New studies -- including a report on the happiest countries on the planet -- suggest that building a theory of "happynomics" is harder than you'd think
Economists can measure unemployment, GDP growth, and housing prices. But do they know how to measure happiness? If they did, what would we even do with the results?
Each year, the OECD produces the Better Life Index, a comprehensive report on the well-being of advanced countries based on a long list of factors, including income, housing, and life satisfaction. In the 2012 survey released this week, Australia took the top spot. The U.S. finished third.
Does that mean Australia is objectively the best place to live in the world? Absolutely not. Even the architects of the index would tell you that the "good life" is utterly subjective, and different people have different values. If you equally measure income and work-life balance (two real metrics in the OECD study), you assume that everybody in the world values money and down-time the same. In the real world, some people like smaller houses, some prefer long vacations, and some choose to work in banking because they like having money and don't care for down-time.
The nice thing about the Better Life Index is that it lets users weight the 11 metrics to emphasize the values that matter most to you. When I emphasized income, housing (e.g.: rooms/person and dwelling size), and jobs (e.g.: employment, long-term unemployment), the United States came out way ahead. From these metrics alone, we really might be number one.
But when I lowered those metrics and instead emphasized community (via surveys on quality of support network), life satisfaction (via surveys) and work-life balance (e.g.: time devoted to leisure), Denmark moved from number 15 in the world to the runaway winner. The United States fell from number one to number 18. Only Switzerland and the Netherlands hung around in the top five. Australia, the overall winner, didn't even appear in the top seven in either list.