Sunday, 19 April 2015

Graph of the week: Happy, happy Europe

From the Economist, calling upon a report from Eurostat: what drives happiness in Europe and how heterogeneous European countries tend to be when it comes to the satisfaction with their living standards. 

Source: The Economist
"ONE frequent stumbling block for the European project is the fact that different countries want different things. Recent Eurostat polling on self-reported happiness highlights those divergences. As usual, Scandinavians are the happiest people in Europe and retired Danish women are the cheeriest among them, reporting a happiness score of 8.5 out of 10. In general, geography is the best predictor of merriness, followed by pay. At all income levels a step up one quintile on the income scale makes people more content. Yet the poorest 20% of Danes are more joyful than the richest Greeks."
Bear in mind that the data on happiness is self-reported, which can make it a bit biased. However, even with all the problems of self-reported survey data, the story is quite clear and actually well-known: Scandinavian nations - the leaders in economic freedom rankings, competitiveness, doing business, and prosperity rankings - by far outweigh the rest. Their economic model is based first and foremost on efficiency. There's no ideology attached to it, only pragmatism. If something works, apply it. South European nations, namely Spain, Italy, Greece and Portugal, should take note. 

Notice another interesting fact; usually life in the South of Europe is portrayed as relaxed and easy-going, implying its people are quite content with their lives. Warm climate in the South must mean that its citizens are much happier than their Northern counterparts, consumed with heavy rains and cold weather. The data on happiness consistently fails to show this. Regardless of the effect of the crisis, Northerners were always much happier. Climate has nothing to do with it. The economy (read: institutions) does. 
Source: The Economist
"Where one lives within a country is also important. Around the Mediterranean people prefer towns, while near the Arctic Circle rural life is best. Procreation affects cheerfulness too. In southern Europe families with children are happiest, whereas the British and Irish are the only people to become sadder when little ones arrive. Ageing draws out differences. Everyone is happiest when young and less so in middle age. But in old age the British and Scandinavians cheer up while in the south retirement is a miserable affair. Debt crises and financial woes are not the only reason life within Europe is so often frowned upon."
The last part is the most interesting: "in old age the British and Scandinavians cheer up while in the south retirement is a miserable affair". The British and the Scandinavians (I would add the Germans as well) understand the value of life-long savings. Their institutional arrangements make it so. This is another crucial North-South European divide. The more care-free the citizens are at the start of their careers (see happiness in ages 16-24), the worse off they get when they are retired (notice the movement of the yellow circle across age groups in the second figure). Tough news for the youth unemployed of Spain, Greece, Italy and Portugal. Will they ever get to enjoy their lives? Or is this the beginning of a truly lost generation in Europe?

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