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By Taylor Marvin

From The New York Times, here’s a great graphic (based on a paper by Betsey Stevenson and Justin Wolfers) that graphs a country’s residents’ reported level of happiness against the country’s average income.

Source: The New York Times

Source: The New York Times

First impression: money does buy happiness, though only to a point and the relationship isn’t very strong. It’s true that richer countries tend to be happier than poor nations, but there are very poor nations that are just as happy as the richest and rich countries gloomier than their income would suggest. Obviously there’s more going on here.

This graph suggests three broad groupings: low and middle income nations with a slight relation between higher income and greater happiness, poorer high income nations that still show the relationship, and finally rich high-income countries that show broadly similar levels of happiness despite widely dispersed income levels. This is a bit hard to see at first glance — remember that the x-axis isn’t on a constant scale. Here’s a clearer view:

Source: UCSD professor Davide Debortoli.

Source: UCSD professor Davide Debortoli.

This suggests that while money can buy happiness any additionally income after about $17,000 per year doesn’t make you any more satisfied with life- Americans make over $15,000 a year more than New Zealanders but both are generally very happy. However, there’s still large discrepancies between high-income nations’ happiness levels. What can explain these sometimes surprising differences? At first glance there isn’t any obvious similarities between the happiest rich nations; the Netherlands, Sweden, Denmark and Norway all have strong social safety nets that reduce the uncertainty of life but are about as happy as the US, which has one of the smallest welfare systems in the rich world. Additionally, some rich nations are more downcast than their similarly-high income peers. Again, finding the root cause of this unhappiness is difficult. Japanese are known for a working culture that values long hours and discourages personal creativity — factors that could contribute to Japan’s general low level of happiness. Other gloomy rich nations are more surprising: both Italy and France, renowned for their rich cultures and beautiful countryside, are less happy than their incomes would suggest. However, they do share a common social trait: both suffer from high (for European standards) public corruption. Corrupt societies, with its increased personal insecurity and a sense of pervasive unfairness, seems to have a strong relation with rich-world happiness. Very happy nations like Ireland, the Netherlands, Switzerland and New Zealand all have extremely low levels of corruption while the less happy poorer high-income group suffer from both lower incomes and higher corruption than their richer peers.

However, there doesn’t seem to be a strong connection between inequality and happiness.

Source: Wikipedia

China, Brazil and South Africa are all relatively happy places yet suffer from very unequal societies. Additionally, while India and Bulgaria are fairly egalitarian societies they are less happy than their income level suggests. It’s similar in the rich world. Some egalitarian nations like Canada and Scandinavia tend to be happy while others like Italy and France aren’t. Additionally, the US is a very happy nation despite its uniquely high level of inequality in the rich world.

As an aside, it seems like happy countries tend to have good weather. Tropical Indonesia, Columbia, Mexico, Nigeria and Vietnam all have low incomes but are generally very satisfied. Similarly, most post-Soviet nations are more depressed than their varied incomes would indicate, though this is likely more due to their chaotic political systems and generally corrupt economies than their dreary weather.

A factor that does seem to show a strong relationship with happiness level is economic freedom:

Source: The Cato Institute

This makes intuitive sense — when people have some control over their income levels and have the ability to succeed with hard work they will feel more satisfied with life. Similarly, a political system where success depends solely on connections or the state is very depressing, so this result isn’t that surprising.

What is surprising is how happy the world generally is. Most citizens of the countries represented report themselves to be either satisfied or happy with their lives, despite their varied incomes and social differences. Additionally, the world average income of about $10,000 a year seem to hold special significance —once nations clear this income threshold they’re citizens report nearly universally high levels of wellbeing. This is encouraging. Measuring a country’s success by the happiness of its citizen makes more sense than artificial measures like GDP or consumption; if a society doesn’t make its people happy than what is it really worth? But even for the very poor very happy societies are possible, which of course makes the world a much more inspiring place.

Note: Thanks to Will Wilkinson’s study for getting me started on this subject.
Updated 6/2/2011.

25 Comments Post a comment
  1. Taylor, this is a really interesting article you have published, along with amazing results – not what I expected.
    You are right in your theory, that personal freedoms and opportunity to create your own wealth and path in life, seem to have serious associations with ‘happiness’ as we know it.Apart from actaul income levels I feel a strong sense of support from local community also prevents people feeling isolated, which also adds to ‘happiness’. (That’s my thought!)

    November 14, 2010
  2. I was really surprised with the findings from some of the European countries like France and Italy.
    Thanks,a very interesting article.

    December 2, 2010
  3. I don’t know how true these facts are for Greece and the rest of the Southern Europe countries anymore…

    December 2, 2010
  4. Are you sure those figures are good for Italy and Southern Europe? It looks a bit off from what im hearing from friends over there

    December 5, 2010
  5. I really think this lines is soooo important.

    “Measuring a country’s success by the happiness of its citizen makes more sense than artificial measures like GDP or global influence; if a society doesn’t make its people happy than what is it really worth?”

    December 7, 2010
  6. I think economic freedom would be a high determinate for happiness. If people believe they can work hard and prosper it gives them hope. In contrast to countries where you don’t have that choice. I believe people in those countries would have a feeling of helplessness and hopelessness which would lead to unhappiness..

    Interesting article..Thanks for sharing.

    December 22, 2010
  7. Interesting article, I like the way you associate money with happiness and happiness with weather.I don’t know if all the facts are true, but something i share with you is about the money, it doesn’t give you everything but it’s able to make you happy.

    December 22, 2010
  8. Its an interesting study. While I agree with the fact that money does not buy happiness it certainly can bring a smile to the faces of those who know that they can afford at least their own basic needs.

    Thanks for the info!

    December 23, 2010
  9. I agree with a lot of what is detailed in this article, however I am not sure about people being totally able to live happily on $17,000 a year. I must find somewhere cheaper to buy my groceries.

    December 23, 2010
  10. If they measured individual city’s happiness, Los Angeles would be at or near the top.

    December 25, 2010
  11. Money does not buy happiness!! worldwide is proof that rich countries and people are not happy, and in countries with less money have more happiness Money does not buy happiness ….

    January 7, 2011
  12. This is really interesting because I just read another article about the corruption in various countries. It seems that the US was not at the very top of least corrupted, but Norway, Sweden and Canada were some of the least – maybe it is time to move to a cold climate – makes you happy and honest! 🙂

    January 8, 2011
  13. Woahh!! I thought Indonesia is one of the biggest public corruption or corrupt societies?

    January 10, 2011
  14. I hate coruption.

    Are those figures from Italy?=

    January 11, 2011
  15. I am glad to see that most people are surprising happy in this world . You said “Most citizens of the countries represented report themselves to be either satisfied or happy with their lives, despite their varied incomes and social differences”. That just goes to show that money truly doesn’t buy happiness. you said “Additionally, the world average income of about $10,000 a year” This is great and tells me to count my blessings and if I am not happy I should be.

    January 30, 2011
  16. The one thing that wasn’t mentioned here is freedom. While having economic freedom seems to make a difference I wonder how other freedoms factor in to these statistics.

    February 7, 2011
  17. I guess money doesn’t always buy you happiness, it amazes me that some of the most happy people in the world are the ones that have just enough to get by, or live comfortably.

    February 7, 2011
  18. Reach a conclusion to this issue is a bit difficult, because happiness depends on many different factors, but certainly the money can not buy happiness

    February 16, 2011
  19. Great article. I always knew money can buy satisfaction. Happiness is another ball game entirely, and depends on who is asked. Satisfaction surely makes up at least 60% of happiness. Statistically, happiness can not be measured by the numbers.

    April 17, 2011
  20. What an interesting article. I am glad I stumbled upon it on the web. It definitely puts success and happiness in perspective. I think its interesting that places like China and Brazil are generally happy countries even though It would seem they shouldn’t be based on certain societal factors.

    April 26, 2011
  21. I think happiness is created when people feel fulfilled in their lives. Sure, having a good income and money to spend on the things we want is great, but setting a goal to achieve and actually achieving that goal is so much more fulfilling. Good weather and feeling secure are also big factors. It would be terrible to live in a country where people are so unhappy. Your surroundings must contribute in some way. Very informative article, thanks.

    May 10, 2011
  22. This is an interesting article. Generally speaking, it can be observed that money does help to bring happiness. People from Denmark are enjoying their lives to the fullest with money.

    No wonder some people are saying that money is the root of all evils.

    May 25, 2011
  23. Very interesting article,I think if you have good health, a warm climate and of course family and friends around you then most people would be happy.But money on its own does not buy happiness whatever country you come from.

    August 15, 2011
  24. I agree with Olivia. I definitely believe the climate and nature around will affect the amount of happiness one has. Great read.

    March 21, 2012

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