Author: Tina Aridas, Valentina Pasquali
Project Coordinator: Denise Bedell

There are a variety of different methodologies being used to study the relatively new field of Happiness Economics. Global Finance presents here results from the 2012 Happy Planet Index and the 2012 OECD Better Life Index with particular reference to the Life Satisfaction survey. Costa Rica, often high in life happiness rankings, tops the first of the two indeces, while Denmark leads Norway among OECD countries.

Data is from the Happy Planet Index 2012

Happy Planet Index
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Darkest red: Most happiness
Dark red: Medium-to-high happiness
Medium red: Medium happiness
Light red - Medium-to-low happiness
Lightest red - Least happiness

Data is from the OECD Better Life Index 2012

OECD Life Satisfaction Rate
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Comparing one person’s level of happiness to another’s is problematic, given how, by its very nature, reported happiness is subjective. Comparing happiness across cultures is even more complicated. Researchers in the field of “happiness economics” have been exploring possible methods of measuring happiness both individually and across cultures and have found that cross-sections of large data samples across nations and time demonstrate patterns in the determinants of happiness.

The concept of "Quality of Life" is much discussed by academics in the field. "What constitutes a “good life” has occupied leading philosophers since Aristotle, and dozens of definitions of the “good life” are discussed in the literature," according to the 2009 Report of the Commission on the Measurement of Economic Performance and Social Progress chaired by Nobel Prize-winning economists Professor Joseph E. Stiglitz and Professor Amartya Sen, and by Professor Jean-Paul Fitoussi. See an abstract here.

Two studies of the “happiness of nations” come from the Happy Planet Index (HPI) of the New Economics Foundation and the Better Life Index of the Organisation for Economic Co-operation and Development.

The Happy Planet Index (HPI) ranks 151 countries across the globe on the basis of how many long, happy and sustainable lives they provide for the people that live in them per unit of environmental output. Put another way, it represents the efficiency with which countries convert the earth’s finite resources into well being experienced by their citizens. The Global HPI incorporates three separate indicators:

o Ecological footprint (the amount of land needed to provide for all their resource requirements plus the amount of vegetated land needed to absorb all their CO2 emissions and the CO2 emissions embodied in the products they consume;)

o Life satisfaction (health as well as “subjective well-being” components such as a sense of individual vitality, opportunities to undertake meaningful, engaging activities, inner resources that help one cope when things go wrong, close relationships with friends and family, belonging to a wider community;)

o Life expectancy.

Nic Marks of the New Economics Foundation and creator of the Happy Planet Index discusses the survey.

New Economics Foundation's Happy Planet Index 2012

(Data is from the Happy Planet Index 2012.)

Click on the column heading to sort the table.

Life expectancy
Green: Good More than 75
Yellow: Middling Between 60 and 75
Red: Poor Less than 60

Green: Good More than 6.2
Yellow: Middling Between 4.8 and 6.2
Red: Poor Less than 6.2

Green: Good Less than 1.78 (equal to the world's biocapacity)
Yellow: Middling Between 1.78 and 3.56
Red: Poor Between 3.56 and 7.12
Dark red: More than 7.12

The Better Life Index analyses 11 topics that the OECD has identified as essential to wellbeing in terms of material living conditions (housing, income, jobs) and quality of life (community, education, environment, governance, health, life satisfaction, safety and work-life balance). It then allows users to interact with the findings and rate the topics against each other to construct different rankings of wellbeing depending on which topic is weighted more heavily. For the purpose of this analysis, what matters is the Life Satisfaction survey. Life satisfaction is a measure of how people evaluate the entirety of their life and not simply their feelings at the time of the survey. The OECD study asks people to rate their own life satisfaction on a scale of 0 to 10. The ranking covers the organization’s 34 member countries plus Brazil and Russia.

Watch a presentation of the Better Life Index of the OECD

OECD Better Life Index 2012

(Data is from the OECD Better Life Index 2012)

Click on the column heading to sort the table.

Costa Rica leads the 2012 HPI ranking , with particularly high scores for life expectancy and wellbeing. Vietnam and Colombia follow in second and third place. Of the top ten countries, nine are from Latin America and the Caribbean. Countries from Africa and the Middle East dominate the bottom of the ranking instead. Botswana is last after Bahrain, Mali, the Central African Republic, Qatar and Chad. Developed nations such as the United States and the European Union member countries tend to score high on life expectancy, medium-to-high in well-being, but rather low on their ecological footprint, which puts them in the ranking’s second-tier.

Denmark places first in the 2012 OECD Life Satisfaction survey, followed closely by Norway. Countries from Northern and Central Europe (such as Austria, the Netherlands Switzerland and Finland) dominate the top part of the ranking. Australia (6) is the highest-ranking country outside of Europe, closely followed by Canada. At the bottom of the ranking are many countries from Eastern and Southern Europe. Hungary comes last, preceded by Portugal.