Switzerland, which came out top the recent 2015 World Happiness Report, has a habit of doing well in surveys that look beyond wealth to compare levels of human wellbeing – Switzerland also ranked third in the recent 2015 Social Progress Ranking. Why is this?
Some cynics conclude that it all boils down to dollars and francs and wealthy Switzerland leads for this reason. While being rich clearly correlates with wellbeing (none of the Happiness leaders are poor), it could be that wealth and wellbeing are both born from something else.
The World Happiness Report looks at social support (having someone to count on in times of trouble), trust (apparent absence of corruption in government and business), freedom to make life decisions, generosity and GDP.
Trust and inclusion
The top five countries in 2015: Switzerland, Iceland, Denmark, Norway and Canada, are all highly inclusive societies that provide their people with social, legal and government institutions they can trust, empowering them to work together. The nations at the bottom typically have exploitive leadership and institutions that limit personal freedom and do little to inspire trust and cooperation.
Cracking under pressure
The study looks at the ultimate test of a nation’s institutions: crisis. In 2007 that happened when banks around the world started to unravel.
It found that weak institutions trigger blame rather than cooperation and repair in a crisis. Greece, 102nd in the World Happiness Ranking and the greatest happiness loser for two years running, shows this in action. In Greece happiness losses were far greater than could be explained by its economic reversal alone and relative weaknesses in all areas, corruption in particular, were apparent.
Pulling together in a crisis
In contrast strong well-trusted institutions drew people together and actually led to improvements in a country’s social fabric. Iceland, 2nd in the World Happiness Ranking and Ireland in 18th position, both showed only small drops in happiness despite suffering banking system meltdowns as extreme as anywhere else. Of all the countries surveyed by the Gallup World Poll, Iceland and Ireland had the highest percentages of people saying they have someone to count on in times of crisis.
In addition, since 2007 Iceland and Ireland saw GDP (Purchasing Power Parity) growth of 14% and 5% respectively while Greece suffered a 10% decline.
Greece’s weak social and government institutions appear to be contributing to a decline in both happiness and wealth.
Money can’t buy happiness
There also seems to be no guarantee that social spending will deliver happiness. Greece’s social expenditure gobbled up 24% of 2014 GDP, while Iceland’s consumed less than 17% and Ireland’s 21%. The OECD’s social spending leader, France spends nearly 32% of its GDP on social services yet only ranks 29th on the World Happiness Ranking, while Switzerland spends a little over 19% and ranks number one1.
In the end it looks like Switzerland’s motto: One for all, all for one (Unus pro omnibus, omnes pro uno) and the institutions it produces could be the key to both sustained prosperity and happiness. Money could very well be no more than a by-product of people working well together, not the essential economic ingredient anti-austerity champions think it is.
World Happiness Report 2015 (PDF in English)
1France also has greater absolute social spending per capita at Purchasing Power Parity (PPP) than Switzerland. Based on OECD GDP (PPP) 2013.