This paper assumes that human nature is universal and postulates the existence of a common, “true utility function” defined on attributes or “substantive goods.” However, individuals have different household production functions so that the capacity to realize the substantive goods varies from person to person. Moreover, the limited life experience of an individual constrains his perception of his constraints and oppurtunities. As a result, individual maximization behavior is based on a perceived utility function and a perceived household production function. Personal development is a process of learning about the true utility or “happiness” function and the true household production function. If a virtuous circle of personal development is activated, imaginary constraints are overcome and real constraints are accepted. On the other hand, a vicious circle of immiserising development may occur if frustrations are misinterpreted.