The Economics of Happiness in the Middle East

, ,

One of my former professors, Dr. Carol Graham of the Brookings Institution, first introduced me to the concept of quantifying happiness through surveys as a an indicator of a country's development. In short, as much as GDP or PPP per capita, infant mortality rates or literacy might be able to be used as a measure in the end all that really matters is whether Country X is happy or not, no?


Well mixing philosophy and economics to better understand the psychology of a people provides for some interesting and unexpected country rankings for sure, and material wealth and happiness do not necessarily have a positive correlation. Some studies that look more deeply into how people "feel" in order to add breadth to traditional development economics hard statistical data include the World Values Survey, The Satisfaction with Life Index, and now the Happy Planet Index.

The HPI combines happiness (a simple 1 to 10 scale) with sustainable living, as measured by the ecological footprint. We use ecological resources (and no one knows this better than Kuwait) as a means to achieve "long, happy, fulfilling lives". The HPI is an index of "happy life years" (life satisfaction multiplied by life expectancy) per unit of the ecological footprint.

The justification for this? According to research designers, "we should not lose sight of the fact that economic growth is just one strategy to achieve well-being, and in terms of natural resources, a demonstrably inefficient one. Rather than pursuing growth at all costs, even if detrimental to well-being and sustainability, leaders should be striving to pursue well being and sustainability, even if detrimental to growth."

I like this philosophy, and I believe this kind of measure puts much of the material happiness from oil revenues in this region more in check, where happiness would be otherwise severely inflated in the Gulf region. Here, happiness has cleverly been linked to sustainability and progress of societies can be reflected in their relationship to the environment.

Amazingly, Latin America with all its problems of debt, inflation, inequality, crime, violence, corruption and political instability surpassed OECD countries on the HPI index. They attribute this high ranking of the region to its unmaterialistic values and aspirations, as well as strong social capital through civil society. The top ten rankings are as follows (assuming an 89.0 HPI target for 2050):

1. Costa Rica (76.1)
2. Dominican Republic (71.8)
3. Jamaica (70.1)
4. Guatemala (68.4)
5. Vietnam (66.5)
6. Colombia (66.1)
7. Cuba (65.7)
8. El Salvador (61.5)
9. Brazil (61.0)
10. Honduras (61.0)

How does the Middle East fair? Here are the rankings for the region:

13. Saudi Arabia (59.7)
26. Jordan (54.6)
38. Syria (51.3)
50. Yemen (48.1)
56. Palestine (47.7)
67. Israel (44.5)
79. Iraq (42.6)
81. Iran (42.1)
83. Turkey (41.7)
110. Lebanon (33.6)
111. United Arab Emirates (28.2)
128. Kuwait (27.0)

Interestingly enough between UAE and Kuwait and after Kuwait until the final ranking are all Sub-Saharan African countries, meaning that UAE and Kuwait are not much happier than SSA in terms of well-being taking into account sustainability. Perhaps most curious is the fact that Luxembourg, coming in at 122 on the ranking, is sandwiched between Sudan and UAE. United States ranks relatively low at 114. What accounts for the major gap between Saudi Arabia, which comes up incredibly high on the HPI and Kuwait, which takes the lowest place for the Middle East?

2 Responses on "The Economics of Happiness in the Middle East"

  1. Sean says:

    Jeff at economixt is in the middle of writing his thesis on happiness economics and he's got some great data on what Happiness means to some of his preliminary US survey respondents.

    He made a pretty cool wordle out of it, definitely worth checking out:

    http://www.economixt.com/2009/07/happiness-synonyms

    Victoria says:

    thanks sean, its an interesting field for sure. im curious to know what Jeff comes up with for the US cities. Wonder when it wil come out?