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There are various ways of measuring well-being at a national level. One potential candidate is per capita GDP; another is life expectancy, or disability-adjusted life years (DALYs).¹ Each of these indices has flaws, and calculating each requires a complex statistical apparatus. So why not cut the Gordian knot as to what goal we should pursue by simply asking people how happy they are? This is the core rationale for assessing happiness.
Furthermore, relative to economic and health status indices, gathering evidence on people’s happiness is a simple exercise. The principal source of the happiness scores in the UN’s World Happiness Report (WHR) is the Gallup World Poll,² which “asks respondents to evaluate their current life as a whole using the mental image of a ladder, with the best possible life for them as a 10 and worst possible as a 0. Each respondent provides a numerical response on this scale, referred to as the Cantril ladder.”³
Having gathered the life evaluation data, happiness researchers seek to explain national scores. One approach discussed in the World Happiness Report is a relatively simple tactic: a statistical exercise that regresses national life evaluations on six variables.⁴ The six variables don’t explain all the difference in national happiness scores, but they do explain most of it.
The first two variables are objective measures of economic prosperity (per capita GDP) and health status (healthy life expectancy); the remaining four are responses to subjective questions. Because the per capita GDP variable is in logarithmic form, the contribution of an additional $100 to national happiness, while remaining positive, declines as GDP levels rise.⁵ Also, implicit in the healthy life variable is that a good public health system improves happiness by lengthening life expectancy. Both of these variables are statistically highly significant. Combined, these two account for about half the explained national happiness score.
One of the subjective variables is perception of corruption, in government (“Is corruption widespread throughout the government in this country or not?”) and in business (“Is corruption widespread within businesses in this country or not?”). The perception of corruption variable is highly significant. This variable explains a good deal of the happiness of most high-ranking countries, while in most low-ranking countries it explains little. In other words, most high-ranking countries have succeeded in suppressing corruption; most low-ranking countries have not.
Another subjective variable is freedom to make life choices (“Are you satisfied or dissatisfied with your freedom to choose what you do with your life?”). This question is open to many interpretations. It can be interpreted as a measure of free speech and basic civil liberties. It can be a measure of freedom from religious constraints (on women in particular). It might be interpreted as a measure of access to adequate income required to escape the constraints of poverty.
The two remaining subjective questions are measures of social cohesion (“If you were in trouble, do you have relatives or friends you can count on to help you whenever you need them, or not?” and “Have you donated money to a charity in the past month?”).
The top 20 countries, ranked in terms of national happiness score, are all members of the Organisation for Economic Co-operation and Development (OECD) – sometimes mocked as “the rich countries’ club.” The difference between the happiness score of the top-ranked country, Finland (7.8), and that of the 20th, France (6.7), is not great. All 20 achieve reasonably high per capita GDP, reasonably long life expectancy, reasonable control of corruption and reasonably free speech and basic civil rights.
An alternative approach to explaining happiness rankings starts with realization that four of the six variables (per capita GDP, healthy life expectancy, control of corruption, freedom to make life choices) measure what most people expect of their national government. With the exception of countries with very large per capita mineral resources, such as the petromonarchies, no country can realize a high per capita GDP without nearly all young adults completing secondary school and the majority completing some form of postsecondary certification. No country can expect long life expectancy without a reasonably good primary and secondary health care system, and public health measures such as vaccination and sanitation. No country with high corruption, or with an arbitrary police and justice system, achieves high-income status.
There is a high correlation between rankings of national happiness and indices of national governance quality. One of the most frequently used governance indices is the World Bank’s Worldwide Governance Indicators (WGI)⁶. These indicators estimate annually the rank of 200 countries along six dimensions: (1) voice and accountability (free speech and honest elections), (2) political stability and absence of violence/terrorism, (3) government effectiveness in delivering services such as health and education, (4) quality of government regulations, (5) rule of law, and (6) control of corruption.
Whether we measure Finland’s relative ranking among countries in terms of the Cantril ladder or in terms of the WGI 2020 ranking does not make much difference. Finland is above the 99th percentile on five of six WGI dimensions. You can guess the exception: it ranks at the 82nd percentile in terms of political stability, as a result of its neighbour to the east.
In conclusion, happiness and governance indices are more or less measuring the same thing. Between the two, my preference is for the governance indicators. They imply that, for an “unhappy” country to become “happy,” there is no quick solution. Success requires the hard-to-implement reforms that increase national scores on the six dimensions of the WGI. This is not easy.
Based on the evidence provided by the great mid-19th-century novelists who described “unhappiness” and “bad governance” – Dickens and Dostoyevsky come to mind – national happiness scores on the Cantril ladder would probably have been less dispersed in the 19th century than they are in 2022. Life chances for most people living in Britain and Russia were probably not much different in the middle of the 19th century. In 2022, however, the U.K. ranks 16th in the World Happiness Report; Russia ranks 80th.
¹ World Bank, GDP Per Capita, PPP (Constant 2017 International $); World Health Organization, Healthy Life Expectancy (HALE) at Birth; Disability-Adjusted Life Year.
² John F. Helliwell, Richard Layard, Jeffrey D. Sachs, Jan-Emmanuel De Neve, Lara B. Aknin and Shun Wang, eds., World Happiness Report 2022 (New York: Sustainable Development Solutions Network, 2022); Gallup, How Does the Gallup World Poll Work?
³ Helliwell et al., eds., World Happiness Report 2022, p. 15.
⁴ Definitions of the six variables can be found in the accompanying article by Jan Otto Andersson, Why is Finland the Happiest Country in the World?
⁵ The logarithm of a number is its exponent relative to a base. If the base is 10, then log 10 = 1; log 100 = 2; log 1000 = 3. Hence, if you start with a GDP per capita of $10, it requires an increase of $90 for the logarithm to rise from 1 to 2. But it then requires an increase in GDP per capita of $900 for the logarithm to rise from 2 to 3.
⁶ World Bank, Worldwide Governance Indicators.