World Happiness Report: living long and living well

The 2021 World Happiness Report comes as the Covid-19 pandemic continues to claim lives and lay waste to livelihoods around the world. Richard Layard and Ekaterina Oparina introduce the WELLBY Approach and look at how wellbeing measures can be used to compare countries progress in improving social welfare and shape policies to increase wellbeing.

How can we compare countries in terms of social welfare? The well-being approach to these issues is simple. People want to live well, and they want to live long. Therefore, we should judge a society by the extent to which it enables people to live long lives, full of well-being.

For any individual, the measure of this is simply the well-being she experiences each year summed up over all the years that she lives, with a discount rate applied to account for increasing uncertainty the further we look into the future. And a natural name for the well-being experienced over one year is a Well-Being-Year (or WELLBY).

To look at how different countries are doing, we take the length of life into account as well as wellbeing.

Hence the measure of national social welfare today is average current well-being times the expectation of years of life.  The “expectation of life” today is how long someone born now could expect to live if her chance of dying at each age was the same as that experienced this year by people of that age. This roots the calculations of life expectancy in data from the current year.

Does taking a length of life into account in this way change our rankings of countries compared to just looking at wellbeing as experienced now? And which countries have been doing the best in terms of the changes they have achieved in social welfare?

In table 1, we present the ranking of countries according to their level of WELLBYs per person in 2017-2019. Remarkably the top 11 countries in terms of WELLBYs are the same as the top 11 in Wellbeing. This is because life expectancy is so similar across the top 19 or so countries. At the very top is Finland, both in Well-being and in WELLBYs. Again, at the bottom, the lowest 11 countries in terms of WELLBYs include most of those which are also lowest in well-being. Overall, the correlation across countries between well-being and WELLBYs is 0.97 (while that between life expectancy and WELLBYs is 0.87).

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