Why a country’s GDP doesn’t predict national happiness

When it comes to a nation's happiness, money isn't everything. Some interesting international stats explain why.

Is this worker happy because of the national GDP? (Source: Pexels 28900)

WASHINGTON, April 20, 2016 — Bhutan is a small landlocked country in South Asia, whose generally meek population currently numbers approximately 786,000. This small nation is situated at the eastern end of the Himalayas, with China to the north and India to the east, west, and south. One small thing makes Bhutan unique: It is the only nation to officially adopt “gross national happiness” as its chief indicator of national development, rather than the “gross domestic product,” or GDP, the measure that’s generally standard around the globe today.

Gross national happiness has only very recently been calculated and used as an indicator of national progress. Created by the United Nations, the World Happiness Report is the first-ever happiness index of its type. The first World Happiness report was released in 2012.

To come up with the measure, happiness levels for over 150 countries are calculated according to variables including social support, healthy life expectancy, perceptions of corruption, generosity, freedom to make life choices and real GDP per capita. The top five happiest countries according to the 2016 figures are Denmark, Switzerland, Iceland, Norway and Finland, in that order. The top five most unhappy countries are Burundi, Syria, Togo, Afghanistan, and Benin.

There are different ways to measure GDP, and different organizations rank different countries differently. But according to the rankings provided by the World Happiness Report, the top five highest GDP per capita countries are Qatar, Luxembourg, Singapore, Kuwait and Norway. As you can see, this list has only one country in common with the list of top five happiest countries: Norway.

Although there is some correlation between higher-GDP countries and relative happiness, GDP is only one piece of the puzzle. For example, take Kuwait, which is the fourth-highest GDP country, but only sits at #41 when ranked by total happiness. GDP, in other words, can’t totally predict the likelihood of national happiness. Money isn’t everything.

What is it about Scandinavia that makes people there so happy? For one, there is a particularly strong government-provided social safety net in place. Denmark, for example, the No. 1 happiest country, has a poverty rate of just 6 percent. Compare this with poverty in America, which can reach rates of nearly 15 percent—even higher when looking only at children.

Although America is certainly a well-developed country GDP-wise, the level of wealth disparity here means that many Americans can’t afford things that citizens of Scandinavian countries may take for granted, such as medical care, secondary education and life insurance. In fact, a typical American living in poverty likely doesn’t even know the difference between types of life insurance or medical coverage.

Although it’s true that Nordic countries are well-to-do financially, there’s more at play. Nordic countries also have good life expectancy compared to global average. Iceland, for example, is in sixth place on the list of longest-living people. Sweden is No. 15, Finland is No. 30, and Denmark is  No. 47 out of 224. Switzerland, also on the list of top five happiest countries, comes it at No. 9. Many other factors make Scandinavia the world’s most cheerful region as well, including a strong national sense of personal freedom, environmental consciousness, family togetherness and gender equality.

Just as it’s not just GDP that makes happy countries happy, a low GDP is not the sole cause of misery for the five unhappiest countries. Burundi, the least happy nation in the U.N. study, scores low in GDP, but also in social support, life expectancy, personal freedom, generosity and trust. The small East African country is also full of political strife and lacks natural resources.

Other countries may have a modest GDP but still remain unhappy. Syria is close to the middle in terms of GDP per capita. But according to the World Happiness Report, it scores very low in social support and freedom to make life choices, without even addressing the fact that the country is also war-torn.

Happiness is subjective and complex. Because wealth is not the only or even the most important predictor of life contentment, we must look at the bigger picture when it comes to improving quality of life around the world.

Improving healthcare and nutrition, building schools, removing corruption from government, ending military strife and moving toward a more compassionate, inclusive social culture are all better ways of lifting spirits around the world than focusing solely on national GDP as the only measure of genuine national happiness.

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