Charles Murray has argued that self-actualization can be viewed as the exercise of competence in the face of challenge (“In pursuit of happiness and good government”, 1988). He based this view largely on the work of Edward Deci and Richard Ryan. (See here, here and here for some discussion and references.)
Evidence from narrative research presented by Dan McAdams also supports this view. McAdams has found that the presence of redemption themes in life stories to be correlated with measures of psychological well-being such as life satisfaction and self-esteem (“The redemptive self”, 2006, p 44).
Redemption themes are not just happy themes. One of the characteristics of redemption themes is that the narrator encounters many obstacles and suffers many setbacks but is eventually redeemed and develops toward actualization of an inner destiny. The presence of a redemptive theme person’s story predicted their psychological well-being much more strongly than did a measure of how positive or happy the story was.
These research findings are also revelevant to my speculations about the things we regret most. See here.