Invest in Your Human Capital for a Good Life

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In our quest to uncover the mysteries of happiness, humans have looked for answers everywhere. From science to art to religion, each path has offered its own clues. Yet, even after centuries of searching, with some of the best roadmaps in hand, happiness remains both within reach and elusive.

In her book Ignite (2025), award-winning economist and University of Amsterdam professor Neeltje van Horen explores, among other things, how economics—the study of decision-making, optimization, and utility—can deepen our understanding of a good life.

Her key insight: Invest in your own human capital.

That’s because small, incremental adjustments in how you use your most valuable asset—your brain—can yield a profound impact on your well-being.

Source: Vilius Kukanauskas / Pixabay

Change is tied to beliefs

As van Horen observes, our assumptions can become roadblocks to our happiness.

Take success, for example.

Often, we measure success by our achievements. We conjure up a metric that, once in our possession, will finally allow us to wear the coveted badge of success. For some, it might be wealth or recognition. For van Horen, it was being published in top academic journals. But once she accomplished that, the feeling of success was surprisingly short-lived. Moreover, it wasn’t enough.

“It took me a long time to realize that the 'if-then' model of success and happiness is flawed. No matter what you achieve, the goalposts keep moving further away. Besides, by saying, 'I’ll only be successful/happy if...' you are binding your happiness to external factors and giving up your agency,” she explains.

Instead of tying success to reaching her goals, van Horen began to look for fulfillment in the path toward them. In other words, she coupled reward with the journey itself. We are, after all, mostly in transit, moving with varying means and velocities, in the direction of our needs and wishes. It makes sense to treat the journey as the purpose, or, in the words of the haiku master Bashō—as our home.

What about money and happiness?

Van Horen’s verdict: It’s complicated.

While a previous study suggested that experienced emotional well-being plateaus after a certain annual income ($75,000 in 2010), new research shows that additional income can continue to make us happier—especially when money helps us avoid pain or hardship, or provides a sense of control and autonomy.

But as with most knotty affairs, there are caveats.

“If you equate money with success, your happiness may suffer,” says van Horen.

That’s because success is often judged relatively: Your focus is not on your own (absolute) income, but on how it compares to others. The comparison mindset can quickly become a losing game. If your peers earn more, you might still feel you’re falling short. Moreover, people who chase money as a symbol of success often end up overworking, typically at the expense of health, family, and friends—things we know are true cornerstones of well-being.

On the other hand, money can have more reliable effects on happiness when we spend it on others, or use it to buy time or experiences.

Insights from economic concepts

In her search for a more balanced and fulfilling life, van Horen found unexpected wisdom in economic concepts.

Constrained optimisation refers to the idea of maximising satisfaction within our given limits, explains van Horen. In economics, it’s about getting the best possible outcome given constraints like time, money, or other resources. In life, it means making the most of your energy, attention, and circumstances—not by doing more, but by choosing wisely.

Too often, we chase a single goal in isolation. For example, we might pursue career success or financial security, without accounting for what we might have to sacrifice elsewhere, including our health, relationships, or peace of mind. Constrained optimisation invites a shift. Instead of asking, “How can I achieve the most in this area?” it asks, “How can I find the best balance across everything that truly matters to me?”

Opportunity cost is the understanding that every decision comes with a trade-off. Saying yes to one thing means saying no to something else.

“Every action has a cost, even if it’s not always obvious,” says van Horen. “Often, we ignore the cost and focus only on the benefit.”

For example, if you agree to take on a task—perhaps to avoid disappointing others—the opportunity cost might be the time you won’t spend working on something meaningful to you. Placing our options side by side and consciously considering the opportunity cost can help us make more informed decisions. Ask yourself: What am I gaining? What am I giving up in the process? The key, according to van Horen, is awareness: realizing that doing one thing always comes at the expense of something else.

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The law of diminishing marginal returns tells us that as you increase the amount of input or effort, the additional benefits or output will gradually decrease. In fact, beyond a certain point, additional effort can backfire, yielding even negative results.

In our striving and overachieving cultures, where perfectionism is pervasive and productivity is often fueled by pushing ourselves harder, slowing down can feel like a radical act.

“When we understand that we can only work effectively for a limited amount of time each day, it becomes easier to step away without guilt,” says van Horen. After all, self-compassion—a key aspect of a good life—means also recognizing when it’s time to say no.

3 mindset-shifting tips from Ignite

1. When faced with a task, supercharge your motivation by replacing “I have to” with “I get to.” Suddenly, a chore turns to an opportunity to foster gratitude and meaning: I get to cook dinner for the people I love. I get to write this report for a job that’s giving me financial security. I get to exercise and keep up my health.
2. Interrupt your inner critic by visualizing it as a separate persona. This visualization helps create distance between you and your negative mental chatter. Van Horen’s inner critic takes the form of a mean headteacher. Whenever she hears the demeaning voice that undermines her worth, van Horen imagines her inner critic tripping into mud. It’s hard to take someone’s disparagement seriously when they are plopped in a puddle, caked with dirt.
3. Alles Mag Dag (Dutch for Anything Goes Day)—is an invitation to take a break from the pressures of chasing an outcome. It’s an opportunity to not equate our worth with our achievements, to simply savor what we like, to enjoy what we already are and have. Such pauses can be catalysts for well-being and inspiration. “The beauty of idleness lies not in the activity it avoids, but in the life it invites,” writes van Horen.

So, en route to your goals, put down your maps and your bags, and permit yourself to rest. You never know what magic awaits at the interludes, underneath the endless blue skies.

Many thanks to Neeltje van Horen for her time and insights. Van Horen is a professor of financial economics at the University of Amsterdam and the author of the book Ignite (2025).