“[GDP] measures everything, in short, except that which makes life worthwhile”

-President John F. Kennedy at the University of Kansas, 1968

Key Takeaways:

  • Healthy people are happy people — more people in a country reporting that they are in good health is associated with an increase in the country’s average levels of well-being
  • Income seems to matter in the short-term: even with the addition of a variable measuring uncertainty, income still has a significant positive relationship with well-being for the cross-sectional data I collected from 2015–2018
  • In the long-term, income matters only up to the point that basic needs are met. Easterlin’s Paradox still holds. The paradox states that at a point in time happiness varies directly with income both within and across nations, but over time happiness does not trend upward as income continues to grow. When reviewing long-term well-being data across decades, I note income only improves a society’s well-being up to a point and then has no significant relationship with well-being.

-That means that overall, for both developed and developing countries, well-being increases with GDP only up to a point

  • An increase in a country’s uncertainty is associated with a decrease in average self-reported well-being
  • Trade is important for both developing and developed countries — an increase in any country’s World Trade Uncertainty index is associated with fewer people reporting that they are quite happy

Happiness and a meaningful life are concepts that have been discussed for centuries. The Greeks through early Philosophy from Socrates and Plato discussed and wrote about “the good life” and the importance of virtues such as justice, courage, and temperance for a well-lived life (Kraut 2018). Aristotle defines happiness as ‘eudaimonia’ — translated as ‘flourishing’ (Kraut 2018). He posits that virtue can be cultivated and that eudaimonia is living well. ‘Eu’ means ‘well’ and ‘daimon’ means ‘divinity’ or ‘spirit’. Being eudaimon therefore translates to living in a state that is well favored by a god (Kraut 2018). Amongst utilitarians, Bentham’s Greatest Happiness Principle — that a society that seeks to maximize the happiness of all people begets the greatest aggregate happiness — is noted as being a pioneering thought in encouraging freedom and happiness for all (Crimmins 2021).

Modern-day psychologists and economists have also sought to measure well-being. As industrialization progressed and Western countries grew richer, Easterlin sought to investigate whether the increased income was leading to greater happiness. He found that happiness only increased with income up to a point for all countries, a phenomenon he named the Easterlin Paradox (Easterlin 1974). Researchers Kahneman and Deaton also investigated the relationship between well-being and happiness, finding a positive relationship between them (Kahneman and Deaton 2010). A long-held debate on whether more money buys more happiness has continued amongst researchers.

More recently, Carol Graham coined the phrase ‘happy peasants, miserable millionaires’ after her observations showing a high number of people in very low-income countries being happy despite their lack of basic necessities whereas there was a large portion of wealthy people in developed countries self-reporting low levels of well-being (Graham 2012). She explains that the human spirit is resilient and can easily adapt to difficult circumstances. The one factor that she finds that individuals cannot adapt to is uncertainty, citing events such as the 2008–09 economic crisis (Graham 2012) and resilience during the Covid-19 pandemic (Graham 2020).

The World Happiness Report has seen its popularity increase in mainstream media over the past decade. First published in 2012 by the Gallup World Poll in conjunction with the United Nations, the report publishes an annual ranking of the world’s happiest countries.

These rankings have been popularized across academia and mainstream media with the rise of well-being research by Economists and Psychologists coupled with renewed interest in mental wellness across the world. The report measures the contribution of six factors to each country’s well-being scores: GDP per capita, social support, healthy life expectancy, freedom to make life choices, generosity, and freedom from corruption.

The United Nations has established a mental health and well-being strategy and encourages people globally to celebrate World Mental Health Month. Data shows that developed countries have recently had the highest share of suicide rates. Some countries ranked amongst the highest in average levels of well-being also report the highest rates of suicide. Unsure of whether this was a paradox, I sought to re-examine the variables that the Gallup World Poll includes as contributors to happiness.

Uncertainty is another consistent factor associated with lower levels of well-being. It is a variable that has been difficult for researchers to measure given the abstract nature of uncertainty. Currently, only the World Uncertainty Index and World Trade Uncertainty Index exist as measures of uncertainty across countries. However, these measures rely on the appearance of a limited number of keywords in media sources which may lead to biased scores. I sought to create an updated estimate of an Uncertainty Index that includes socioeconomic data.

Data & Methodology

To compare the factors that contribute to subjective well-being across developing and developed countries, I collected data for both the life satisfaction question (participants respond to the question: ‘All things considered, how happy are you?’) and the Cantril ladder question (survey respondents are asked to imagine a 10-rung ladder with the top representing their best possible life and the bottom representing their worst possible life. They are then asked to position themselves on the ladder). The data I collected was for the years 2015 to 2018.

I sourced the life satisfaction data from the World Values Survey and country Cantril ladder scores from the World Happiness Reports. The Cantril Ladder score datasets are also publicly available on Kaggle which hosts online data repositories. I also used country-level economic data on GDP per capita, GDP growth, the index of economic freedom, gross domestic savings, and public sector debt from the World Bank data repository. To measure generosity, I used data from the World Giving Index which ranks countries’ generosity based on the number of survey respondents who in the past month had donated money to a charity, helped a stranger along with the number of people who had volunteered in the past month. I sourced data on uncertainty from the International Monetary Fund. The IMF provides country-level data on uncertainty through the World Uncertainty Index and the World Trade Uncertainty Index. I also sourced data on each countries’ level of average self-reported health from the World Values Survey.

These datasets are publicly available on a repository on my GitHub which can be found here.

My Model

I used an Ordinary Least Squares regression to complete the following regressions:

Model (i)
Cantril score_i =  world uncertainty index_i + world trade uncertainty index_i + standard deviation of GDPs_i + GDP growth_i + log-gdp per capita_i + economic freedom score_i +  self-reported health_i + generosity_i + gross savings_i + public sector debt_i
Model (ii)
Well-being score_i = average log gdp_i + standard deviation of gdp_i + average economic freedom_i + overall generosity score_i + donation score_i + helping strangers score_i + volunteer time score_i + average public sector debt_i + average savings_i + average world uncertainty index_i + average world trade uncertainty index_i + self reported health scores_i

My main findings can be found in the key takeaways at the beginning of this article. One more interesting finding is that for the life satisfaction question, respondents who practiced a religion self-reported higher levels of well-being.

On Uncertainty

I would like to highlight uncertainty’s role in affecting people’s happiness. People reported higher levels of well-being when the US economy was at its bottom during the 2008–09 economic crisis than when the economy was at higher levels but on a downward trend in previous months (Graham 2012). Graham highlights that the main reason for this was the uncertainty associated with the continuing reports of the market continuing to fall and jobs being lost. The people had no idea at the time when the economy would stop its then downward trajectory — this caused a lot of angst. Uncertainty in those preceding months, therefore, was at levels higher than when the economy finally hit rock bottom.

Measuring uncertainty — an updated Uncertainty Index

I used Principal Component Analysis to generate an updated estimate of uncertainty. Beyond including the average World Uncertainty Index 2015–2018 and the average World Trade Uncertainty Index 2015–2018, I also included the standard deviation of each country’s GDP as a proxy for uncertainty, average economic freedom scores, average savings and the average public sector debt for the same period.

A map showing countries’ estimated levels of Uncertainty using the updated Uncertainty Index.

Limitations and Recommendations

Given the simplicity of conducting an Ordinary Least Squares regression on the data from the World Values Survey, it would be interesting to re-explore the data using a probit model instead.

The dataset for estimated uncertainty is limited to 26 countries. It would be interesting to generate new estimates with more complete socioeconomic datasets, as this analysis was limited to publicly available data. Finally, the bias of the World Uncertainty Index and the World Trade Uncertainty index can be shown by the case of Lebanon. Since there are no keyword matchings in Lebanon’s news in the media as used in generating the World Uncertainty Index and the World Trade Uncertainty index, its score is skewed. It would be advisable to build on these uncertainty estimates using techniques such as Natural Language Processing for news media articles along and tools such as Google search trends. Combining these elements with socioeconomic data would lead to better estimates of uncertainty.

Looking Ahead

Governments looking to achieve social progress, development and improve the collective well-being of their citizens are more likely to benefit from adopting egalitarian policies. Such policies would focus on both economic growth and creating an environment that promotes democracy, social tolerance, self-expression, and individual autonomy. This will help in creating a social and political environment that helps citizens be less miserable while encouraging citizens to have free choices and maximize their life satisfaction.

Social media is currently a part of our daily lives. There are currently about 14 billion cellphones and tablets across the world (Radicati Group, 2020). This is nearing double the world’s global population currently at 7.8 billion people (US Census.gov, 2021). With companies such as Facebook having platforms that help billions of users around the world connect, it would be useful to understand how social media use affects well-being. Facebook previously published its own Gross National Happiness Index based on the negative and positive word associations users included in their status updates. This data was suggested to have both face validity and convergent validity (Kramer, 2010). However, further research by Wang et al found that the Facebook Gross National Happiness index was not an actual measure of mood and well-being (Wang et al, 2014). Given the inconclusive nature of this research and how social media is increasingly being used by people to build their relationships, it would also be important to understand the effects of social media use on people in general and across different cultural settings.

Finally, Bhutan is currently the only country in the world prioritizing Gross National Happiness over GDP as its leading indicator for development. This switch in priorities began in 1972 with the hope that the indicator would take on a more holistic approach to aligning citizens’, the government’s, NGOs’, and businesses’ incentives for a happier nation (Karma et al, 2012). Since Bhutan’s Gross National Happiness Index seeks to provide a holistic reflection of the Bhutanese people’s “general well-being rather than a subjective psychological ranking of happiness alone” (Karma et al, 2012), it would be interesting to explore how Bhutan’s choices since 1972 going forward have aided the country’s economic and social progress. A recent example would be Bhutan’s recent success in responding to the COVID-19 pandemic. The country has maintained the lowest fatality rate worldwide, with its government’s implementation of policy and citizens’ adherence to social distancing measures being considered a worldwide success.

A community in Bhutan. Photo by Drukgyel Dzong from Unsplash.

Works Cited:

  1. Crimmins, James E. “Jeremy Bentham.” The Stanford Encyclopedia of Philosophy, edited by Edward N. Zalta, Summer 2021, Metaphysics Research Lab, Stanford University, 2021, https://plato.stanford.edu/archives/sum2021/entries/bentham/.
  2. Easterlin, RICHARD A. “Does Economic Growth Improve the Human Lot? Some Empirical Evidence.” Nations and Households in Economic Growth, edited by PAUL A.
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  5. Graham, Carol. The Pursuit of Happiness: An Economy of Well-Being. Washington, D.C: Brookings Institution, 2012. Internet resource.
  6. Inc, Gallup. “Understanding How Gallup Uses the Cantril Scale.” Gallup.Com, 24 Aug. 2009,
  7. Kahneman, Daniel, and Angus Deaton. “High Income Improves Evaluation of Life but Not Emotional Well-Being.” Proceedings of the National Academy of Sciences, vol. 107, no. 38, Sept. 2010, pp. 16489–93.
  8. Kramer, Adam. An Unobtrusive Behavioral Model of “Gross National Happiness.” Apr. 2010, https://research.fb.com/wp-content/uploads/2016/11/an-unobtrusive-behavioral-model-of-gross-national-happiness.pdf.
  9. Kraut, Richard. “Aristotle’s Ethics.” The Stanford Encyclopedia of Philosophy, edited by Edward N. Zalta, Summer 2018, Metaphysics Research Lab, Stanford University, 2018, https://plato.stanford.edu/archives/sum2018/entries/aristotle-ethics/.
  10. Radicati Group. Mobile Statistics Report, 2021–2025. Radicati.com, Jan. 2021, https://www.radicati.com/wp/wp-content/uploads/2021/Mobile_Statistics_Report,_2021-2025_Executive_Summary.pdf.