Archive for the ‘ Norway ’ Category

Measuring development and subjective well-being: Human Development Index vs. World Happiness Report

Can measuring “happiness” be a science? Doesn’t the meaning vary too much from person to person and culture to culture? The squishiness of happiness has not prevented researchers from trying to measure it and make it relevant for public policy.

With studies tracing in the paths of what the Human Development Report started over two decades ago, the OECD’s Better Life Index, the OECD’s Guidelines on Measuring Subjective Well-Being, the Happy Planet Index, and the U.S.-focused Gallup-Healthways Well-Being Index (with an international report from 2010) have aimed to perfect the science of quantifying subjective well-being and demonstrate the relatively fresh attention the subject has elicited. Most recently, the United Nations Sustainable Development Solutions Network has released its first World Happiness Report last year.

Subjective Well-Being Indices Rankings-page-001

According to the above table, rankings for well-being become pretty varied. Different indices use and weigh different indicators in different ways. The most exceptional example in this case is the Happy Planet Index which places an immense amount of weight on its indicator, “Ecological footprint” in order to emphasize the importance of environmental sustainability.

But let’s direct our attention to the first two: the United Nations Development Programme’s Human Development Index (HDI) 2013 and the United Nations Sustainable Development Solutions Network’s World Happiness Report (WHR) 2013. The HDI has been a pioneer, and Internationalcomparisons.org has long considered the index to be one of if not the authoritative voice on quality of life, achieving results profoundly more telling than the traditional GDP/capita. The WHR has developed under the influence of the HDI, yet it has come up with different results contrasting most significantly as it relates to Internationalcomparisons.org and the countries studied. Fortunately, the WHR dedicated an entire chapter (Chapter 8) to compare its system to the HDI.

Are more developed countries happier?

Human development, as an approach, is concerned with what I take to be the basic development idea: namely, advancing the richness of human life, rather than the richness of the economy in which human beings live, which is only a part of it.
-Economist Amartya Sen on the capabilities approach and what it means to defining subjective well-being

The objective of Chapter 8 in the WHR is to observe the relationship between human development and life satisfaction, that is to say in certain terms the HDI and the WHR. The chapter discusses at great length the different approaches (human development vs. capabilities) to define and measure development, satisfaction, happiness, and subjective well-being. Chapter 8 asks how positive is the relation between the HDI and life evaluation of well-being? For the intents and purposes of the HDI and WHR reports in the scope of the 150+ countries surveyed, very positive. Chapter 8 dissects individual indicators of the HDI like life expectancy, years of expected education, actual years of schooling, and GNI/capita with positive life satisfaction and concludes with correlative coefficients of 0.70, 0.69, 0.63, 0.73, and 0.78. Finally, HDI (overall score) shares a correlative coefficient of 0.77 with life satisfaction.

While this is good news in determining that the gap between measurements of human development and subjective well-being is closing thanks to an increased focus and research on the subject, our more narrow scope concerning the gap among the 12 countries studied at Internationalcomparisons.org disappointingly still lacks explanation.There are 33 places between the systems’ rank for Japan, 20 places for Germany and Italy, and 14 places for the U.S. and Denmark (which the WHR has at 1st). The correlative coefficient is either not strong enough at 0.77 or not relevant enough with the 12 countries on which we focus.

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Norway=model; exception

In addition to already having country profile pages for Germany and Japan, we have recently just added Denmark and Norway (also accessible from our home index page under the “countries covered” listing). While putting together the Norway page, we realized even more how exemplary Norway truly is.

Norway is not a member of the European Union. Also a factor in escaping the eurozone crisis is their oil and gas industry which has them benefiting from the largest budget surplus among all advanced democracies. Norway has an unemployment rate below 3%, no net national debt, and around $640 billion dollars stored away in a sovereign wealth account, mostly from its oil and gas industry. In 2009 Norway earned the highest per capita income.

Deserving much credit for its success is Norway’s fearlessness to tax. Their prosperous oil and gas industry receives a 28% corporate tax and a 50% industry surtax. Overall tax as a share of GDP is among the highest in the OECD. Corporate taxes are four times as high as U.S. rates. Their highest income tax bracket kicks in at $124,000 at 47.8%. Yet businesses aren’t saddling up to head to places where they might save on looser tax breaks, an argument from those in the U.S. representing a vast majority who refuse to consider any tax increase. In fact, start up activity not only in Norway, but also Denmark, Switzerland, and Canada is higher than that of the U.S. From 2006-2009, the U.S. economy treaded at a practically stagnant .1% growth rate compared to Norway’s exponentially faster rate of 3%. Norway also boasts more entrepreneurs per capita than the U.S.

Part of the reason why business owners are so keen to comply without raising a stir at Norwegian taxes is the sense of appreciation they have for the system. Norwegians benefit from free education from preschool to graduate school (often including universities outside of Norway); free healthcare; generous unemployment benefits due to a competitive, employee-friendly job market; forty-six weeks of maternity leave paid in full, 10 weeks for paternal leave. Education, retirement, and medical expenses are three paramount concerns for the average U.S. citizen, but all of which are provided in Norway. There’s a sense of giving back to the system in Norway for the ways one has benefited previously from the system.

 

Adapted from“US fiscal debate could learn from Norway” by Mark Provost from Progressive Press and  “In Norway, start ups say Ja to socialism” by Max Chafkin in Inc. Magazine.