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Top 10 Happiest countries to live in. The Happiness Index and Better Life Initiative

Updated on May 29, 2012


This article reveals the Top 10 happiest countries to live in and explores what has been used to measure this happiness; how the countries fare in individual happiness indicators and discusses some broader issues around the OECD happiness index (or Better Life Initiative).

“Global environmental changes driven by human activity, above all climate change and biodiversity loss, can only be addressed by asking again the question:

‘what does it mean to live a good life?’ “

 [Andrew Simms & Joe Smith, ‘DO GOOD LIVES NEED TO COST THE EARTH?’]

The Better Life Initiative

Since its inception in 1961, the world-wide economic think-tank the Organisation for Economic Cooperation and Development (OECD) has aimed to guide its members in growing Gross Domestic Product (GDP). After all, GDP - or how rich a country is - has always been a measure of international success and a yardstick for aspiring economies.

Although a number of social and public policy commentators have argued for many years for a more balanced approach to global well-being (notably James Lovelock [The Revenge of Gaia], Andrew Simms – New Economics Foundation), it has taken the OECD 50 years to begin to realise that there may be more to life than being rich.

Who’s Happy?!

The top 10 happiest places among the OECD countries are as follows:

1. Australia

2. Canada

3. Sweden

4. New Zealand

5. Norway

6. Denmark

7. United States

8. Switzerland

9. Finland

10. Netherlands

In 2011, on its 50th birthday, the OECD had a mid-life crisis. What did it mean to be happy? Was driving for growth the be all and end all? Was being wealthy and having a growing GDP ready what life was all about? On the back of this crisis, the OECD launched a new, exciting initiative: The Better Life Initiative.

This initiative - and the ensuing Better Life Index (or Happiness Index) - aims to guide and countries’ policies based on a range of different dimensions – rather than focusing just on GDP.

While a commendable and welcome step in the right direction, one question the immediately jumps into people’s minds: Has anyone noticed?

But what makes up the Happiness index (or Better Life index)? To answer this question, we turn to the Better Life Index dimensions and their individual results.

The Better Life Index Dimensions comprise 10 dimensions and one or two indicators within each dimension. For the purposes of this synopsis, we will consider the key indicator for each dimension and show how the happiest countries in the OECD world fare.


1. Income and Wealth

While wealth and income does not bring people happiness, it is an indicator in a market economy that a person or household is able to achieve the basic level of survival in terms of being able to feed, clothe and (to some extent) shelter themselves.

OECD INDICATOR: Household Net-Adjusted Disposable Income.

This is the annual, post-tax amount of money that a household earns or receives (including social payments). It represents the money available to a household for spending on goods or services.


2. Jobs and Earnings

Arguably (see Freeganism) working or having a job helps individuals stay connected with society, build self-esteem and develop skills.

Apparently, societies with high levels of employment are also richer (although this is counter to what the Well Being Index is trying to measure), more politically stable and healthier.

OECD INDICATOR: Employment Rate


3. Housing conditions

The OECD argues (states) that home ownership is an important dimension of individual well-being. It protects owners from fluctuations in rents and ensures families a stable and secure shelter. Additionally, the value of a property represents a major source of wealth for households.

That stated, it then goes on to measure the space available to an individual in their house (whether rented, owned or provided by the state). Arguably, if a person has a roof over his or her head, they probably don’t care whether there is one room for them to live in or 10. This indicator (rooms per person) is certainly a rich-country’s measure. A better measure would be number of homeless as a proportion of empty, available property or percentage living in sheltered accommodation.

OECD INDICATOR: Rooms per person


4. Health status

Few can argue that good health does not bring with it an inherent feeling of well being or a degree of happiness, and to that extent this dimension is appropriate.

The OECD states that consequential benefits of good health include enhanced access to education and the job market, an increase in productivity and wealth, reduced health care costs, good social relations, and a longer life.


This dimension’s indicator – as measured by the OECD is life expectancy, which is a seemingly more appropriate measure than infant mortality although the latter is implied in the former.

OECD INDICATOR: Life Expectancy – Number of year’s survival from birth.

5. Work-life balance

Probably the most subjective of all the indicators used to measure a country’s well being or happiness is “life satisfaction”. That said, as 10 people to define happiness and you will inevitably get 10 different answers.

The OECD recognises this subjectivity but argues that this data can provide a personal evaluation of an individual’s health, education, income, personal fulfilment and social conditions.


OECD INDICATOR: Life Satisfaction – Average self-evaluation of life satisfaction on a scale of 0 to 10.

Some might argue that as this “measures” people’s perceived happiness, this indicator should pretty much align with the well being index results.

Interestingly, this is not the case: Australia comes top in the Well Being index results, but scores a low 75% satisfaction result. Whereas the Netherlands which scores the highest satisfaction result within the Top 10 countries in the Well Being index results, comes 10th place in this index.

As if to underscore the argument that wealth does not buy happiness, three of the “richest” countries in Europe (France, Germany and the UK) fair badly in the life satisfaction results (see table).


6. Education and Skills

Studies have shown that the more educated an individual is:

- the longer she or he lives;

- the greater he or she participates in the community and politics;

- the fewer crimes she or he commits; and

- he / she is less reliant on social assistance.

Agreed then that this is an important factor in the well being of a nation.

OECD INDICATOR: Educational Attainment - % of the population (aged 25 to 64) that has completed at least upper secondary education.


7. Social connections / Community

The frequency of contact with others and the quality of our personal relationships are crucial determinants of our well-being. Studies have shown that time spent with friends is associated with a higher average level of positive feelings and a lower average level of negative feelings than time spent in other ways.

That stated, the OECD use a rather subjective indicator to measure “community” or social connections.


OECD INDICATOR: Quality of Support Network

Or percentage of people who believe that they know someone they could rely on in a time of need.

Not only is this another subjective measure but it also doesn’t really measure core community activity. Knowing that you have a neighbour who is likely to help you out if something goes wrong is one thing. Knowing that you are actively participating in a regular community-building or cohesive/cooperative activity – such as helping to run a soup kitchen; or helping out at the girl guides / boy scouts – is something altogether more tangible and therefore measurable.


8. Civic engagement and Governance

The OECD “blurb” states: “Today, more than ever, citizens demand greater transparency from their governments. Information on the who, why and how of decision making is essential to hold government to account, maintain confidence in public institutions and support a level playing field for business. Greater transparency is not only key to upholding integrity in the public sector, it also contributes to better governance. Indeed, openness and transparency can ultimately improve public services by minimising the risk of fraud, corruption and mismanagement of public funds.

A cohesive society is one where citizens have a high degree of confidence in their governmental institutions and public administration. Across OECD countries, 56% of citizens say they trust their political institutions."

OECD INDICATOR: Voter Turnout - % of those registered


A commendable dimension to attempt to measure, however, it might also be supplemented with some form of measure around the extent to which localised decision-making is being allowed by central government and the participation of the local population in that process.

Rob Hopkins (The Transition Handbook) has argued for several years about the benefit of localisation – even to the extent of creating a local currency. His thinking has created a movement known as the Transition Towns, where local decision-making, community and environmental living are key cornerstones.

The OECD might be minded to have a look at this type of model for some of it’s policy ideas and indicators.

PM10 – tiny particulate matter small enough to be inhaled into the deepest part of the lung – is monitored in OECD countries because it can harm human health and reduce life expectancy. The annual guideline limit is 20 micrograms per cubic meter set by the World Health Organisation.

9. Environmental quality

From subjective measures to arbitrarily objective measures – the OECD determines a nation’s environmental quality by measuring the level of PM10 in the atmosphere.

Admittedly, each country in the OECD has their own unique environmental concerns, due to differences in consumption, pollution, climate, industry and trade. However, countries also need to work together.


Arguably a more useful indicator would be some measure of the country’s steps taken to reduce it carbon footprint, address climate change or introduce more sustainable forms of energy generation.

But for now, the OECD is sticking with the measurement of air pollution as to the quality of country’s environment.

OECD INDICATOR: Air Pollution - PM10 concentrations


10. Personal security

Personal security is a core element for the well-being of individuals, and largely reflects the risks of people being physically assaulted or falling victim to other types of crime.

The biggest impact of crime on people’s well-being appears to be through the feeling of vulnerability that it causes.

Across the OECD, victimisation rates for conventional crime (theft, robbery, assault) have declined in the new millennium. Nonetheless, between 2004-2005 victimisation rates exceeded 20% in Ireland, New Zealand, Iceland and the United Kingdom. Conversely, rates were below 10% in Japan and Spain.

OECD INDICATOR: Homicide Rate – Murders / 100,000 inhabitants


Let’s give the OECD a credit for above step and hope that it can start ramping up the “Better Life index” and encourage (force?) other countries to do the same.

Because let’s face it: everyone is getting a tad tired of the continued (finger-in-the-ear) bleating about worst global recession and negative GDP growth and how to spend our way out of “this mess”….

Quick Happiness / Well being poll

Which of the following gives you the greatest sense of happiness / well being?

See results


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