Why North Europeans Are the Happiest People

Authored by: Leonid Bershidsky, April 2015

Original post from Bloomberg.com

Switzerland, Iceland, Denmark and Norway are the world’s happiest countries, according to the 2015 World Happiness Report, which is put out by some influential economists. Three of these European states are not members of the European Union. What are they doing right that the rest of the world is doing wrong?

Jeffrey Sachs of Columbia University, Richard Layard of the London School of Economics and John Helliwell of the University of British Columbia have been putting out these reports since 2012. They are intended to remind governments that success is about more than economic growth and other such statistics. Sure, people are happier when they’re richer and healthier, as they tend to be in more developed countries, but there are other contributors to perceptions of well-being. That’s what the reports measures: People in various countries are asked how they perceive various aspects of their lives.

The report’s authors say six variables account for three-quarters of the differences in happiness levels among countries: Gross domestic product per capita, social support, healthy life expectancy, freedom to make life choices, generosity and freedom from corruption. Two of these — social support and generosity — are relatively independent of economic development or the political system, which explains why some relatively poor, institutionally weak countries have happier populations than the strongest Western democracies. For example, Mexicans are happier than Americans, Brazilians enjoy higher perceived well-being than the residents of rich, free Luxembourg, and Venezuelans like their life better than Singaporeans.

A country is an all-around winner, however, when it’s rich, healthy, free and populated with generous people who support one another when there’s trouble. One has to wonder if Northern Europe’s Law of Jante might not be responsible for the presence of Iceland, Denmark, Norway, Finland and Sweden among the world’s 10 happiest nations. Scandinavians may scoff at that creed, which makes individualism a crime, but it does make for unusually strong social support networks. That’s how the authors explain Iceland’s surprising resilience during an economic collapse, and its second place in the rankings. That country has the highest percentage in the world of people who say they have someone to count on in times of crisis.

The report contains a chapter that stresses the role of “relational goods,” such as reciprocity and simultaneity (which describes people taking part in meaningful activities together), in building happy nations. People are happier when they’re socially fulfilled, perhaps as members of a group (both group membership and happiness levels are high in Scandinavia):


The happiest countries are participatory. That goes for Switzerland with its direct democracy and tight-knit local communities, as well as for the Scandinavian countries, which, as Sachs wrote in his chapter of the report, have “perhaps the highest social capital in the world.” Participation and deliberative democracy help to build mutual trust, an important part of social capital. People are more willing to pay taxes, less prone to corruption, and expansive social safety nets become the norm.

This kind of social fabric, however, is finely woven and delicate. The happiest countries in the world have small populations (the biggest country in the top 10 is Canada, with 35 million people). Bringing countries together in a big bloc such as the EU doesn’t help increase social capital. And when some countries in such a union do worse than others, their social fabric rips in a dramatic way, trust erodes and the decline in happiness becomes more pronounced than economic losses alone can explain. That’s what happened in Greece, the biggest happiness loser compared with data for 2005-2007. Other big losers are Italy and Spain.

One of the policy implications is that countries need to nourish their natural social fabric rather than seek to impose contrived rules that may have worked elsewhere. For  Sachs and Layard, who both advised the economically ultraliberal Russian government after the Soviet Union’s collapse, that appears a revisionist thought. Yet Sachs writes, reflecting perhaps on the largely failed Russian liberal experiment, or perhaps on Greece’s disastrous post-bailout performance:

If the legal rules that are promulgated “run counter” to the social rules and, more importantly, to the moral rules prevailing within that society, then the former will fail to produce the desired results, in that they will not be observed for the simple reason that not all infringers of such rules can be punished. Even worse, they will undermine the credibility and/or acceptability of the other two categories of rules, thus threatening the stability of the social order.

No matter how much we may like big, ambitious programs, aiming for happiness may well mean thinking small and being careful with the fragile web of relationships that make human society function.