Apparently being rich does make you happy

by Tim Wilson, October 27, 2009

It probably wouldn’t come as a surprise to Zimbabweans that they have the least prosperous country in the world. And now they’ve had it confirmed following the release of the Legatum Institute’s 2009 “Prosperity Index: An inquiry into global wealth and wellbeing”.

The third edition of the Index aims to educate the community to take a “holistic view of prosperity and understand how it is created” and weights prosperity based on nine separate criteria (economic fundamentals, entrepreneurship & innovation, democratic institutions, education, health, safety & security, governance, personal freedom, and social capital) and delivers some unsurprising results.

Zimbabwe is the worst, but it is closely followed by a series of largely African States that lack not just economic freedom, but social and political freedom as well. Australia ranks number six, down from 9th position last year, and New Zealand scrapes in at position 10. By contrast the countries at the top of the list (mostly traditionally developed European and North American countries) have compounding strengths and rank highly in all categories.

And the role of compounding strengths hasn’t been lost on the authors who identify “prosperous countries are strong (on indicators) across the board”.

Africa may be a prosperity basket case, but interestingly most of South East Asia fares well considering their stage of economic development. China and Vietnam fare poorly as a consequence of their lack of democratic institutions and personal freedom. But the authors shouldn’t be too quick to lay judgement considering a comparison of their economic prosperity to that of the United States and Europe wouldn’t show these democratic bulwarks in the best light.

The most important contribution of the report is not the rankings, but evidence to finally dismiss the idea that wealth won’t make you happy. A graph included in the report shows an almost perfect linear correlation between happiness and wealth, or as you can see from the graph there are no “Happy, poor countries”, nor “Unhappy, wealthy countries”. Of course wealth alone won’t make you happy, but it enables you to have the freedom to live your life and that does tend to put a smile on people’s faces.

The ten best countries (in order): 1. Finland (best), 2. Switzerland, 3. Sweden, 4. Denmark, 5. Norway, 6. Australia, 7. Canada, 8. Netherlands, 9. United States & 10. New Zealand.

The ten worst countries (in order): 10. Zimbabwe (worst), 9. Sudan, 8. Yemen, 7. Central African Republic, 6. Cameroon, 5. Pakistan, 4. Nigeria, 3. Tanzania, 2. Algeria & 1. Kenya.

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