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Utility Functions

Updated: Dec 30, 2021

What are utility functions? Well utility could be defined as how much something is worth, but can also be used for describing if something brings happiness which is how I will be using the term in this article. Functions of utility would be different ways you can calculate utility, and the goal is how you can maximize utility because everyone wants to be more happy. And from these utility functions, you can develop a mental model of how to think about happiness, and how to bring more happiness into your life.

This is a very simple example of how you could calculate your utility:

Max(U) = b*B +g*G+Y

U = Utility = Happiness

b = How much happiness/utility you gain from something that is bad for you

Example: Eating unhealthy food

B = Amount of bad thing

Example: Three cookies

g = How much happiness/utility you again from something that is good for you

Example: Hanging out with friends

G = Amount of good thing

Example: One hour hanging out with friends

Y = Baseline Happiness

Example: Your baseline happiness is feeling neutral … feeling neutral would be 0

Given this calculation these are three strategies you can implement to try and maximize utility…

First Strategy: Get More Stuff

Max(U | B,G) = b*B +g*G+Y

In this example the only variables you control are B and G, how much bad and good things you can do to gain happiness. The way to maximize your utility is to do as many good or bad things as you can so you can be more happy. There are downsides and upsides to this strategy. One upside is that it is very easy and doesn’t require much effort and discipline because you naturally want to do things that make you happy. A downside is that you will be doing things that are bad for you so you can be happy in the short term, but it will have consequences on you and your utility in the long run. So, what's another way of maximizing utility that doesn’t incentivize maximizing B?

Second Strategy: Change preferences

Max(U | b,g) = b*B +g*G+Y

In this strategy the variables you affect are b and g. This is a very cool concept, because usually when we are doing something fun, like playing with our friends, we aren’t thinking “Maybe I can get even more utility from this if I appreciate the time with my friends more and live in the moment!” And although you may still do bad things that maximize utility, you will be getting more happiness from whatever that harmful activity is. The downside to this strategy is it takes more conscious effort to apply the strategy.

Third Strategy: Meditation

Max(U | Y) = b*B +g*G+Y

The last strategy is where the variable you are affecting is your baseline happiness (Y). This can be done through many different ways, one of which is meditation where you try to live in the moment. But you can also do other things like, getting more sleep, eating healthy foods, exercising more, and maybe to try and be aware of habits like Automatic Negative Thoughts (ANTs). The challenge for this strategy is also that you have to put in a significant amount of effort, so unless you make it a habit, it might be hard to continue consistently applying this strategy.


What makes you happy? And how can you apply utility functions in your everyday life? It is important to learn about utility functions and that happiness isn’t just something that comes and goes as it pleases, but something we have some degree of control over. We all need to feel negative emotions, and it is impossible to always be happy. But simple things like living in the moment and appreciating the time, things, and people in your life can make a huge difference.


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