OK, I’ll bite. It does seem to match my observations that if your expectations are excessively high vs. reality then your happiness will be low. And, I have observed that people in truely... difficult(?) situations (living in North Korea/South African slums) are often still happy because what they hope for are the basics of survival, friendship and family.

I think there have been a number of studies showing that poverty does directly make people unhappy, though - or at the very least, happiness is definitely correlated with wealth. Being poor is extremely stressful. Being stressed is not necessarily going to make you unhappy, but it's certainly likely to.

There are numerous studies showing that people with basic need expectations are stressed but not depressed, while people who don't struggle about fulfilling basic needs, but have high luxury and social expectations are more depressed. Same thing has been shown at a the societal level in term of suicide levels.

Basically, the level of stress in a population or experienced by an individual has little to no correlation with happiness. The type of stress, especially the more insidious one, is probably more important.

Then, I'll add that it's all about your expectation. If we hope to put food on the table everyday, and we succeed most of the time, we will be proud and happy most of the time. If we expect to strike millions by being an entrepreneur, because we all know that we're nobody if we're not an entrepreneur, we will endure a roller-coaster of deception and small victories, with no quantifiable bearing on our success or lack thereof...

OK, maybe that should be

"let Happiness = reality - expectations"

I think he’s saying that high expectations cause sadness which would cancel out the expectations and give you reality.

But it’s obviously an oversimplification

I understand it as -- if you can influence reality to meet your expectations, great, that leads to happiness, otherwise work on your expectations.

If "reality" means competing against other smart/driven humans, be prepared to lower your expectations.