Efficient market hypothesis (EMH) is a powerful idea. It started as a way to explain how prices of tradeable securities will reflect their real value. Essentially, if people all have access to the same information, that information will be reflected in the price of securities and any new information (like higher interest rates) will immediately be reflected in security prices. The implication: you can't game the system.

In the same way that the idea of natural selection extended beyond its original realm of evolution into exploring phenomenon like meme propagation, EMH is an idea that can maybe give us a lesson on our life choices.

The explanation of how is best supported by an example. Let's say you work at a bank. You grew up working with your hands and wanted to be a sculptor, but you were convinced that wasn't a career, and so you settled for this. Work is okay, but you aren't exactly happy - and if it weren't for the pay, you would have left long ago. You also get the feeling your colleagues like the job more than you. For some bizarre reason, they seem to enjoy the work you see as so menial and perhaps the money means more to them.

Now let's add a few numbers. This job, would have to pay you at least $100,000 to keep you, and since it happens to pay $100,000, you continue to stay. You are the marginal producer at your work - you get no surplus pay beyond the bare minimum you need to stay. You take a survey, and it turns out that on average your colleagues, who also earn $100,000, would take the job for $40,000, or make a surplus of $60,000.

You probably made a bad decision. The market has priced the value of someone in your position based on an average group of employees who, all things considered, get more out of the job than you do. You have let the market fuck you. If EMH tells us anything - it tells us that. You want to buy shares of GE because you like the stability, but rather than pay a market price of $10, you pay $20. You could have bought Apple stock for less than its market price, but you didn't because Apple is risky and everyone else is buying GE.

The analogy isn't perfect, but the idea is simple (and maybe obvious) in its core. Two people with the same job may get the same monetary compensation, but their total utility (or happiness) is based on a number of factors, so it turns out that some people are holistically better rewarded at work than others. The "efficient" salary for a job will be based on the absolute utility of the marginal worker, and so the marginal (or least happy) worker will just barely enjoy his or her work, while someone who enjoys their work will be rewarded handsomely.

The lesson, as I see it. Pursue your passions. If you do, you will always be in an advantaged position of getting more out of it than your peer group, some of whom will not love it nearly as much as you.