In Figures: The economics of happiness

Greater affluence does not appear to lead to greater contentment, but where on earth is the happiest place to live?

by Steve Lodge, World Business
Last Updated: 23 Jul 2013


Despite being more than twice as rich as their counterparts 50 years ago, Americans say they are no happier. Studies in other industrialised countries show similar results, with the average person no more content with their lot, even though they enjoy markedly more comfortable lives with higher real incomes and much greater consumer choice. But in what could be seen as a feather in the cap for globalisation, economic growth appears to raise the average level of happiness in developing countries - unsurprisingly, money makes more of a difference to those nearer the breadline. However, once a nation's average income hits $20,000 and basic wants are satisfied, that link between wealth and human contentment is lost, according to leading 'happiness' economist Richard Layard.


Comparing countries by GDP per capita and alternative measures produces some differing results. Wealthy Denmark tops a Satisfaction With Life (SWL) ranking based on studies of happiness, and Scandinavia often rates highly in studies such as the UN's Human Development Index. By contrast, the poor Pacific archipelago of Vanuatu heads the New Economics Foundation's Happy Planet Index (HPI), which measures a society's environmental footprint. Much of the West - including Scandinavia - rates poorly in the HPI. Bhutan, which uniquely talks about maximising Gross National Happiness (GNH) rather than GDP in its policymaking, scores highly in the happiness rankings, but low in the UN's index.


Are we working too hard for our own good? 'Lazy Europeans, crazy Americans' is how working hours and holiday differences are often characterised, although stereotypically industrious Asians rank as having the worst work-life balance. Europe, as it has become richer, has chosen to work fewer hours and enjoy more leisure time. Lower taxes may be an incentive to work longer hours, but not having enough spare time makes everyone unhappy.


Money may not buy happiness, but happiness could be a way of making money. Conventional wisdom says happier people are more productive employees and more successful. Happiness research also suggests that happy people will tend to shine in outgoing leadership positions and roles that require self-confidence and sociability. Other research by Credit Suisse has identified business sectors and companies that are set to benefit from a growing focus on society's non-material well-being. The domestic robot market is forecast to quadruple to $25 billion by 2010, while demand for independent and assisted living communities for older people is also expected to rise sharply. With nanotechnology helping the early detection and treatment of cancer, the oncology market will grow at 15% a year to 2010, while neonatal care businesses stand to profit from the increasing numbers of premature births resulting from lifestyle trends such as greater obesity. And with more than a third of people in industrialised countries missing at least one tooth, the dental implant market is expected to grow at 15% over the medium term. Nobel Biocare and Straumann have the biggest shares of this market.

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