The relationship between GDP per capita and the Happy Planet Index (HPI)
We investigated the relationship between Gross Domestic Product (GDP) per capita and the Happy Planet Index (HPI), using data collected from the census and the results of the 2012 HPI by the New Economics Foundation (NEF) and the GDP per capita data published by the World Bank (http://data.worldbank.org/indicator/NY.GDP.PCAP.CD). The 2012 HPI shows the extent to which 151 countries across the globe produce long, happy and sustainable lives for the people that live in them. The Index uses global data on three criteria: life expectancy (LE), experienced well being (EW) and Ecological Footprint (EF) to calculate this. It ranks countries on how many long and happy lives they produce per unit of environmental input. (Happy Planet Index: http://www.happyplanetindex.org/data)
Why use a Scatter Graph?
We were interested in identifying the relation between wealth and happiness, based on the following questions: i) Is there a positive relationship between income and happiness? ii) Is there an ideal level of income with which people are satisfied? iii) Do people from different countries view these relationships in a different way? Using a scatter graph allowed us to make the following observations: 1. Right-skewed distribution
We can observe a right-skewed distribution. The mass of the distribution is concentrated on the left of the figure. The mean of the HPI is 42.2 as the above black line.
2. Two thresholds
There are two thresholds—GDP per Capita $10,000 and $20,000 * GDP per Capita <$10,000:
The level of happiness of people in countries with a GDP per Capita of less than $10,000 can range from HPI 65 to HPI 31. This implies that for this range of income, wealth does not play a major role in explaining people’s happiness. * GDP per Capita $10,000-$20,000:
The level of happiness of people in this cluster can vary from HPI 54.1 to HPI 30. We cannot observe a direct relation between GPD per capita and HPI in this group. Among this group, people in central and southern America (Mexico 52.9, Chile 53.9, Brazil 52.9, Argentina 54.1) have higher HPI. However, we have to refer to other data to verify that if people in central and southern America tend to be happier in nature. * GDP per Capita >$20,000:
The level of happiness of people in this cluster can vary from HPI 27.1 to HPI 55. The average HPI of this group is 41.9 but the range of HPI is 27.9. There are several countries with high GDP per Capita but low HPI indicating that higher GDP doesn’t necessarily bring higher happiness. For example, Luxembourg has the highest GPD 115,038 but the lowest HPI in this cluster. Conclusions:
1. Wealthier People are not necessarily happier: we did not find a relationship between GPD per Capita and HPI, or an ideal level of income that generates the highest HPI. 2. Outliers: There are outliers that contradict the common conception that high income implies happiness: * Low GDP per Capita with high HPI: Costa Rica, Colombia, Vietnam * High GDP per Capita with low HPI: Sweden, Denmark, United States, United Arab Emirate From the outliers, we understand that to define happiness of a country, only three criteria are not enough. When calculating the happy index, we might need to consider many criteria such as income, education, living conditions, political conditions, gender equality, and culture.
Take Vietnam for example, Vietnam would not be ranked top 2 when considering education, health and sustainable development. 3. The definition of happiness varies in different countries: The concept of happiness varies from country to country, from person to person, and from culture to culture. 4. GDP per capita is an aggregate value and will be impacted by the commercial activities such as Oil and refinery that that cause the wealth distributed unevenly. That is to say, the large proportion of wealth held by certain group of people such as entities or politicians. This might also imply GPD per Capital is a fair measure of income.