So, it’s out. The 2016 World Happiness Report, commissioned by the UN. And what does it say? Well, much the same as last year. The happiest places in the world are Denmark, Switzerland, Iceland, Norway and Finland, with Canada not far behind.
Why are these places so happy? That’s not too hard to answer. They are all economically advanced.
So, we can conclude, economic development leads to greater happiness, no?
Well, not entirely.
We can certainly say that economic development leads to greater happiness, but only up to a point, because there are countries that are much richer than those in the top 10, and less happy.
Denmark, the happiest country of all, is far from the richest. It ranks 21st in terms of GDP per head (in PPP terms). While Norway and Switzerland are very rich (6th and 8th), Iceland is only 22nd richest, Canada is 20th and Finland 25th.
So it is important for a country to be rich if it wants to be happy, but it is not necessary to be the richest. Being in the top 15% of rich countries in the world is enough.
And happiness certainly seems to have nothing to do with the pace of economic growth. Most of the happiest countries in the world are miserable laggards when it comes to their rates of economic progress. Denmark ranks 158th in the world and Switzerland is even worse, at 174th.
So the rate of economic growth is not important to happiness.
Well, there is the gap between rich and poor. Almost all the countries in the top 10 have very low levels of inequality by world standards. They almost all have strong welfare systems and good healthcare. They have low levels of unemployment and high education levels. And they tend to have higher taxes.
Critically, they almost all have very short working hours. There is a very close correlation between the number of hours people work each year and the level of happiness. Happy people work less – and tend to live longer.
Which all adds up to something quite interesting.
In a world where so many rich countries are pursuing economic policies that are focussed on austerity, or reducing the size of government, or lowering taxes and boosting economic growth, is there a need for change? For the last 30 years working hours have risen in many countries, education has become more expensive and healthcare harder to access. Is is time for some political leaders to pause a little for reflection?
The policies being pursued in many parts of the world, and notably large parts of the rich world, are the exact opposite of what is needed to make people happy.
Rather than pursuing growth, lowering taxes and shrinking government, politicians should reduce inequality, increase taxes and boost welfare.
That’s what makes people happy.