Spinoza approached human emotions the way Euclid approached triangles and squares, aiming to understand their inter-relations by means of principles, logic and deduction.
Spinoza’s primitives were pain, pleasure and desire. Everyone who inhabits a human body recognizes these feelings. Just as financial stock options are derivatives that depend on the underlying stock price, so more complex emotions depend on these three primitives pain, pleasure and desire.
Love or hate, then, is pleasure or pain associated with an external object. Hope is the expectation of future pleasure tinged with doubt. Joy is simply the pleasure we experience when that doubtful expectation materializes. Envy is pain at another’s pleasure. Cruelty is a hybrid of all three primitives: it is the desire to inflict pain on someone we love. And so on to all the other emotions …
Figure 1 is a simple diagram I constructed to illustrate Spinoza’s scheme. For Spinoza, good is everything that brings pleasure, and Evil is everything that brings pain. And happiness is good.
Figure 1: Spinoza’s model of emotions
But how does money fit into Spinoza’s scheme?
* My Life as a Quant: Reflections on Physics and Finance by Emanuel Derman