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Happiness Is The Freedom To Prosper

"The data seems to show that the most flourishing economies also are those that have transparency, accountability, and rule of law," says William Inboden of the Legatum Institute.
"The data seems to show that the most flourishing economies also are those that have transparency, accountability, and rule of law," says William Inboden of the Legatum Institute.
It is always interesting to compare how happy people are in different countries. Now, a new study has ranked 104 nations according to how happy and prosperous their citizens say they are. The study, the Legatum Prosperity Index, shows that the happiest countries share some fundamental traits, including good governance and economic freedoms. In short, they are countries where people have the freedom to prosper.

RFE/RL senior correspondent Charles Recknagel spoke with William Inboden and Ryan Streeter of the London-based Legatum Institute, a foreign policy and economics think tank, to learn more.

RFE/RL: In preparing your Prosperity Index, you found that the countries where people say they are most satisfied are mostly the economically developed countries of the North Atlantic region. Those are also the world’s richest countries. But does happiness and a sense of well-being simply correspond to how much money a society accumulates? Or are there other factors?

William Inboden:
When we put together this Prosperity Index and were thinking about the foundations of prosperity, we started with the definition of prosperity as being both money and the quality of life. Quality of life we measure by how people answer survey questions like, "Are you satisfied with your life?" or, "Are you very happy?"

So, taking those two outcomes -- of does the economy grow and generate more wealth and are the people becoming happier and having a high quality of life -- we then asked ourselves what are the different factors that go into that. What are the foundations or component parts that help create those good outcomes. And when we did all of our statistical analysis we came up with nine different component parts. They are: economic fundamentals, entrepreneurship and innovation, democratic institutions, education, health, safety and security, governance, personal freedom, and social capital.

RFE/RL: You also found in your study that these multiple elements are mutually reinforcing. That is, that personal freedom, for example, helps create a healthy economy. But is it absolutely necessary to have all of these elements working together? Can people be equally happy living in a country with a strong economy but very few personal freedoms?

We are aware of a particular model that some countries are trying to develop now where they will, say, grow the economy and increase their income but also maintain very tight control by the government, not allowing citizens their freedom of speech, their freedom of worship, their freedom of assembly. That also seems to have a negative effect on the strength of families and communities and it may work for a few years where, whether it is because of oil revenues or low-cost manufacture and exports, a country like Russia and China can have some narrow success there.

But what our study seems to show, and we try to use data going back 40 years, is that over time that model will not work, that all of these different freedoms and goods need to go together, and a country that tries to only have one and to squeeze out the others will inevitably find that it can't even achieve a sustainable economic growth.

RFE/RL: That seems to point to the importance of good governance. How do you define good governance in your study, and measure whether a country has it or does not have it?

Good governance is our shorthand for actually two different indicators. One is our democratic institutions indicator. And that is where we look at transparency, accountability, and the rule of law, and free and fair elections and their effects on economic growth. Then the governance category is our other one in which we look at civil liberty protections, the government’s ability to maintain basic order, while still allowing citizens freedom to choose the course of their lives. And we test that in its relationship to happiness.

Ryan Streeter
We keep talking about good governance because it’s pretty much the only factor that, with these two different categories, tested in terms of how does it affect the economy and how does it affect people's happiness. And it’s all these different component parts.

[Good governance] is government that is there to serve its citizens by preserving basic order and protections for them. And it is a smooth and clean regulatory environment. But it is also a government that is limited and accountable to its citizens, rather than oppressing them. And then again, places like Russia and China may, with considerable effort in the short term -- whether it’s natural resources exports in the Russian case or this tremendous manufacturing boom in China’s case -- may be able to maintain tight controls on people's political freedom while still having some economic success.

But over time, at least, the data seems to show that the most flourishing economies also are those that have transparency, accountability, and rule of law. And also over time countries with happier citizens are going to have more economic growth as well.

RFE/RL: You have measured how happy and prosperous people feel in 104 nations and, of course, that is across a great variety of societies – from Finland, which ranks No. 1 in your survey, to Zimbabwe, which is in last place. Do people in all societies, rich and poor, define happiness and prosperity the same way, or did you find some important differences even while some elements – such as good governance – seem universal?

Ryan Streeter:
Well, in the poorest countries you see that $3,000 of income will increase on average people's happiness 33 times more than it does in a rich country like the United States or the United Kingdom or Germany or France. This is just purely math. It affects the overall satisfaction of people in poor countries because for every dollar increase to family income you are able to provide for basic needs that we all take for granted in the developed world.

Once you move along the income scale up toward highly developed countries, you see that other factors such as health, quality of family relationships, having people to rely on, a good government that you are living under, predictability in contracts, things like that, actually contribute to people's happiness more than the amount of money they have.

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