GDP v. Happy Planet Index? Some New Year's number crunching from Moscow, comparing life in cold and warm climates, rich and poor countries, free and less free societies.
MOSCOW - We hope that this past year has been a happy one for you. Of course, individual incomes for many dropped, while the world as a whole saw a slowdown of economic growth.
But those details are not enough to interfere with a Russian’s happiness. On the other hand, there is no amount of economic growth that would have made Russians happier.
“They’ve had their fill,” is perhaps what a resident of the Central African Republic might say, where per capita GDP ($445) is roughly 30 times less then ours ($13,764), but where people are only four times less happy, according to the Happy Planet Index (HPI).
That hypothetical African would not be far from the truth. Statistical analysis has shown that per capita GDP only has a strong influence on happiness in the poorest of countries. It’s actually quite easy to calculate exactly how poor a country has to be for it to matter. By looking at the HPI and GDPs, there is a strong correlation between GDP and HPI up until a per capita GDP of around $2,500. After that, the correlation disappears.
We are not the first ones to notice this. The HPI, which has been measured since 2006, came about because rich countries had gotten so rich that their inhabitants started to doubt the importance of material goods. After the 2008 crisis, the researchers behind the HPI learned that the best time to talk about the eternal, and in our view absurd, question of whether or not growth should be the goal of economic politics was when the economy was shaky. The subject was even discussed at the London School of Economics.
That is strange because Britain is one of the countries where there is a very slight but still positive correlation between wealth and happiness. Not because the British are so poor, but more likely because the GDP is a product of their self-realization, of the values that go along with capitalism.
It is safe to say that in countries that have already climbed out of humiliating poverty but have not yet reached first-world standards of living, happiness is determined not by GDP, but by something else, since there appears to be no correlation between the two whatsoever. But it appears that it is even more complicated then that.
When we asked a researcher to verify the conclusion we had come to, he determined that there was a small group of extremely poor countries where happiness and GDP were linked. But for countries with GDP between $9,500 and $14,000, he found the correlation between GDP and Happiness to be negative. Russia’s GDP, again, is just shy of $13,800.
You can’t buy happiness
This can be explained logically. The group of countries we are talking about includes several former Soviet states as well several Latin American countries, where people are inexplicably happy no matter what their income. At first, researchers suggested that was because of the lack of political conflict, but most people would agree that political life is not exactly calm in Panama or Venezuela.
You might say, “It’s easy to be happy in Panama, it’s the weather! How can one enjoy life at minus 25 degrees Celsius?” But in similarly frosty places like Finland, Iceland and Norway people are far happier, although they are also much richer. But in Latvia, Lithuania and Estonia, which aren’t exactly tropical and are about as well off as Russia, people are exactly as happy as Russians - which is to say, not very happy.
To further explore this hypothesis, it is interesting to find countries that are richer, warmer and less happy then Russia - places like Kuwait and Bahrain. Both countries have had their share of political upheaval in the past several years, so perhaps that has something to do with it. You can’t buy happiness when there is no freedom.
It’s clear that this is something like Maslow’s “hierarchy of needs” pyramid. Once you’ve taken care of basic needs, people want love, respect and self-realization. Democracy is not that far up that pyramid, either, because democracy is respect. Although continually soaring incomes can help things. But Russia has to find it’s own way now - because it is far from the high incomes of the gulf regions, but just as far from the respect of Western democracies.
[rebelmouse-image 27086119 alt="""" original_size="640x480" expand=1]
Maslow's pyramid, courtesy of Wikipedia
This is the trap that Russia risks falling into – the trap of the middle-income countries. When the economy has used up its ability to grow quickly by fully using the labor resources of the country, the economy will have to be restructured. Some predictions say that Russia will reach this dangerous crossroad before the end of 2013. And when that happens, it will be even more impossible to buy the people happiness with increased GDP. There are already obvious signs - life expectancy and consumption have gone up, but Russia’s HPI score has not changed in three years.
Throughout 2012, Russian sociologists have been repeating that now that the country is no longer threatened by absolute poverty, people will start demanding other things, like education, health care, public safety and good housing and public services. Love and democracy are the next steps on the road to happiness. So perhaps the old New Year’s toast, “To New Happiness,” is not so ridiculous after all.