a career
standpoint, what am I, what'sleft?
What am I doing?
I have the security, but nowthere's really not much left to
do.
So how do I get motivated to.
do more research or to do a goodjob or not do anything stupid
like all these things andrealize that this is our
(12:59):
tendency after something goodhappens to just reset and adapt
had the same thing with Alwayslook forward to my summer
paychecks.
You see that and you're like,Oh, I can't wait till that day
because then I get an extrapaycheck for my summer work in
addition to my regular salary.
And I always realize once thatnumber hits, it's such a
(13:22):
fleeting feeling where it's goodand then you go right back to
where you were.
And nothing really changes.
And so I'd like you to thinkabout that.
What that looks like in yourlife.
And we're going to have to talkabout now, how do we, if this is
actually happening, how can wemake something good out of this?
Or how can we do good decisions,especially when it comes to
(13:45):
finances.
Okay.
So let's bring hedonicadaptation into the world of
finance here.
So once again, you get a raise,you get a bonus.
This feels awesome.
It's great, but it's veryfleeting.
So that's my experience too.
That extra money it's thatfeeling that you see when you
see basically on a computerscreen is very fleeting and
(14:09):
then.
We also have, after this, wealso have spending habits that
can creep up.
Now we're going to, this is ourlifestyle creep or our lifestyle
inflation that can come with it.
So if you get that extrapaycheck, you go, hey, I'm going
to, if I have this bigger houseor if I have this nicer car,
(14:29):
then I'm going to be happy.
And then you get that biggerhouse, you get that bigger car
and you feel very underwhelmedby it.
And so perhaps you double downand you chase a bigger house or
a bigger car, a nicer car fromthat.
This is our hedonic treadmillthat we're following and it
leads to unhappiness,dissatisfaction and some cases
(14:55):
this is what can lead peopleinto overspending.
high amounts of debt, whichcauses high amounts of stress.
So the opposite of wellness, theopposite of happy is what
happens when we're running onthis hedonic treadmill.
Another example here of thishedonic adaptation we've seen
(15:16):
with lottery winners.
Once again, they get thislottery winner and then their
lifestyle.
it and they find themselves veryunhappy.
So this reminds me of the quote,I'm going to quote Michael Brady
from the old school Brady bunch.
It says, wherever you go, thereyou are.
And now this is starting to movea little prelude into the bigger
(15:39):
picture here.
So if you are happy with a smallhouse, you're going to be happy
with a big house.
If you are unhappy with a Bighouse, you're gonna, or a small
house, you, wherever you go,there you are going to be
unhappy in that bigger house.
(16:00):
And that house size or that caris not going to make you
satisfied or happy.
I've seen this with people whohave highly stressful jobs.
They think that they are goingto give themselves some relief.
around their stress by buyingsomething.
And so they, or maybe they'reworking a lot.
(16:22):
I've seen this with some lawenforcement agents and different
service people who are workingextra hours to make extra money.
But because of that, they arealso missing their family and
their family time.
So in order to compensate forthat, They will buy extra shit
for them and hopefully thatappeases them.
But once again, that just, theyadapt, the happiness level
(16:46):
adapts and the issues remainpersistent.
But when we talk about that, butwhat about on the flip side
here?
What if something bad happens toyou?
So if you have this negativesetback, and this is where I
think we often, we overlookthis, but.
If something bad happens, wealso adapt.
(17:08):
So that's good news.
We will reset, we'll recenter.
You get a pay cut, you get a jobloss.
We will survive, we will adapt.
Now, of course, when thisnegative thing happens, we have
what is called the negativitybias, which means we will recall
that negative event four timesis more than we will any
positive events, butnevertheless, when that happens,
(17:30):
We resettle our reference pointand we adapt.
So we're going to talk abouthere.
Some of the dangers, if we areconstantly seeking these
financial upgrades.
So whether that be incomethrough higher salaries, we're
going to work more, work harderin order to get that bigger
salary, or if it's on a spendingside to get that bigger house or
(17:52):
the fancier items.
Remember if that's all we aredoing, once we get there.
It is going to be a very shortamount of satisfaction and it's
going to be fleeting and we'regoing to have to reset the
goalposts.
The goalposts always reset.
So whether you're trying tobecome a multi millionaire, once
(18:13):
you get to that multimillionaire standpoint or area,
once you get there, what do youthink is going to happen?
You're going to be totallysatisfied?
No.
You're going to get off thatseven minute Zoom call like I
did.
And you're going to need thatnext goal, or you're just going
to fall into this existentialcrisis until you figure out what
your next goal is.
(18:35):
This is where this chasing ofmoney can be more problematic
than we often think.
And along those lines, when, ifwe're having that spending
problem, trying to find theshort term things.
And then this is where we'regoing to differentiate between
(18:57):
things and experiences here.
We're just trying to spendthings on things in order to
give ourselves that happiness.
Meanwhile, we might want toconsider this long term.
Financial security compared tothe short term pleasures, what
each one can give.
And so now we're going to startto work on the overcoming
(19:20):
process, trying to tie this alltogether and close the loop.
But we first, before we do this,if we were trying to remain
happy, may I offer a practice ofgratitude?
This is.
A really important thing thatI've adapted or adopted in my
life.
And, oh my god, it goes a longway.
(19:44):
Now I struggle sometimes withsome of these things because as
a researcher in a math brain, Iwant to quantify this.
So I want to quantify this with,gratitude, with happiness in
numbers.
At this point, what I can dothough, is I can use my own
anecdotal evidence of how I feelwhen I have done my gratitude
(20:11):
practice.
So for me, if I am really doingwell on this, that means it is
the first thing I do before Iwake up and grab my phone.
Think about three things thatI'm grateful for.
It is the last three things Ithink about before I go to bed.
And those things set thismindset of gratitude.
(20:35):
And again, I can't quantifythis, but it increases your
happiness and sets your day offon such a different note and a
different level.
then wake it up and grabbingyour phone, which is, otherwise
going to be the default.
So anytime I can practicegratitude, sometimes I'll do my
gratitude meditation, 10minutes.
(20:56):
Man, then I start reallyclicking around this and it
suddenly increases that.
That base level of happinesswhen you start contemplating and
thinking about all the greatthings that you have and you're
actually putting some thoughtinto it instead of having that
one moment and then letting itgo and constantly searching for
that happiness.
You're actively finding yourgratitude and your happiness
(21:19):
because it's around you, but youhave to just carve out some time
and some intention aroundgetting there.
Another thing.
Around our spending is let'sconsider spending on
experiences, not things.
So these are what we callexperience dividends.
(21:40):
Now buying a thing has verylimited experience dividend.
And sometimes if you're usingit, I've noticed sometimes with
the furniture, the decorationsaround the house.
So we get to experience that cancause a little bit of a gray
area, which I'm, I now I'm infavor of.
But some of these things thateither get put in a closet or in
(22:02):
the garage that we don't useconsider spending on experiences
if you're going to spend, so thetrips that constantly give us
memories, give us experiences,we can come back to those and
those will give us that lifetimeof happiness.
Which is opposed to that sevenminute Zoom call, which was a
one drip and then done.
(22:24):
And sometimes that's what athing is.
You try to buy something or someclothes or in my case it's a
nice pair of shoes and you thinkthat's gonna make me happy and
it gives you that dopamine burstwhen you pay for it.
And then it goes in your closet.
You might wear it a couple oftimes.
So that's where we say, let'stry to spend on experiences, not
just things.
(22:45):
Pay yourself first.
This is one way we can avoidthat spending trap.
If we have that new money, makesure it has a name and a place
to go.
And is going to help you achieveyour financial goals instead of
getting if you don't have thatset in place and this kind of
goes to what we said before orwhat we try to do with our
financial plan is pay yourselffirst, set it up automatically.
(23:09):
So it goes.
So not only do you have to, youdon't have to step in and
intervene, but you also get ridof the temptation to spend it on
something.
That money that you've designedto save is still sitting in your
checking account.
You just want to get that onestep away from you as quickly as
possible and through thatautomation You'll be able to get
(23:31):
there and then finally to thebigger picture here as we're
trying to set our financialgoals I want us to think not
just in numbers.
So the numbers are helpful.
That means we can quantify it.
That is, a part of our SMARTgoals.
A good way to measure, a goodway to be specific around having
(23:54):
our financial goals.
But we also realize now that weknow about this hedonic
adaptation and the hedonictreadmill, reaching your
financial goals is not going togive you long term happiness.
What you might be able to dowith that money when you hit
your goals is something that canhelp you with long term
(24:15):
happiness, whether it's savingfor your future or investing to
give yourself financial freedom,financial independence, create
the life you want.
So now all of a sudden ourfinancial goals are aligning
with something else, aligningwith the experiences that we
(24:36):
want to have.
The purpose that we want to livewith now, our money is in
alignment with the, that purposeand those goals, those
relationships, your overallhealth, physical, and mental.
This is where it all sinks intoplace.
(24:57):
And this is where I finally.
I have realized in my own lifethat it is not about hitting a
number.
It is about having your financesaligned with what you want to do
with your life and using themall in conjunction with each
other.
So if I put all my effort intojust hitting a number and all my
(25:19):
relationships go to shit, all myphysical health is trash and I'm
doing a job that I don't like.
I'm totally miserable, but I'mhitting that number.
It's not worth it.
And that's where we want to takea step back and think about how
can we do how can we get ourfinancial goals to align with
that purpose?
(25:40):
With that friends, I am going torelent.
So thank you very much.
If you've made it this far ifyou have any questions or any
comments, we'd love to hear fromyou.
You can find me at BrianFoltis.
com or on Instagram or YouTube.
That's your best bet.
Otherwise, have a wonderful day.
Thank you very much.
(26:01):
We will see you on the nextepisode.
Thank you for tuning in toanother episode of the Brian
Volti Behavioral FinancePodcast.
We hope you found ourexploration into the fascinating
world of human behavior andfinance, both enlightening and
thought provoking.
Be sure to subscribe for futureepisodes and until next time,
stay curious and financiallysavvy.
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