Happiness - More than just money?

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Many of the factors that produce high levels of life satisfaction in countries are the by-products of economic success: richer countries have more money to spend on expensive medical care, faster-growing economies will tend to suffer lower rates of unemployment, and of course, long-term growth produces higher incomes and reduces poverty.

There are, however, several factors that are not highly correlated with income but nonetheless strongly impact life satisfaction -- most notably religious faith, climate, and the average number of hours of leisure time per week. Furthermore, in richer countries, income levels become a less important driver of life satisfaction, and factors such as good health and vibrant community life matter more. Hence a few countries that do very well on our Material Wealth Index do very badly on our Life Satisfaction Index, and vice versa. In short, some countries are “rich and dissatisfied,” and others are “poor and satisfied” (see chart).

Regional differences are strikingly apparent in this analysis, despite substantial country-to-country variation. The relatively “rich and dissatisfied” countries tend to be located in Eastern Europe and East Asia. Many Eastern European countries are highly secular and have colder climates, and both of these factors tend to reduce levels of life satisfaction. Industrialised Asian countries also tend to be secular and moreover to have the world’s longest working hours.

The “poor and satisfied” countries, by contrast, are mostly located in Latin America (generally with warmer climates and, according to surveys, stronger religious faith) and Southeast Asia (also with warmer climates and stronger religious faith -- Islam in the case of Indonesia, and a mixture of Islam and Christianity in the case of the Philippines). These factors tend to alleviate some notable deficiencies in income, health, and, in some cases, political freedom. There is a natural limit to what can be achieved in the “poor and satisfied” category, however. In extremely poor countries, income is the single strongest determinant of national average life satisfaction, because the sources of misery generated by the material deprivations that accompany poverty are so severe. Hence, as is the case this year, the top countries in the Life Satisfaction section of the Prosperity Index will almost inevitably be rich.