All Publications
Criterion of the Month
Ref: COM-April-2018

Article

3 min.

April 2018

Related topics:

Browse all topics

What makes countries happier?

 Christos Cabolis

By Chief Economist of the WCC Christos CabolisChristos Cabolis

Image description here

Research on what affects the levels of happiness of an individual, organization or country has been growing across different academic fields because of its importance to managers, business leaders and policy makers alike. The relationship between different measurements of income and happiness is multi-faceted. We presented this complexity in a chart recently. In this edition of the Criterion of the Month we explore how other important measures of The IMD World Competitiveness Ranking are related to the happiness of an economy.

Let’s begin by exploring the correlation between Happiness and Quality of Life. The vertical axis in Graph 1 presents the values from the 2018 UN World Happiness Report. The horizontal axis shows the IMD Executive Opinion Survey answers by mid- and upper- level business executives as to whether the quality of life is high in their country of residence. There is a strong positive relation with a correlation coefficient equal to 0.8 - the countries with high levels of subjective quality of life are also the countries that exhibit high levels of happiness.

What is it that makes countries happier?
Download this article

PRINTABLE PDF – Less than 1MB

There are different grounds on which to formulate a subjective belief of a high quality of life. Undoubtedly, views about safety and justice as well as sentiments about environmental conditions and health provisions of a country are among the factors contributing to the quality of life. The IMD World Competitiveness Ranking uses a number of criteria that quantify these elements and aggregates them into various sub-factors.

The Societal Framework sub-factor includes measures that capture components related to justice and security, private property rights, homicide, risk of political instability and social cohesion as well as measures of gender and income inequality in an economy. The higher the ranking in the Societal Framework, the lower the risk of negative effects in the above criteria. Graph 2 shows this association. Countries that fare strongly in issues related to personal safety and security as well as inclusiveness are associated with higher levels of happiness. The correlation coefficient is 0.7.

In addition to the current feelings about security and safety, one may have similar sentiments about living conditions. This is captured by the Health and Environment sub-factor, which captures both hard data and subjective opinions on issues related to the quality of the health infrastructure of a country as well as the environmental conditions related to ecological balance, pollution problems and environmental laws among others. Graph 3 portrays this positive relationship. Countries that exhibit high rankings in the Health and Environment sub-factor also demonstrate high levels of happiness. The correlation coefficient is 0.79.

Research related to the determinants of happiness as well as the impact of happiness on economic performance is growing. In this note, we show that using the IMD World Competitiveness Dataset, happiness is strongly related with high levels of safety and security, social inclusiveness, health infrastructure and environmental conditions. Policy makers should keep the above in mind when they work hard to improve the level of happiness of their citizens.

Contact our Knowledge Center for additional information on IMD publications

Contact our Media Relations team to republish

Keep reading

Back to top

IMD Chemin de Bellerive
23 PO Box 915
CH-1001 Lausanne
Switzerland
Tel: +41 21 618 01 11
[email protected]
www.imd.org

Copyright © 2006-2021 IMD - International Institute for Management Development. All rights, including copyright, pertaining to the content of this website/publication/document are owned or controlled for these purposes by IMD, except when expressly stated otherwise. None of the materials provided on/in this website/publication/document may be used, reproduced or transmitted, in whole or in part, in any form or by any means, electronic or mechanical, including photocopying, recording or the use of any information storage and retrieval system, without permission in writing from IMD. To request such permission and for further inquiries, please contact IMD at [email protected] Where it is stated that copyright to any part of the IMD website/publication/document is held by a third party, requests for permission to copy, modify, translate, publish or otherwise make available such part must be addressed directly to the third party concerned.