Why Irish eyes are smiling

This is an 2005 article from The Economist magazine by Laza Kekic: director, country forecasting services, Economist Intelligence Unit.

Where will be the best place to live in 2005? The World in 2005 turned to the Economist Intelligence Unit, which has devised a 2005 “quality of life” index for 111 countries. Result: Ireland comfortably tops the league. America, though the second-richest country (behind Luxembourg) in GDP per head, slips to 13th in quality of life. Britain languishes in 29th place.

It has long been accepted that material well-being alone does not adequately measure quality of life. Money matters, of course, but surveys suggest that over the decades big increases in income have translated into only a modest rise in satisfaction. Although rising incomes and expanded individual choice are highly valued, some of the factors associated with modernisation—such as the breakdown of traditional institutions and the erosion of family values—in part offset its positive impact.

But how to combine in a single, comparative statistic the factors believed to influence people’s happiness? There have been many attempts, none entirely successful: the factors selected, and the weights assigned to them, tend to be arbitrary. Subjective surveys of “life satisfaction” have been attracting growing interest—especially since the evidence is that people in different countries and cultures cite similar criteria for being contented—but getting comparable surveys across many countries is hard and there is too much margin for error for a truly objective quality-of-life index.

So ours takes a new approach. We use life-satisfaction surveys (assembling the average scores for 74 countries) as a starting point for weighting the various factors that determine quality of life. A regression analysis suggests that as many as nine indicators have a significant influence, and can be turned into an equation explaining more than 80% of the variation in countries’ life-satisfaction scores. The main factor is income, but other things are also important: health, freedom, unemployment, family life, climate, political stability and security, gender equality, and family and community life. We feed the factors into the equation, measuring them using forecasts for 2005 where possible (in four cases) and latest data for slower-changing indicators, such as family life and political freedom. The resulting score, on a scale of one to ten, gives the quality-of-life index. A full explanation of the methodology and a full country ranking are available to download here.

Ireland wins because it successfully combines the most desirable elements of the new (the fourth-highest GDP per head in the world in 2005, low unemployment, political liberties) with the preservation of certain cosy elements of the old, such as stable family and community life. Offsetting its poor climate and, by rich-country standards, gender inequality are a higher political stability and security. Even if GNP—not available for all countries, but in Ireland’s case significantly lower than GDP—is used to measure income, Ireland still wins.

Britain, by contrast, mixes high income per head with high levels of social and family breakdown; it comes bottom among the 15 countries of the pre-enlargement European Union. America ranks above the EU-15 average. Italy performs well but Germany and France do not—belying the notion that big euro-zone nations compensate for their economic sluggishness with a better quality of life than America.

China, for all the excitement over its development, still falls in the lower half of the league. Proud Russians will be disturbed to find themselves at the wrong end of the table. Bottom of the lot is Zimbabwe, where things have gone from bad to worse under Robert Mugabe.

In 1986, in response to an early attempt to measure well-being across countries, The Times scoffed: “Can anyone really assess, in mathematical or other terms, the value of living in Britain?” Well, they can try—on the basis of what people around the world themselves say about life satisfaction. No doubt critics will poke holes in this index too. Except, of course, in Ireland.

<i>Economist</i> Quality of Life country rankings, 2005

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