Happiness in Countries: Does Greater Wealth Equal Happiness
Within this argument lies two theories. On one hand some people believe that in many cases YES a wealthier country will experience higher happiness, but on the other hand there are many economists who think that there is NO relationship
Evidence for a Connection
So does a higher GDP have permanent effects on a nation’s happiness? GDP does help buy extra happiness. But other factors have been forming throughout the years that have gradually offset the benefits of extra real income. To make this correlation easier to find we used the ‘GDP in a happiness Regressions’ equation, provided in the essay, The Macroeconomics of Happiness.” The equation is as follows:
- HAPPYjit: well-being level reported by an individual ‘j’ in country ‘i’ in the year ‘t’
- GDPit: Gross Domestic Product per capita in that country
- PERSONALjit: Personal characteristics of respondents (income, marital status, education, employed/unemployed, age
Below is a Comparison of the USA's GDP and it's fluxuations compared to average happiness survey fluxuations that occured during the same time frame. As you can see, if you visually compare the data there are similar peaks and valley's in both.
In another recent survey, Hagerty and Veetoven rexamined this concept in regards to many foreign countries. Breaking up the countries into high, medium, and low GDP/per capita allowed them to make an easy comparison of average happiness scores. They had argued that previous economist who were against the idea that the wealth of countries equaled happiness had not taken an accurate measure lower GDP/capita countries and dealt mainly with middle to higher income countries. This plays such a large role as as wealth of nations continually increase, there is an increasing at a decreasing effect on GDP and happiness
The idea that happiness is a zero sum game has lost some of it's standing. In fact, evidence shows that happiness can be raised in countries by increasing GDP. This is more prevelant in low GDP nations than in wealthy nations.
Evidence Against
Many of the arguments that oppose the idea that there is a connection between happiness and a country's wealth state that there are other factors that are more important and overshadow the happiness theory. They point to the idea of relative income and unemployment as being a better determinant when discussing how happy are the citizen's of a country.
When first looking at many illustrations of countries plotted in regards to GDP and happiness, there seems to be a direct correlation between increasing happiness and GDP. Some economists suggest that there are other inside forces that help drive this trend besides happiness. Pointing to the fact that wealthier countries have, on average, a more stable democracy than poor countries. Another factor of happier countries that could play a role is the notion that citizen's of poor countries don't have access to the higher health care.
Let's start with a situation. For this example, just choose what outcome you would rather have, which one would make you happier:
- You get 50K and everyone else gets only half that
- You get 100K and everyone else gets more than double that
In the majority of the cases, people would rather get less, as long as everyone else is recieving half of what they are earning. This example shows relative income. People are happier to earn less as long as other people were worse off. This relationship can be used in conjuction with various countries. For a whole society, if people are thought to use relative income as a measure for their happiness, then economic growth does nothing in helping happiness. The only way happiness can change is if people would look at a reference that is lower in wealth than they did before. Happiness remains unchanged as these references maintain a relative stability.
