Jon Krohn: 00:05
This is episode number 836 with Dr. Nat Ware, founder and CEO of Forte.
00:19
Welcome back to the Super Data Science Podcast, I am your host, Jon Krohn. Today we’ve got the economist, Dr. Nat Ware, on the show. Nat is a renowned keynote speaker, he has one TEDx talk alone that has over two million views on YouTube and will actually be using the content from that TEDx talk as the basis of today’s episode.
00:38
Nat is also a social impact entrepreneur behind 180 Degrees Consulting, which is the world’s largest consultancy for nonprofits. He’s also the entrepreneur behind Forte, a startup that facilitates cost-free re-skilling of workforces. He holds a doctorate in economics as well as an MBA from Oxford University.
00:59
Today’s episode should be fascinating to anyone, in it Nat details why despite life on this planet being better than ever before, humans are so unhappy. And he provides concrete guidance on what you can do to become happier.
01:12
I recorded this episode live in front of an audience at an event in New York for a Switzerland-based group called the St. Gallen Symposium that I’m involved with. If you hear references to the Symposium or an essay competition during our conversation, that’s why.
01:27
On that note, if you are a graduate student anywhere in the world who would like to win an all-expenses-paid ticket to next year’s St. Gallen Symposium in Switzerland, check out their global essay competition. They have a hundred all-expenses-paid places for the top hundred essays that are submitted. I’ve got a link to make that submission in the show notes. All right, let’s jump into our conversation.
01:51
Delighted to have you as a speaker here, Nat. I’ve actually known you for a long time.
Nat Ware: 01:59
We went to Oxford together.
Jon Krohn: 02:00
And we lived in adjacent, we lived in a place at a college called Magdelene College where, there was this graduate student residence area that was quite idyllic.
02:10
So we’re here to talk about the topic of Nat’s most popular TEDx talk. When I see this talk, even just the title of the talk, it’s so gripping to me, that I felt like it had to be the topic that we’d start off with today. So in your wildly popular TEDx talk on YouTube with over 2.2 million views at the time of us sitting here tonight, you detail why despite the world in terms of quantitative metrics being better than ever in terms of lifespans, in terms of quality of education, in terms of violence, both domestically as well as in terms of geographic disputes, there’s never been a better time in history to be alive, yet despite this so many people are unhappy.
03:01
So as a jumping off point into talking about this, in your talk, you talk about three types of expectation gap that drive this, maybe I’m putting you on the spot with that, I don’t know if you want to generally introduce expectation gap.
Nat Ware: 03:20
Yeah, first of all, I’ve given a couple of TEDx talks, mostly on my main area, which is social entrepreneurship, development economics, impact investing, all of that. It turns out people don’t Google that as much and aren’t as interested in that. And it seems like more people search for happiness, how to be happy, why I’m unhappy and so on. So I don’t think it’s because it’s a better talk, I think it’s just people are more interested in that and it appeals to a broader audience.
03:49
But really the basis of that talk was, I grew up in Australia, my parents are school teachers, I’m one of five kids, we didn’t have much money growing up, we didn’t have enough money to go skiing or go on a flight. So I didn’t go on a flight until I was I think 13 or 14 and didn’t leave Australia until I was 16. And that was a trip with a big charity in Australia called World Vision, and that was to Mozambique.
04:15
And in the build up to that trip, I was like, “We’re going to rural Mozambique.” And you’ve seen all these images of people starving and malnourished. And I was expecting to be shocked by their desperation, by their poverty, and that was what I was anticipating in these rural villages. And when I got there, yes, there was desperation, yes, they didn’t have much, yes, they were struggling. But what was the most surprising thing is they were actually happier in many ways than a lot of the people that I knew in Australia. I had a lot of friends in Australia who would complain about everything. And then in these areas, even the smallest thing made their day. They were happy, they seemed to enjoy life and love family and love community.
05:03
And so it got me thinking of how the way that we think about happiness differs from the way that we just think about income and wealth. And the main point that I make in the talk is not something that’s groundbreaking, it’s not something no one has thought of before. I think it’s pretty intuitive.
05:22
And it’s basically just at a fundamental level the idea that the way that we form happiness or what determines whether or not we’re happy is very much based on our expectations and how expectations compares to reality. And at the simplest level, it’s if reality is here and our expectations are here, well, when reality doesn’t live up to our expectations, we’re unhappy. And the reverse is true. That when our expectations are here and reality exceeds that, we tend to be pretty happy.
05:55
Now that sounds super simple, super basic. And it is. But I think then we break it down into the three different ways in which we form expectations. One of the ways that we form expectations is based on all those around us. So if you’re living in New York and all your friends are working for investment banks or big law firms on 250/300/400,000 a year, and you’re trying to scrape by as a poor student at NYU on a stipend of 15,000 or 20,000, you probably feel pretty poor. You can’t afford what your friends can afford, et cetera. Whereas if you’re on $20,000 in rural Mozambique or in Manila or Lagos or wherever, you probably feel very wealthy relative to those around you.
06:45
Likewise, if you get an email or a phone call from your boss at work saying, “Hey, we’re giving you a $10,000 pay rise.” Your initial reaction is probably like awesome, amazing. If you go into work and find out everyone else has got a $20,000 pay rise, you’re probably pretty pissed off. And so whether or not we’re happy is largely based on how we compare our circumstances to those we spend most time with. So that’s almost like an interpersonal expectation gap.
07:18
A second expectation gap or the way that we form expectations is based on our past. If we’re very much used to a certain standard of living, that impacts our expectations of our own life. As I said, I didn’t have much growing up, my main entertainment was throwing a tennis ball with my brother and playing sport with my brother and dad. A family of seven, we had a small 34 centimeter TV. Do I think I was deprived? No, I thought that was just the norm. And it is obviously in a lot of the world. But I was never allowed game consoles or travel, et cetera, et cetera.
07:54
But in retrospect, I think it was good for my happiness because now I get to travel and have a lot of experiences that I never had as a kid. And I compare these experiences I have now to what I didn’t have or what we couldn’t afford growing up. I never had new clothes as a kid. My parents had a network of other mothers and passed clothes between them. My mum stitched her own clothes and made a lot of my clothes, et cetera. And so I think a lot of the way that we form expectations is based on our past.
08:24
And there’s some economic research that shows that if you take two people who have the same average lifetime income, one whose income is increasing throughout their life, and one whose income is decreasing, the one whose income is increasing is almost always happier, even if the average is the same. And so I think that reality has some implications for how we, for example, raise kids. I’m all for giving kids every opportunity under the sun. I think education and opportunity is hugely important. Economic mobility is hugely important. But it is something that we should consider, the trajectory throughout one’s life.
09:07
And certainly I’ve been fortunate to also meet people on the other end of the spectrum. I have one, I’m not sure I’d call him a mentor, but he is like an acquaintance, a friend who’s a billionaire. And once he was a bit drunk and I was chatting with him and he was like, “Nat, you know how I have my private jet, sometimes, I don’t normally tell people this, but sometimes when I’m traveling I get a bit embarrassed by the size of my jet, so I rent a bigger one and pretend it’s mine just so that it looks more impressive to the other billionaires.” And it made me realize that even if you’re a billionaire, you can still feel like you’re poor and not living up to the standard of the world or those around you and so on. So that was a bit insightful.
09:53
And I think the third way that we form expectations, which is maybe the most relevant in today’s day and age, is just based on our imagination, which I think is largely influenced by a few things. One is advertising and two is social media. And I’ll touch on those just for a minute each. And then we can go back to the questions.
10:12
But with advertising, you are told the best thing about something, if you’re being sold an Apple Watch, you’re told this is the greatest watch, it’s the best that’s ever been produced, blah, blah, blah. You’re sold the good stuff. You’re not told really the negative stuff that you have to charge it every day otherwise it stops telling the time. Unlike your cheaper one that can last a year, blah, blah, blah. And so the way that advertising works is to raise your expectations. Even with the election at the moment, every politician will promise you everything, “I’m going to do XYZ, blah, blah, blah,” to raise your expectations. But pretty much it never lives up to that regardless of who is in power.
10:55
And when it comes to social media, say you go on a holiday and you take, let’s just say a hundred photos, there are people who probably take a thousand or more, but let’s say a hundred. So you have a hundred photos on your camera roll. And you go through those hundred. And then you pick out what are the ones that you post. You pick out the best five of those hundred. And then you probably adjust and filter the colors or tweak it in a certain way. And so reality is at the 50th percentile. So that’s what you actually experience if you go to the place. So reality is at the 50th percentile. What you see on social media is not just the top 5%, which is already above the 50th percentile, so expectations are above reality. But because we tweak it and airbrush it and filter it and blah, blah, blah, it becomes better than the top percent. And so we have our expectations being formed by what we see, which is better than the … it’s even outside the range. Our expectations are formed by that, but reality is at the 50th percentile.
12:03
And that all contributes to this idea that when we experience stuff in reality, we sometimes get that feeling of huh, not because it’s bad, it’s just not as amazing as we hoped and expected and longed for. And even from my own experience, a lot of the best places I’ve been to are where I’ve had zero expectations. I remember a long time ago I went to this … I was invited to this random conference in a random town in Slovenia called Bled. I didn’t even look up what the town was, I was super busy, I just got on the flight and went there.
12:35
And I don’t know if anyone’s been to Bled, but it’s one of the most beautiful towns in the world. It’s a lake surrounded by snow-capped mountains with a church rising out of the center of the lake, a thousand-year-old castle on a cliff on the side. Stunning. And I was expecting some industrial town. I was like, that’s still my favorite town in the world, and it might actually be my favorite town in the world, but I think part of it is I was just blown away because my expectations were here, and reality was here.
13:03
Whereas you go to see the Eiffel Tower or the Mona Lisa or the Empire State Building, and it’s not that they’re bad, it’s just hard to live up to your expectations. So as I said, nothing groundbreaking, but I think food for thought at least.
Jon Krohn: 13:20
That was great. Also, my very next question for you was about the impact of social media and digitization, which I think you’ve now answered. It’s been about a decade since that talk came out I think. And in that time-
Nat Ware: 13:29
Showing my age.
Jon Krohn: 13:31
At least you haven’t gone bald.
Nat Ware: 13:35
I take finasteride, I don’t know if it … it’s meant to stop baldness. I don’t know if it works or not. Sorry.
Jon Krohn: 13:50
How do you spell it, is it with an F? So yeah. So I think you’ve answered my question about social media. You covered that well there. There was something specifically in your talk that you talked about called the hedonic treadmill. Do you want to talk about that and its impact?
Nat Ware: 14:01
Yeah. Hedonic treadmill is just the idea that we, it’s a bit of a counterintuitive idea, that often … Everyone wants to be happy. But sometimes the more that we think about happiness and strive for it the harder it is to achieve. And so often happiness occurs when you’re almost not seeking and not striving for it. But the more that we run at the goal of happiness and it’s like, I’m trying to be happy and blah, blah, blah, and you’re forcing yourself to be happier, it almost moves further away and you never get there. It’s like you’re running on a treadmill and not getting closer to that goal of happiness.
14:42
And so it’s one of those things where, maybe this is a bad analogy, and I just thought of it then, so I’m not even sure if it works, but if you’re looking at an eclipse, you’re not really meant to look straight at it, you’re meant to look to the side of it and then you see it. Whereas if you look straight at it, you don’t see it. I think it’s a bit like that with happiness.
14:59
You don’t want to run straight at the goal of happiness and be like, my 10 point plan to be happy is X. You want to do related things that hopefully push you vaguely in that direction, but happiness is not the goal in and of itself. I think when happiness is the goal …
15:17
You rarely see someone, “My goal this year was to be happy, I had a 10 point plan for how to be happy and guess what? I’m happy.” It’s like no. I wanted to spend more time with my family and friends. I wanted to prioritize experiences over meaningful things. I wanted to overcome my risk in different ways and have fewer regrets. It’s those things that are broadly pushing you in that direction that actually generate happiness as opposed to going for the goal itself. So that’s the idea of running on a hedonic treadmill, you don’t run directly at the goal, you run slightly to the side of that goal.
Jon Krohn: 15:54
And so we’ll take away that treadmills exercise, bad. Treadmills are bad. So avoiding the hedonic treadmill, this made sense, that idea of directly following it. I like the looking at the sun analogy with an eclipse. Do you have general advice, practical advice for how we can be happy? You just gave one there, which is pursuing happiness itself is probably not a good idea. And then on the side of that, you mentioned some … maybe those are the kinds of things, spending time with family and friends, pursuing experiences. I don’t know if there’s other items that economics has shown us?
Nat Ware: 16:34
Yeah. And again, not expecting any of this to be groundbreaking. But they do all those surveys of people at the end of their life and ask them, what do you regret the most? And we all know this, but worth repeating anyway. People don’t say, “I really regret I’m not going to be the wealthiest person in the cemetery.” What they regret is, “I wish I’d spent more time with family and friends.” That’s one thing that constantly comes up.
17:01
The other thing that comes up is regret. And people often routinely say, “I acted in a way that was not my most authentic self because of either I was scared or because of other people’s expectations of my own life. So I felt pressured to do this career even though I didn’t really want to.” Or “I acted in that way just because my parents wanted me to be that way rather than because that was who I really was.”
17:31
And so I think a lot of it is taking risks, not having regrets, being your most authentic self, generally prioritizing memories and experiences over materialistic things. And prioritizing time with people who love you and you love them. And that all sounds pretty basic and obvious, but it’s always worth reminding ourselves of them.
Jon Krohn: 18:00
Nice. It was actually, it might’ve even been around the time that we were both at Magdelene together, there was a two-hour seminar in the Magdelene Theater around the economics of happiness. And at that time at least, something that kept coming up, regardless of your demographic, something that makes everyone happier is gardening.
Nat Ware: 18:26
Maybe I should do more gardening. And there’s a lot of obvious things. Like seeing more sunrises and sunsets make people happy. That doesn’t cost anything really. Being grateful and practicing gratitude and reminding yourself of how lucky you are for X, Y, Z more frequently. That doesn’t cost us anything. But it helps to contribute to happiness.
18:52
And just in general, just on that point, I think often when we, and I’m guilty of this as well, but if you’re getting on a flight and the flight’s delayed, you get annoyed and frustrated. It’s still a big metal object that is in the sky, defying gravity, getting you from one side or one place to another in a speed that for most of human history would’ve been unimaginable. And we do need to remind ourselves that regardless of where we are socioeconomically today, we’re all way better than the top 0.01% for the vast majority of human history.
19:35
The kings of the past, the kings and queens and royalty of the past did not have running water, did not have flushing toilets, did not have the drinks and wine and so on, could not go on a device in their pocket and within 30 minutes pretty much have every cuisine in the world right in front of them. And so we’re already better than the top 0.01% for most of human history. And I think just keeping that front and center of mind as we go about our day and our life I think is good for happiness as well.
Jon Krohn: 20:16
Nice. Thank you. Those were some great practical tips. Switching gears a bit, I alluded to in the introduction, your consultancy, it’s called 180 Degrees. You founded it while you were an undergrad in Australia nearly two decades ago now. And it has become over that time the world’s largest voluntary consultancy. It operates in 42 countries, has 175 branches, and nearly a hundred thousand people have volunteered through that network, through the 180 Degrees Consultancy that you founded.
20:49
So to tie it into the general theme of this, do you think that volunteering for those hundred thousand people, do you think that that makes them happier? Do you think that this is something … why would somebody choose, why would a hundred thousand people choose to be part of a voluntary consultancy?
Nat Ware: 21:11
I think there’s a few answers to that. One is that I do think in general … Volunteering or philanthropy or altruism, there’s a fine line between selfishness and altruism. When I help out other people, both of my organizations, 180 Degrees and Forte have a social impact aspect to it. Do I get a good feeling out of helping people? Yeah. And so the line between altruism and selfishness is pretty blurred. Like I’m doing it because I feel good about it. And I’m doing it because it helps other people. And so altruism is there, but I think because people do feel good about it, it’s also a bit selfish as well. If you want to be happy, if you want to feel good about yourself, helping other people feel good is a good strategy to do that.
22:07
In terms of 180 Degrees and the growth, I think it’s partly that, to be honest I think a lot of, and this is going a bit off-topic, but I think a lot of entrepreneurship is riding the right trends to be honest. I started that back in 2007 in my first year of undergrad at Sydney University when social entrepreneurship and consulting and impact investing, they were there, but it was new, it wasn’t as mainstream as it is now. And we very much rode that trend.
22:37
And the idea then was I saw so many different student clubs and societies that were getting people to raise money and donate money, and it didn’t seem to match with the strength of university students. And at the same time, I realized that doing good is as much an intellectual endeavor as it is an emotional endeavor. And so I wanted a way that people could donate with their minds rather than just with their money.
22:58
And while starting new ventures is great, it’s pretty hard to do that successfully alongside full-time study. So the idea was, instead of let’s get top university students starting new ventures, let’s get them improving existing organizations, and do so in a way that’s mutually beneficial.
23:15
Now, university students, what do they want to put on their CV? One, I’ve made a difference. Two, I have work experience and real work experience, not photocopying, but I was in a leadership role, I took initiative, blah, blah, blah. And three, they want community. And 180 Degrees is a unique university club and society because it hits those three things with one stone. Hits those three birds with one stone.
23:40
You can do 180 Degrees and tick off I’ve made a contribution, tick off I have work experience that’s applied my university studies, and you have that community as well. So we never spent a dollar on marketing. I set up the first branch at Sydney University. Then I met people actually in New York in 2008 from Mexico and Sweden who wanted to set up the second and third branches, and I helped them do that.
24:06
Then we set up a global organization, also a hundred percent volunteer-based, to oversee those three initial branches. And then three grew to seven, grew to 15, grew to 30. And then as Jon said, a hundred, almost up to 180. I think it’s 177 now, so we should hit 180 in a week or two. But yeah, it’s been very organic growth. And I think it’s a lot riding the right trends. And maybe that’s me being a bit too skeptical.
24:33
But the point is altruism is definitely a part of it, but I think altruism is not purely altruistic. I think we also benefit from it, and I don’t view that as bad, I think that actually makes it more sustainable and more of a reliable predictor of human behavior, which is good.
Jon Krohn: 24:53
A nice inbuilt biological mechanism there I think that keeps society together. I’ve got one last question for you before opening up to the audience here. I mentioned in the intro that you’d won the Wings of Excellence Award twice for the best essay at the St. Gallen Symposium. One of those essays was on your Forte model. You mentioned the company name in the response to my preceding question. So the Forte company is based on this Forte model. It’s a new way of funding education. Tell us about that.
Nat Ware: 25:20
So I think this was 2017, my essay, at the time, I called this new approach, TIBS, or Tradable Income-based Securities. And then I basically decided that I wanted to make it happen and try to implement it around the world, and then I rebranded it to Forte, standing for Financing of Return to Employment. But same approach, same mechanism.
25:44
The one-liner is it’s a way to finance education and healthcare at no cost to individuals, no cost to governments, and without needing philanthropy. It’s a way of having as much impact as scholarships, but with far more scalability. And it’s also a new type of public-private partnership.
26:01
The way it works in a nutshell, and I could speak about this for hours and hours, is that we basically use private capital from a wide range of investors, family officer, impact investors, wealth managers, we use private capital to fund high quality education such as retraining, particularly for people in unemployment, in long-term unemployment. And so we use that private capital to fund high quality training and support. We don’t do the training ourselves, we have a network of over a hundred of the best training providers around the world that do the training.
26:34
People who receive that training and support pay nothing at all. Nothing now, nothing in the future, no chance of exploitation, no chance of predatory behavior. But the idea is that training leads to greater employment, greater incomes and greater government income tax revenue. And we have agreements with governments around the world where they then pass back to the investors a percentage of the increase in the income tax revenue they receive that’s attributable to the retrained individuals.
27:01
So say there’s 10,000 women in Costa Rica who are unemployed, we can go to the government and say, “You’re not getting any revenue from these 10,000 women at the moment. Let us train them up, support them, help them get good jobs, help us fill skills gaps. If it doesn’t work, you pay nothing. If it does work, a revenue share agreement, just pass back a percentage of what you otherwise would not have had.”
27:23
And so I do think that’s a win-win. As much impact as scholarships for the individuals. They’re able to get back on their feet, learn new skills, hopefully achieve their potential. For investors, I view it as a very, very good model of impact investing. That almost perfectly aligns social impact and financial return. Because the way investors make more money is by doing more good, by making sure the education actually works and actually helps people and actually leads to good outcomes. So it’s almost like trickle up economics, let’s help those who are struggling and disadvantaged, and benefits flow up through the system. A way of helping disadvantaged individuals, but with the credit worthiness of governments.
28:02
And then our pitch to governments is, don’t need to worsen the budget, never pay for something that doesn’t work, get the revenue first. So good from a cash flow standpoint, revenue is always greater than the cost, always makes economic sense, and you get to close skills gaps, reduce unemployment, increase productivity, give companies the skills they need, et cetera, et cetera.
28:21
So it’s almost envisaging a new role for government, not as public provision or privatization, but as almost a third role of conduits or facilitators of tax transfers. Because what is the government better at than the private sector? I think one thing is knowing incomes and collecting taxes. And so can we use that institutional strength of governments, but use that to unlock private sector innovation and investment in a way that incentives are aligned.
28:50
And then finally, for the service providers, the education providers, the healthcare providers, including nonprofits and social enterprises, this is a new business model for them. Through 180 Degrees, I worked with hundreds, thousands of different nonprofits around the world and a lot of them are reliant on ad hoc grants and donations and struggle to scale up. And so this is a way that we can take great nonprofits that might be reliant on donations. And we say, “We’ll fund you, instead of helping just 25 refugee women to learn coding, now scale up, do it 10X, do it a 100X. And we will fund you, you focus on what you do best, and we can scale up that impact as well.”
29:29
So yeah, I became convinced it should exist in the world. Figured I didn’t want the essay just sitting in a PDF on a website or whatnot. And so set up an organization called Forte to make that happen around the world. We’ve now implemented this in five countries, Colombia, Costa Rica, Puerto Rico, also done pilots in Australia and in the US. We’re endorsed by the World Economic Forum. And hopefully we’ll be able to scale this up pretty significantly. And so yeah, that’s what’s keeping me busy at the moment.
Jon Krohn: 30:05
Tremendous. Yeah, amazing all that you have accomplished, and I’m sure even bigger things are to come. I’m sure these things will scale. And very cool that in some ways the genesis of Forte was things like the St. Gallen competition, which shows the value that the Symposium has. And there’s so many ways that it provides value. And I think that just ticks another way. All these ripple effects affecting huge numbers of people. Excellent. Thank you, Nat. That was awesome.
30:33
Thanks to Nat for that thoroughly engaging episode. In it, he covered how interpersonal, historic, and imagination-based expectation gaps lead us to be unhappy. And how we can make ourselves happier by, of course, reining in our expectations, but also by things like spending time with family and friends, acting authentically, appreciating experiences over material wealth, gardening, and watching sunsets.
30:58
To be sure not to miss any of our upcoming episodes, subscribe to this podcast of course, if you haven’t already, but most importantly, I just hope you’ll keep on listening. Until next time, keep on rocking it out there. And I’m looking forward to enjoying another round of the Super Data Science Podcast with you very soon.
