The 7th edition of the World Happiness Report has recently been published: while Finland ranks first, followed by its neighboring Nordic countries, we went a step beyond the ranking and looked at data with a different lens.
Money can’t buy happiness. Ever heard of this sentence? Probably yes, and probably most of you agree with it. Yet, this is not what data suggests: according to the latest studies about happiness in the world, there seems to be a strong correlation between the wealth of a country and how happy its citizens feel. The follow up question must then necessarily be: what do we mean by happiness and can we actually measure it? The authors of the World Happiness Report seem to have found a way to do it, and results could be surprising for many readers.
The World Happiness Report (WHR) is published yearly by a team of independent researchers in collaboration with the UN, that in 2012 launched the United Nations Sustainable Development Solutions Network as a way to explore practical solutions for the implementation of the Sustainable Development Goals (SDGs). The idea behind the WHR is to value the happiness and well-being of citizens in the world in the process of determining how to achieve sustainable development.
To measure happiness, the authors used data coming from the Gallup World Poll, collected through a survey administered to a sample of typically 1000 people per country. The survey is based on the Cantril ladder question, that goes like this:
“Imagine a ladder with steps numbered from zero at the bottom to 10 at the top. The top of the ladder represents the best possible life for you and the bottom of the ladder represents the worst possible life for you. On which step of the ladder would you say you personally feel you stand at this time?”.
WHP authors built a model where the reported level of happiness in a country is explained by six key variables: GDP per capita, social support, healthy life expectancy, freedom to make life choices, generosity, freedom from corruption. While the full report is available at this link, here are some interesting facts we extrapolated from the analysis and some limitations of reducing happiness to a mere number.
1. The rich are happier than the poor
Results speak it clear: rich countries are happier than poorer ones. The most developed area of the world is, with no exception, completely on the top right quarter of the graph below. This relation also holds within countries: richer people in one country are happier than their compatriots, as shown in the data reported by Our World in Data (that has beautiful data visualization for studies of any sort). Out of the six variables mentioned above, income is the one that contributes the most in explaining happiness; this also means that income inequality, a topic that has been largely debated in the last years, causes high differences in people’s perception of their own well-being. Interestingly, the authors of WHR as well as other researchers have found that income is not the strongest predictor of inequality, and that overall inequality can be better explained by the differences in happiness within countries.
For interactive data set: https://www.datawrapper.de/_/7WSMD/
2. Can I say that I’m happy?
Can cultural differences account for different levels of happiness reported? Yes, they can, especially if we talk about happiness measured through a survey.
Professors in Japan, when giving interpretations of facts in front of their audience of students, will often complete their sentences with “maybe”. Expressing an opinion and treating it as an absolute truth is something which is not well seen in Japanese society, even when you have the confidence of being the most expert in the room. Instead, Japanese, as well as other Asian peers, are taught to be “in the middle” and to practice humility. This also affects the way they express feelings and the idea they have about themselves and their own happiness – who am I to claim that I am happier than average?
3. Can I admit that I’m unhappy?
Dynamics in western society are different. In one of the best acted scenes of the iconic American Beauty (1999), Carolyn, the real estate agent, after a disappointing day with zero deals closed and consequent meltdown, she forces herself to stop crying by fiercely slapping herself on the face; she is good, everything is fine. It is quite a widespread mindset in the western countries: I must feel happy and it costs me a lot to admit that I am not. Self-reported well-being is likely to be influenced by these factors, threatening the validity of results.
4. Which came first, the chicken or the egg? The problem of the two-way linkages
According to the report, happiness is dependent on the six factors mentioned above. But it could be the other way around too. It’s quite a widespread theory, confirmed by many studies, that health depends on happiness: unhappiness leads to a shorter healthy life expectancy, which in turns affects the well-being of a country, in a vicious circle where causation remains unclear.
5. The Latin American exception
Latin American countries, marked in pink in the graph, have very homogeneous levels of income and happiness. More than that, they are all above the trend line, meaning that life satisfaction in all countries is higher than would be predicted based on income, corruption and the other variables considered. The peculiarity of Latin America lies in the warm and strong social bonds of its societies and the high importance people give to social life. Foundations of happiness are rooted in the social aspects of life, that count more than income. This set of countries is a good example of how measuring well-being in terms of indicators that might serve as its drivers has limitations and excludes from the picture socio-cultural aspects that have a greater and more comprehensive explanatory power.
Despite the skepticism about the model, it seems that money can buy at least some of our happiness; but among countries with similar levels of income per capita happiness can differ, sometimes substantially. United States are richer than Finland, yet they lose in terms of happiness by almost one point. Here is one reason why: Finland, together with the other toppers of the ranking (practically all Nordic countries) have managed to create strong safety nets for their citizens, such as free education, functional healthcare and pensions systems, abundant unemployment benefits; taxation is on average higher than in other countries in the world (look at Sweden, with the highest marginal tax rate in the world, 57%), but the trust in the government and the quality of public services make citizens believe that tax collection is not a synonym or robbery, but rather a fair contribution for the equal redistribution of wealth in the country, which eventually benefits everyone.
Shall we then all learn from the Nordic countries? Probably yes, to the extent that culture allows: try and tell a Brazilian to turn into a Finnish, you might not get the enthusiastic reaction you were hoping for.
Cristina Cibin, MSc Economics at WU (Vienna University of Economics and Business)
Explanations and References:
- GDP per capita: how much money on average one person earns in one year.
- Social support: how likely a person is to get the help of family and friends in times of need.
- Healthy life expectancy: how many years a person can live in full health, with no illness or disabilities
- Freedom to make life choices: how likely a person is to be satisfied with what they do with their lives
- Generosity: how likely a person is to have donated to charity in the past month.
- Freedom from corruption: how likely a person is to think that government and business are corrupt.