What can contribute to the happiness of a country?
Within a variety of countries, there are several global factors that correlate to self-reported changes in happiness. Namely, taxes, education, and high immigration are all positively associated with countries’ Happiness index (a sect of the United Nations Sustainable Development Solutions Network that averages self-reported happiness by country). However, some of these aspects can only impact happiness to a certain extent, at which point internal factors become the leading determinant.
While many other factors have a linear correlation to self-reported happiness, GDP per capita has a strong logarithmic relationship that essentially plateaus after 50,000 USD, where afterwards the effect of a high GDP per capita on happiness is limited. This finding is confirmed in various studies that show money can only increase your happiness to a certain extent. A worldwide study conducted by Perdue University and the University of Virginia reports that the ideal income point for emotional well-being is between $60,000 and $75,000 per annum.
In a separate 1978 study published in the Journal of Personality and Social Psychology it was shown that “lottery winners and controls were not significantly different in their ratings of how happy they were now, how happy they were before winning (or, for controls, how happy they were 6 months ago), and how happy they expected to be in a couple of years”.
While vastly different in experience and financial situations, lottery winners and the control group had similar happiness levels. So internal factors have a large impact on happiness, rather than the external factors we tend to attribute happiness to.
Despite this, certain external factors in countries have distinct correlations with countrywide self-reported happiness. An example of this is the relationship between tax revenue (as a percentage of GDP) and happiness.
On average, as taxes as a percentage of GDP increase, so does nationwide self-reported happiness. At first glance this may seem counterintuitive — you’ve heard your neighbor complaining about how high their taxes are — and yet, the benefit from social programs established with tax money largely outweigh the negative implications. When considering a wider selection of countries (and by extension a wider array of tax revenues), the relationship between tax revenue and Happiness Index remains positive and linear.
Another linear correlation can be found between the population of new immigrants and self-reported happiness. This can be attributed to two key factors. Fundamentally, immigrants have dramatically altered their living conditions, recently enough to result in significantly higher happiness levels. Furthermore, to migrate, determination and therefore hope is required, leading to the self-selection of happier individuals. As a 2018 study published by the World Happiness Report found, “immigrants across the globe are generally happier following migration — reporting more life satisfaction, more positive emotions, and fewer negative emotions — based on Gallup surveys of some 36,000 migrants from more than 150 countries”.
A strong correlation here is evident, but why is it linear and not logarithmic as seen in GDP per capita? On a strictly personal level, there is only so much one is capable of doing to raise their happiness. However, if a country has more immigrants, who, by nature of immigration will have elevated happiness, the country will be happier proportional to the influx of immigrants.
Analyzing education ratings from a “study [in which students] were given exam questions that tested their reading, math, and science abilities,” we see a significant positive linear relationship between education and happiness. Even when accounting for GDP per capita the effect of education is still positive. This goes against the common belief that education and intelligence provoke unhappiness, but is supported by certain scientific studies.
Essentially, people who are more educated tend to be happier than those who aren’t (dispelling consensus), even if this increment of happiness is minimal and generally insignificant.
The linear relation we see with education, tax revenue, and immigration is not shared with GDP per capita (PPP), which has a distinct logarithmic relationship with countries’ Happiness index. Despite this, all four factors are positively correlated with the Happiness Index, specifically on a countrywide level. While each person’s happiness is bound by their nature, there are several external factors that play a strong determining role in that happiness.
Written by Benjamin Vyshedskiy, Diego Luca Gonzalez Gauss, and Sophia Noyes. NOTE: this article was originally released on January 7, 2021.
Referenced studies:
https://www.purdue.edu/newsroom/releases/2018/Q1/money-only-buys-happiness-for-a-certain-amount.html
https://pdfs.semanticscholar.org/fbcf/098df289397dd4842756a9ee6634ee138d9b.pdf
https://www.migrationpolicy.org/article/does-migration-increase-happiness-it-depends
