The Quest for the Happy Grail

Eylül 2014 | Serkan Köse, Girişimci
There is a dearth of happy news in the world today. There is always some civil war, economic crisis, disease, poverty or corruption story on the front page of every newspaper. We are either getting more and more depressed about the state of our planet or more and more indifferent about other human beings. Perhaps it is most befitting in a time like this to take a 10 minute break from all the negativity surrounding the world to read about happiness. Isn’t that our ultimate goal? Once you are done reading, you might see that this was not a rhetorical question after all…

Life itself is the source of our happiness…Most of us perceives death as the ultimate misery, an inevitable end to postpone and hence living longer makes us happy. Unsurprisingly, among the 50+ indicators we looked at, life expectancy is the best at explaining happiness of nations. It is followed by competitiveness and wealth.

Figure 1: Happiness vs Life expectancy (in number of years) Econoscale
Source:, World Bank, 2014.

Lack of money can make us unhappy…All poor nations, almost unexceptionally, are unhappy. Of the 26 nations with income per capita below USD1000 (that’s USD2.7 per day!), all have happiness levels significantly below world average. Regardless of your geography, civilization or attitude, when one risks meeting his primary needs like food and shelter, he is bound to be unhappy and low income economies prove that for us. Ironically, the only exception to the rule is Malawi – the poorest nation in our sample (see below in the corruption section for the explanation) .

Figure 2: Happiness vs Income per capita (in USD)


Source:, IMF, 2014.

…but we don’t need a lot of money to be happy. Latin American nations have income levels significantly below Europeans and North American but are either happier or have the same happiness levels. In fact, once a basic income level is attained, further increase in wealth does not seem to have a major impact on happiness (see figure 6) . This suggests that money alone can’t buy you happiness.

Figure 3: Happiness by region

Source:, 2014.

Note: SSA – Sub-Saharan Africa, MENA – Middle East and North Africa, CEE – Central Eastern Europe, CIS – Commonwealth of Independent States, Latam – Latin America.

Free nations are happier than not free ones. If we take Freedom House’s index as a guide, democratic countries tend to be happier than those with failing democratic institutions. This statement alone suggests that while our politicians may try to hang on to power denying their citizens the right to govern themselves, it is only their selfish happiness that they seek.

Figure 4: Happiness by freedom


Source:, Freedom House, 2014.

All rich and free nations are happy (except Japan) …Every nation above USD25,000 income per capita level and are rated ‘free’ by the Freedom House have happiness levels significantly above world average (except Japan but we will get to why at the very end) . Taken together, the data seems to suggest that freedom and prosperity is linked to higher levels of happiness.

Figure 5: Happiness Venn diagram


Source:, IMF, Freedom House, 2014.

…but there exists happy nations which are neither rich nor free. Both Vietnam and Laos have income per capita below USD2000 and are not free nations. Yet their happiness levels are above world average. They are not the only ones. One could add to the list a number of
partly free but not rich Latin American nations such as Mexico, Colombia, Honduras or
rich but not free Arab nations such as Saudi Arabia, United Arab Emirates. This reinforces the view that while freedom and prosperity can help increase overall happiness, it is not the sole cause of it.

Once you are rich and free, it’s best to stay that way. Greece was once a free, rich and happy nation. With the Global Financial Crisis (GFC), due to fast declining levels of wealth Greeks’ happiness levels declined to levels observed in the low income group even though they are relatively speaking still rich. Prosperity and freedom are gifts and like any gifts they should not be taken away or otherwise can cause great unhappiness.

Figure 6: Greece – Income per capita and Happiness


Source:, IMF, 2014.

If you can’t be free, at least it is better to be rich than poor. Among those nations that are not free, the ones with higher wealth tend to be happier than those with lower wealth. There isn’t a single nation in the Middle East that is free but among them the wealthier ones like Saudi Arabia, Kuwait and UAE are happier than those with lower levels of income like Lebanon, Morocco or Algeria.
The middle happiness trap…Much like the middle income trap in economics where countries get stuck at a certain income level, unable to become high income economies, there seems to be a middle happiness trap. These nations are unable to break a certain level of happiness (a glass ceiling so to speak) but among these countries, the ones with more accountable governments and outspoken oppositions tend to be happier than those without. From a dynamic standpoint, many of these countries became progressively happier through reforms that promoted freedom and wealth. For instance, Turks, Russians and Poles were happiest during the stability years between 2003 and 2007. However, no country in our sample was able to break this glass ceiling of happiness in a sustainable way.

Figure 7: Happiness vs Voice and Accountability (countries with income per capita USD10,000-15,000)


Source:, World Bank, 2014.

Happy capitalists, miserable communists? Isn’t that the picture painted for us by the Western media? Unfortunately, the data does not seem to confirm this image. Happiness levels of currently socialist countries (Cuba, Laos, China) are not significantly different than their neighboring capitalists. Furthermore, back in the day happiness levels in Soviet Russia seems to be similar to those in Western Europe. In fact, happiness levels declined after the fall of the Soviet Union only to pick up recently again. It was the relatively sudden switch and the unpreparedness of the people for the new regime that caused great misfortune in Russia, not the communist system itself. Social democratic Scandinavians share the top spot of happiness with a number of Latin American nations with no clear rightist or leftist governments. Thus, overall happiness levels do not seem to be correlated with any regime of choice.

Figure 8: Laos and China Happiness


Source:, 2014.

Figure 9: Russia Happiness


Source:, 2014.

Causality of corruption. Among all income groups, corrupt countries are bound to be less happy than incorrupt ones. The causality is not clear here. Do we become corrupt because we are unhappy or are we unhappy because people are corrupt? It does not matter. Lack of corruption makes us happy and it is in the governments’ hands to make us free of corruption. As mentioned above, Malawi is the only Subsaharan African country that is relatively happy with extremely low incomes. We believe it is no coincidence that Malawi also scores significantly better than its peers on government effectiveness, rule of law and corruption indices. Perhaps, Malawians understand that while things might not look up today, at least their leaders are not in their pockets scrambling for whatever change is left and that makes them hopeful of tomorrow’s.

Figure 10: Happiness vs Corruption


Source:,, 2014.

The larger the government, the happier we are…As much as we all hate paying taxes, it seems countries with larger governments (larger government revenues like taxes) are happier than those with small governments. Those countries with larger governments also tend to be less corrupt and politically stable. Maybe it is not so much the tax itself but what the governments do with our money is what really matters.

Figure 11: Happiness vs Government revenues (% GDP)


Source:, World Bank, IMF, 2014.

Inclusion of women in society makes us happy. Among similar levels of income, countries that have higher women labor participation and higher representation by women in government are happier than those that are not. The latter, in particular, shows a very high correlation with happiness. Countries with higher proportion of seats held by women in the parliament are richer, freer, have better rule of law and are happier. Our development as species depends on our acceptance of equality between genders.

Figure 12: Happiness vs Proportion of seats held by women (%)


Source:, World Bank, 2014.

Data cannot explain why Latin Americans are so happy while Arabs and Asians aren’t? Latin America is significantly happier than Arabs and Asians. But when we look at economic and social indicators they do not differ in any way from the others. So what explains the ecstasy of Latinos? To understand we must delve into history of philosophy and religion.
Western philosophers wrote extensively about happiness. From Socrates (through Plato) to Marcus Aurelius to Jeremy Bentham, happiness has been a heated debate among philosophers in the West for millenniums. Bentham conveys pleasure and pain as two mutually exclusive concepts which dominate every decision we make. The ultimate goal of mankind, according to Bentham, is to maximize pleasure (happiness) and avoid pain.
In the Arab world, however, happiness in this world has a different connotation than it does in the West. The Quran emphasizes “
hayat tayyibiyah” meaning “
the good life” as the ultimate goal (“
maqasid”) in this life which leads to heaven in the next one. In Islam, happiness is equated with “
al nafs al mutma’innah” roughly translated as “
peace of mind” which can only be attained if the individual’s life is in harmony with his inner nature. To attain peace of mind, one must dedicate himself more to religion and less to mundane matters.

In Asia, two main streams of thought, namely Buddhism and Confucianism, also stress the importance of virtue and say very little or nothing of happiness as an ultimate goal. Buddhism (dominant in South Asia, parts of China, Japan, Korea and Mongolia) suggests that we live more than one life and we have to behave in this one to have an advantageous birth in the next. Confucianism (dominant in China) speaks of righteousness, justice, integrity and importance of knowledge but not about happiness. Most of these concepts are difficult to reconcile with happiness, particularly in the short term.
Using the ancient Greek terminology, one could argue that while the Western civilization including its offshoot in Latin America are Epicureans* (who stress worldly pleasure over virtue), Asians and Arabs are Stoics* (who put more weight on virtue than worldly gain) . Thus, happiness is a more central concept in the Western culture than it is in the Arab world or Asia.
The long and winding road to happiness… what I meant to convey in the previous passage was that perhaps levels of happiness enjoyed in the West might not be applicable to us in the East. Our culture and history simply does not allow it on a large scale. Russia and Turkey are two good examples here. Even though they come from completely distinct civilizations, both have a certain element of melancholy embedded in their cultures. Just listen to their music and you’ll know. Russians might blame the weather and Turks ‘kader’ (meaning fate) but there is always something to complain about. Without their respective grumpiness, they just would not be themselves.
Given that the West’s ultimate goal was happiness, one could conjure that all the Western economic and political institutions, be it democracy, freedom or capitalism, evolved around this concept. People and governments realized that happiness comes through freedom and prosperity. Perhaps this is why democratic institutions did not develop fully elsewhere. The only exception is Japan. Japan has fully developed democratic institutions and is a prosperous nation but given that happiness is not in their culture, they are the only exception to the free and rich rule mentioned above. Despite rising levels of income and prosperity, the happiness level of Japanese have remained stagnant and below other rich and free countries in the past half century. Much like Russia, Turkey and Poland, Japan has not been able to break the glass ceiling of happiness due to cultural barriers.
The laws of happiness. Using above data and analysis, we can reach the laws of happiness for nations.

Law 1) There are cultural and pecuniary boundaries to happiness. The lower boundary of happiness is defined by wealth. No matter how free or Epicurean you are, if you are below a certain level of prosperity as in Sub-saharan Africa, unhappiness is inevitable. The upper boundary of happiness is shaped by culture. No matter how prosperous and free you are, it might be impossible to break a certain level of happiness due to cultural barriers.

Law 2) Between the two boundaries, freedom and prosperity helps increase overall happiness. Once a nation breaks through the lower boundary of happiness, to make its citizens happier, its policy makers should aim at more prosperity and freedom. The happiest years of a number of countries were when they were becoming more prosperous and felt freer like Russia and Turkey (see figure 13) …until that culturally-defined glass ceiling of happiness is reached. Only those countries with an engraved culture of happiness can break through this glass ceiling of happiness and it seems they do not need democratic institutions or high levels of prosperity to do so.

Figure 13: Happiness laws in a nutshell


Source:, author’s calculation, 2014.

That brings us to the ultimate question; can or should countries try to break the glass ceiling of happiness if it means defying their cultural norms (à la Japan, Russia, and Turkey) ? That is a question we all must ask ourselves. To that end, I would be infinitely grateful if you could follow the link below to answer this fundamental question to help me write the part II of this piece.

* Note: I apologize from Greek philosophy fans for oversimplifying concepts like Epicurean-ism and Stoicism.

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