Summary
The data reflects the level of ‘happiness’ of citizens in each nation. Every single year shown, Canada has been the happiest country of the 10, with its lowest figure (7.278 in 2019) exceeding that of any other country by 0.157. However, it has experienced a decline of 0.149 since 2015. The UK and Italy have both experienced happiness increases of 0.187 and 0.275 respectively. There were also marginal gains for Germany, France and China. Brazil has seen the most significant fall in happiness of 0.683 during the period shown, although it experienced a rise in 2017. The figure in India fell by second most significant level of 0.55 overall, and is the only country within the data to fall in happiness year on year. The USA has also seen a decrease from 2015-2018 of 0.224, with a marginal increase in 2019. Japan has seen the lowest drop of 0.101. The smallest overall increase was in China, where happiness grew by 0.051.
What does the chart show?
The graph plots the changes in the happiness index of the world’s ten largest economies by GDP. The data is derived from ‘The Happiness Report’ and is collated annually from 2015-19. This survey is carried out by the United Nations Sustainable Development Solutions Network in partnership with the Ernesto Illy Foundation. This has been calculated by modelling several factors. These include economic data such as GDP per Capita as well as polling data on subjective factors such as life satisfaction, freedom of choice and corruption perception. These are then pooled to create a single figure to indicate how happy a country is overall in a given year.
Why is the chart interesting?
Previously overlooked within economic analysis, the ground breaking ‘Happiness Report’ has received significant media attention as a metric for measuring global quality of life. It has been complied from multiple data sources as complementary metrics. For example, research carried out by Proto and Rustichini suggests that happiness rises in line with rises of GDP per capita up to $36,000, and falls thereafter. This takes into account the desire for social change such as the introduction of democracy which, along with other factors, causing a drop to occur. Whilst many countries shown have seen little fluctuation in their figures, some have experienced significant changes or trends through the data set worthy of analysis.
Within the data shown, Brazil has experienced the most significant drop in happiness throughout the period. This reflects several trends within Brazilian society that have led to societal dissatisfaction. This has coincided with the election of the divisive Jair Bolsonaro in 2018. Gallup polling suggests that just 17 percent of Brazilians trust their national government, a 50 percent drop throughout the last decade. This suggests a lack of trust in institutions due to the perception of widespread corruption, unsurprising considering recent corruption scandals, including Operation Car Wash and the arrest and charge of 47 MPs within the first electoral round of the 2018 election. Crime levels have also consistently risen despite politicians’ promises to the contrary. The murder rate rose by 2.9% in 2016, leading to 7 Brazilian cities being in the top 20 most dangerous globally as of 2017. Within the time period shown, economic performance has been poorer than other BRICS nations. In 2015-2016, a 2-year recession saw a GDP contraction of 7%, followed by a weak 1.1% overall recovery in 2017-18. This is combined with significant rises in unemployment, which remains above 11% from Q1 2016. These factors would explain the increasing trend of dissatisfaction in Brazil.
Out of the countries shown, the UK is perhaps the most confounding. Over the data period it has experienced significant political upheaval and societal division, centered around the Brexit vote. In 2016, the statistics suggest that Britain actually became happier and has remained on this trend until the end of the data period. The Brexit vote rather than focused singularly on EU membership, became a touchstone encompassing a range of issues, including opposition to austerity and immigration. Other economic factors, including stagnating wage growth and housing shortages, go further to explaining some of the dissatisfaction.
In 2013, the UK had the 4th highest income inequality in Europe and through 2018 household income inequality grew from 31.4% to 32.5%. Whilst employment is at a historical high, flexible work has also significantly driven this rise. While it affords many workers flexibility and freedom, this increase in flexible working (including zero hours contracts) has increased job and financial insecurity.
Not all indicators suggest unhappiness and the optimism on the chart is understandable when other factors are brought into the mix. Unemployment remains low (3.8% as of July 2019). Wage growth, although still stagnant, has started to exceed the inflation rate (3.4% over 2019 so far). This, when combined with record levels of household debt which is maintaining current consumption, may serve to increase living standards in the short term.
In January 2019, the European Journal of Political Economy undertook polling which revealed that people who were dissatisfied with life overall were 2.5% more likely to have voted to leave the EU. Perhaps then the more recent spike in optimism from 2017 onwards may reflect the promise of change brought about by the Brexit vote, especially as those on low incomes are more likely to be dissatisfied. As the country experiencing the second highest anti-EU feeling (some 28% of Italians would like to leave), Italy has nonetheless experienced an increase in happiness from 2015 onwards of 0.275. The result of the Brexit vote may have boosted reported happiness within the UK as just over half of society were able to see their views enacted (of begun to be!) into policy for the first time.
In comparison to the other European countries listed, Germany and France have both experienced little change in their figures. Both have made marginal gains in happiness though not to any great extent; 0.235 and 0.017 respectively over the data period. Using politics as a gauge of societal sentiment, both have experienced significant changes. In France, significant upheaval led to the second round being contested by candidates not from the mainstream political parties. It has also experienced significant social disorder through the gilet jaune movement. However, given the frequency of such events through French history, the effect on happiness is perhaps softened. This is also the case in Germany, with mounting nationalist/xenophobic sentiment allowing the AFD to win 12.6% of seats within the Bundestag in 2017. Again, this has not translated itself into the happiness figures, perhaps hinting that relatively strong economic performance from both countries has kept happiness high. Therefore, as the Bundesbank predicting recession within the EU’s largest economy that will surely affect its neighbour, future figures for both could well decline.
The US has undergone a similarly divisive and polarizing public vote. Coinciding with the election of Donald Trump to the White House, the graph displays a fall in happiness in 2016. The US annual General Societal Survey shows a 50% decrease in happiness between 1990 and 2018. Self-identified republicans tend to maintain a higher level of reported happiness than democrats, levels that tend not to fluctuate with the party in power. As a result, it appears the politics of the day has little effect on the happiness of Americans. Indeed, the happiness report attributes it to other aspects of American life, from phone usage to the opioid epidemic. Perhaps most notably, it cites the state of American health. This has become an increasingly prevalent factor with an obesity rate of 39.8% in 2016, costing 22% of all US healthcare expenditure at $190 billion annually. Whilst not the only factor, it appears that lifestyles in the US have repressed happiness levels despite great economic advantages, such as having the world’s largest GDP and the 8th highest GNI per capita.
Interestingly, Indian happiness appears to have declined significantly over the same period, despite profound increases in wealth. As of 2019, India ranks 140 out of 156 countries for happiness, with a score of just 4.015. Some commentators attribute this to a decrease in religious participation or spirituality, which has been shown to boost life satisfaction. The controversial 2016 policy of demonetisation wiped out some 86% of Indian cash, disproportionately affecting poorer, unbanked citizens and causing the loss of 1.5 million jobs in the first 4 months of the following year. Whilst poverty has halved between 2008 and 2018 and economic growth has remained above 6 percent, structural problems remain which may feed into dissatisfaction with the unevenness of the country’s wealth. Wages have not risen in line with consumption, perhaps leading to household consumption falling from 23% to 17% since 2013. This contraction disproportionately affects those working on the lowest incomes to the greatest extent, largely in the agricultural sector. In 2018 the rural economy accounted for 58% of the overall workforce and saw real wage growth of only 0.9%. Consumer non-durables (an indicator for rural consumption) however, have grown at an average of 6.5%. Such low wage growth indicates systemic low labour productivity, which likely results from with a lack of government investment in education and infrastructure, particularly what is required to mechanise and scale the work of rural farmers. Indeed, last recorded fiscal year (2017-18) the Indian government’s fiscal spending was equivalent to 12.7% of GDP, with just 1.6% GDP being spent on healthcare. However, as India’s middle economy and rates of job formality grow, it will be interesting to see if and how a potential increase in tax revenue is used to further elevate productivity and quality of life.