For decades, the success of a government was measured by the growth in its economy, and its GDP per capita. While there certainly is a link between GDP per capita and overall well-being of the people within a country, it is actually far smaller than people tend to think, and in fact almost non-existent in developed countries. This is the reason why many countries have recently started focusing on well-being as one of the measures of success. If we take happiness as the ultimate goal of any society, the governments need to take far more things into account than simply increasing economic output.

Although we can see that the two variables are directly linked, meaning on average countries with higher GDP per capita will have higher levels of happiness, the distinction becomes apparent when you look at an individual level. Tajikistan, for instance, with a GDP per capita  of $8701, placed higher on the World Happiness Report2 than Hong Kong, which has a GDP per capita of $48,7553. At the top, we see the outliers in the Scandinavian states. These countries have recently emerged both as some of the most successful economies and the countries with the happiest people. A common feature of these countries’ economic systems is progressive tax, with very high rates for the top bracket. This has led to a decrease in socioeconomic inequality in these countries. In rich countries, inequality has been shown to be directly correlated to the amount of social problems within the country:

This near-linear relationship is a contrast to the graph of the same social problems and the same countries against GDP per capita, where we observe almost no relationship.

The study also provided some insights into some of the major social problems linked with inequality in wealthy countries, many of which have also been proven to affect overall well-being:

Judging from this, one of the ways to increase overall well-being is to place have progressive taxes, particularly targeting the richer part of the population. This money can be used to improve healthcare, education and police.

According to UNESCO, poorer children are more likely to be bullied (4). Child bullying can not only cause physical damage, but it also often causes long-lasting mental damage, as well as having a negative effect on the child’s education (5), potentially decreasing their chance of employment. The government should increase funding to schools in poorer areas, as well as educating both teachers and pupils in order to prevent bullying, and further promoting mental health support within affected regions.

Unemployment and general lack of involvement in the community are large causes of mental illnesses, which are especially prevalent in the elderly. Depression is more than twice as common in the unemployed part of the population than those who are employed, and almost one in five of the long-term unemployed (over 27 weeks) in the USA suffer from the illness (6). In order to decrease unemployment, the government can improve the quality of education, especially for those from poorer backgrounds. Assistance schemes can be introduced to help those out of employment. Retired people can be encouraged to be involved with their community, for example through local charity participation, or by formation of local clubs where people with common interests could gather.

Another frequent cause of unhappiness is the general feeling of social injustice, especially within the legal systems, as well as corruption within the government. The relativity of contentment accounts partly for the low happiness in unequal countries. The government should strive for equal treatment of all citizens by the legal system, potentially through its reformation or through independent monitoring. The government should also aim to strike down on corruption through the potential introduction of new laws, as well as full disclosure of all income, property, savings and foreign accounts from its politicians annually. It should introduce laws to prevent tax avoidance from wealthy people and large corporations, which have been a part of the reason for recent increases in inequality. These laws can include obligatory publishing of financial data for all countries of operation for TNCs.

An essential part of happiness for many people is the work-life balance. When people have to work fewer hours, they have more time to spend with their friends and family, exercising, or resting, which can reduce their feeling of stress and anxiety. The Scandinavian countries, which have already been mentioned, have some of the lowest average working hours, with very high compensation per hour (in Denmark, for example, the average per-hour pay is around $507). It has been proven that people take less time off sick and cut down on less productive tasks, so the productivity decrease can be held to a minimum while greatly improving the workers’ overall well-being8. This may also help to reduce unemployment as more workers are hired, increasing labour participation. In order to encourage shorter working weeks, the government can enforce working hour limit, as well as potentially reducing the maximum number of hours for some occupations.

From the graph of GDP per capita vs Happiness two countries stood out- Costa Rica, which has far higher happiness than its GDP per capita would suggest, and Hong Kong, which is the opposite. I will use these two cases as examples of factors other than income and wealth that affect the happiness of the people.

Costa Rica

A large part of the Costa Ricans’ overall happiness is their physical well-being. Their government invests large amounts of money into healthcare. As a result, their life expectancy is over 80 years, with medical insurance a fraction of the cost of that in the US.

Although both their taxes and their national income is low compared to many countries, they still have money to fund social projects and healthcare since they abolished their military in 1949. This decision also prevented the formation of military dictatorships like in many other countries in that region, with the country remaining completely democratic. Although this would not be feasible in many of the bigger countries, such as the USA, which has obligations to defend 69 countries through treaties (9), the expenditure on defences can still be cut, as for example an internal study identified $125 billion of bureaucratic waste within the Pentagon (10).

Costa Rica has very low levels of pollution, and the government has planted vast green areas, all of which have been shown to improve both physical and mental well-being (11). It also plans to become carbon neutral by 2050. 

Physical mental well-being is affected by the foods you eat. The Costa Rican government encourages the growth and consumption of healthy foods, such as lean meat and vegetables. They also eat very few processed foods, and many vitamins that guard against mental health problems. Although processed food and red meat tax has been discussed in many countries, few have taken action. 

Hong Kong

With one of the highest GDP per capita out of any country, a fast-growing economy, the 2nd most economically free system in the world12, and the highest life expectancy in the world, by any traditional sense of the word, Hong Kong has been very successful in recent times. However, this has not been reflected in the happiness of the people, as it ranked just 78th on the World Happiness Report. There are many reasons for this:

 Due to its free economic system, which has very low taxes and tariffs, free immigration etc, Hong Kong has the 11th highest inequality out of any country, far higher than that of the United States. Whilst it has many wealthy businessmen, it also has 20% of its population living below the poverty line, which is already very low compared to Hong Kong’s GDP per capita (at around $6,000 per year, more than 8 times lower than Hong Kong’s GDP per capita (13).

Another problem from the perspective of the citizens of Hong Kong is their oppression from mainland China which, according to them, has violated the so-called ‘one country, two systems’ agreement, and has been manipulating their elections. In fact, almost all dictatorships, no matter how successful or how free its people are in other areas, rank low on the World Happiness Report (compared to their economic output). It would appear that freedom of choice and speech are essential to human nature, and all governments should aim to give a political voice to its citizens.

Conclusion

The government focusing on the economy rather than the people has greatly increased productivity in the past, leading us to the technology that we have today. For example, the use of child labour and decrease in life expectancy in many regions were the cost of the jump in output during the Industrial Revolution. But we like to think that our perception of the value of human life has increased since then, and governments have begun to take the individual citizen into account. However, this requires a change of perspective from the government, and a complete revision of its policies.

References

1. World Bank, GDP per capita (current US$)- Tajikistan, https://data.worldbank.org/indicator/NY.GDP.PCAP.CD?locations=TJ-UZ-KG-TM-KZ

2. UN SDSN World Happiness Report 2020, https://happiness-report.s3.amazonaws.com/2020/WHR20.pdf

3. World Bank, GDP per capita (current US$)- Hong Kong, https://data.worldbank.org/indicator/NY.GDP.PCAP.CD?locations=HK

4. UNESCO, ‘New Data Reveal that Poor Youth Are Among the Most Vulnerable to Bullying’, http://uis.unesco.org/en/blog/new-data-reveal-poor-youth-are-among-most-vulnerable-bullying

5. Education World, Nicole Gorman, ‘Bullying Affects Students' Academic Achievement, Study Finds’, https://www.educationworld.com/a_news/bullying-effects-students’-academic-achievement-study-finds-1646296443

6. The Atlantic, Rebecca J. Rosen, ‘The Mental-Health Consequences of Unemployment’, https://www.theatlantic.com/business/archive/2014/06/the-mental-health-consequences-of-unemployment/372449/

7. StatBank Denmark, Labour, income and wealth,  https://www.statistikbanken.dk/statbank5a/SelectVarVal/saveselections.asp

8. Harvard Business Review, Steve Glaveski, ‘The Case for the 6-Hour Workday.’, https://hbr.org/2018/12/the-case-for-the-6-hour-workday

9. The Washington Post, Adam Taylor, ‘Map: The U.S. is bound by treaties to defend a quarter of humanity’.

10. Washington Post, Craig Whitlock, ‘Pentagon buries evidence of $125 billion in bureaucratic waste’, https://www.washingtonpost.com/investigations/pentagon-buries-evidence-of-125-billion-in-bureaucratic-waste/2016/12/05/e0668c76-9af6-11e6-a0ed-ab0774c1eaa5_story.html?utm_term=.3e39516d1c17

11. UN SDSN World Happiness Report, ‘How Environmental Quality affects our happiness’, https://worldhappiness.report/ed/2020/how-environmental-quality-affects-our-happiness/

12. Heritage 2020 Index of Economic Freedom, https://www.heritage.org/index/?version=534

13. Oxfam Hong Kong, Poverty in Hong Kong and Oxfam’s advocacy work, https://www.oxfam.org.hk/en/what-we-do/development-programmes/hong-kong/povertyinhongkongandoxfamsadvocacywork

International Labour Organisation, Richard Wilkinson, ‘Inequality: the enemy between us?’, https://www.ilo.org/wcmsp5/groups/public/@ed_dialogue/@actrav/documents/meetingdocument/wcms_232060.pdf

Our World in Data, Self-Reported Life Satisfaction vs GDP per capita 2017 https://ourworldindata.org/grapher/gdp-vs-happiness?time=latest

Figure 4 Source: JRF, Karen Rowlingson, ‘Does income inequality cause health and social problems?’, https://www.jrf.org.uk/sites/default/files/jrf/migrated/files/Rowlingson-Income-eBook.pdf