The most competitive and productive country in the world is Denmark. But the country also has the highest tax burden. What about people in the Nordics? Here you will find six possible explanations why Nordic Countries rank high on Happiness and Finance indexes.
In most cases, happiness and general well-being are linked to money, but that’s not always the only explanation. However, in most cases they do have something to do with a wallet.
Why do people in Nordic countries consistently rank as the happiest and what can we learn from them?
1. Trust in government
The Swiss Institute for Management Development issues the World Competitiveness Ranking Index. For second year in a row, Denmark has been ranked as the no. 1 country in the world.
The UN organization Unctad has launched a new index, Productivity Capacities Index. It measures a country’s capacity to produce goods and services, so that the economy can grow and develop. In this ranking too, Denmark comes out best of all countries.
Want to know more about the gigantic Norwegian Wealth Fund? Just click the image below.
But not all wealthy countries have happy inhabitants. Singapore, one of the wealthiest in the world, sits for instance at 25th place, while Saudi Arabia, the world’s seventh richest, sits at 26th.
One reason might be that Nordic countries are known for having low levels of income inequality. However, researchers have not proven that it actually correlates with high life satisfaction.
What they have been able to prove, however, is that if income inequality leads to mistrust, then it does directly contribute to lower life satisfaction. Simply put, people really do hate feeling cheated. Trust in government might therefore be the number one explanation.
2. Environmental factors
Last week, the cooperative organization for the rich countries, OECD, launched its biennial report on how well politicians govern their countries. Government at a Glance does not select winning countries but ranks the countries according to a number of different criteria. Denmark scores very high on many important indicators.
Studies indicate that 60 to 70 per cent of the difference in happiness between people is caused by environmental factors, so again, what governments do are important.
3. Democracy
The Economist Intelligence Unit (EIU) ranks Norway as the most democratic country in the world, a score Norway has retained for several years.
Want to learn more about the Norwegian democracy? Just click the image below:
The quality of government institutions and welfare state have an important and positive impact on life satisfaction, so much in fact, that the Corruption Perception Index can work as a predictor of who will make it to the top or the bottom of the happiness ranking.
Progressive taxation leads to happiness via public and common goods such as health care, education, and public transportation that the taxation helps to fund. And ultimately, you guessed it, trust. People trust the money will be used and distributed wisely.
4. The Employment Situation
Statistics from the OECD show that Norway, Sweden and Denmark are the three countries with the most employees in the public sector. The proportion of employed people is 30.9 per cent, 29.4 per cent and 28 per cent respectively. The average for all OECD countries is 18.6 per cent.
Want to learn about growing job fields in Sweden? Just click the image below.
Data shows people are more satisfied with their lives in countries where there is institutional quality. That’s usually divided into the democratic quality and delivery quality. The latter is the one more strongly related to citizen happiness, according to the WHR: good pensions, generous parental leaves, maintenance for the ill and disabled, free health and education, solid unemployment benefits, etc.
5. Openness to International trade
Earlier this year, the Swiss bank Credite Suisse published its third economic analysis of small countries. The main conclusion is that many small countries do well because of their openness to international trade. It ensures that the countries must be competitive in order to manage in the global economy.
6. Well-functioning welfare states and a good social safety net
The Nordic countries show that it is entirely possible to combine economic success and sustainability with a good social safety net.
The Danes also manage to combine a good city life and an impressive gourmet culture. The EIU recently named Copenhagen the second best city to live in after Vienna.
So, the Nordic countries have managed to enter a very virtuous cycle, where efficient and democratic institutions are able to provide citizens security, so that citizens trust institutions and each other, which leads them to vote for politicians that promise and deliver a successful welfare model.
Six Explanations Why Nordic Countries Rank High on Happiness and Finance Indexes, written by Tor KJolberg
Feature image (on top): © Photo by Raimond Klavins / Unsplash