Monday, March 20, 2017

Happiness: A Matter of Prosperity or Economic Security?

A macro-economist would probably assume that the percentage of people rating their lives positively enough to be considered thriving is positively correlated with real GDP per capita. Yet evidence suggests that this is not the case. The key to happiness, I submit, is having the sense of foundational economic security—that come what may, even in the case of rich people, you won’t fall through the cracks. It is difficult to thrive over a continuous, subterranean (i.e., subtle) anxiety, whereas a sense of security, such as most children feel while still living in their childhood homes, is a sturdy foundation on which a sense of thriving can grow and survive. I think most people, particularly Americans, take this point for granted, and thus are all too willing to make staples like housing, food, and health care conditional on having money.

In Britain during the two years leading up to the referendum to secede from the E.U., Gallup found that the percentage of people who were happy in the sense of having the sense of thriving fell 15 percent.[1] Meanwhile, GDP per capita (PPP) in current international dollars increased from $38,873 to $41,499.[2] Egypt, likewise, went from 29 percent “happiness” in 2005 to 8 percent in 2012, while GDP per capita increased from $8,123 to $11,210. Clearly, something other than the level of prosperity is behind changes in happiness as a sense of thriving.

That Norway (7.537), Denmark (7.522) and Iceland (7.504) led the pack among countries in terms of happiness as thriving in 2017, with the Netherlands coming in sixth and Sweden tenth may suggest that having an economic safety-net may be important. The United States stood at only 6.993, and the safety nets in those states are partial. To be sure, the state of France in the E.U. came in even lower, at 6.442, and Italy at 5.964, so we cannot conclude that the stronger safety nets in the E.U. necessarily translate into more happiness. However, even within the E.U. Denmark and the Netherlands were known for their well-fortified socio-economic infrastructures, whereas in the U.S. only Massachusetts and California were known to have relatively encompassing social policies in comparison with the other American states. Unfortunately, Gallup lumped all of the American states together while distinguishing the European states, so we cannot tease out differences within the U.S. 

Even so, the high marks of Denmark, Norway, and the Netherlands suggest that having a solid social-welfare safety net for the most vulnerable in matters of food, housing, and medical care is at the very least consistent with a broad sense of happiness in the sense of not merely surviving, but thriving in life. With less of the existential, conditional angst, people rich or poor can feel more stability upon which they can step out onto striving, venturing, into the unknown, with paradoxically a higher chance of sustainable self-sufficiency.

1. Jon Clifton, “The Happiest and Unhappiest Countries in the World,” The World Post, March 20, 2017.
2. Source: The IMF