What has happened to average world happiness levels since the GFC?

Despite the Global Financial Crisis (GFC) and its aftermath, there has been a small improvement in average life satisfaction of the world population over the period from 2005-07 to 2010-12. That finding is based on data from the Gallup World Poll, and is reported in the World Happiness Report 2013 edited by John Helliwell, Richard Layard and Jeffrey Sachs.

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It seems to me that the report may actually understate the extent to which most people in the world have perceived their lives to have improved since the GFC. I will give my reasons for that view toward the end of the article, after I have presented some of the Report’s findings.

Chapter 2 of the World Happiness Report indicates that increases in average life satisfaction occurred mainly in Latin America and Caribbean countries, the Commonwealth of Independent States (Russia and other former Soviet countries), East Asia, Sub-Saharan Africa and Southeast Asia. It suggests that these increases were offset to a large extent by declines in the Middle East and North Africa, South Asia, Western Europe and NANZ (North America, Australia and New Zealand).

Significant improvements in average life satisfaction occurred in 16 of the 21 countries in Latin America and the Caribbean and significant declines occurred in only 2 of those countries. The increases for Ecuador, Nicaragua, Paraguay, Peru and Chile were all greater than 0.7 (on the zero to 10 Cantril scale), putting those countries among the top 12 countries in the world in terms of improvement in average life satisfaction.

The pattern was more varied in other regions. For example, average life satisfaction declined in 7 of the 17 countries of Western Europe but increased in 6 of those countries. Average life satisfaction declined in the United States and New Zealand, but did not change much in Canada and Australia.

Analysis in the report suggests that the main reasons for the improvement in life satisfaction in Latin American and Caribbean countries was growth of average income levels, combined with substantial declines in perceived corruption and a substantial improvement in life-choice freedom.

The Report includes a special analysis of the reasons for the decline in life satisfaction in Greece, Spain, Italy and Portugal, the four countries of Western Europe in which life satisfaction declined to the greatest extent during the Eurozone crisis. The declines in life satisfaction in those countries were far greater than could be explained by the decline in income alone. Declines in perceived life-choice freedom, social support and generosity and increases in perceived corruption went some of the way toward explaining the decline in life satisfaction, but left a substantial amount unexplained. Inclusion of unemployment in the analysis suggested that this variable also had a significant independent impact.

The authors note that Greece stands out among the four countries as having the largest decline in life satisfaction that cannot be explained by any of the above factors. They suggest that another factor that might be of particular importance in Greece is a decline in trust in key institutions, such as the legal system.

It might have been illuminating to include Ireland in this analysis because that country was also severely affected by the GFC and still has an unemployment rate of 14%, which seems alarmingly high even though only about half the rate in Greece and Spain.  In contrast to the four countries included in the analysis, average life satisfaction levels in Ireland remained virtually unchanged over the period considered.

The time has come to discuss why I think the Report may actually understate the extent to which most people in the world have perceived their lives to have improved since the GFC. In my view there is a problem in attempting to measure changes in world happiness levels by comparing the results of successive surveys. The problem arises because the measurements have been made relative to a reference point – perceptions of the best possible life – that changes over time, and changes to a different extent in different parts of the world.

It seems to me that while it would be reasonable to expect that people in Europe would not have changed their perception of the best possible life to any great extent over the last five years, that is unlikely to be true of people in a country such as China, where high levels of economic growth would have been accompanied by broadening horizons and rising aspirations. I think that means that the World Happiness Report has probably tended to understate progress toward a better quality of life in countries with relatively rates of economic growth and thus to understate the increase in average happiness levels of the world population.

Perhaps it would help to clarify the point I am trying to make if I elaborate on the implications of rising aspiration levels in China for measurement of happiness. I noted on this blog a few years ago that Gallup data for 2008 indicates that the rating the Chinese gave to ‘life five years ago’ is lower than the average life satisfaction rating for just about every country in the world outside Africa. I also noted that the rating the Chinese gave to their lives five years ahead was higher than average life satisfaction in some western European countries. I went on to predict:

‘When they appraise their current quality of life in five years time they will realize that they still have somewhat further to go before attaining “the best possible life”. But they are not likely to become discontented while they continue to experience the economic growth they have come to expect’.

The World Happiness Report shows only a small improvement in average life satisfaction in China, from 4.7 in 2005-07 to 5.0 in 2010-12. We don’t have data on how much the Chinese have perceived their lives to have improved over the last five years, but it could well be by about the same magnitude as the improvement they perceived in the five years to 2008 (1.2 points). What we do know is that the Chinese remain just as optimistic about the prospects for improvement in the quality of their lives over the next five years as they were in 2008 (with an average improvement of 1.5 points expected in both instances).

We can be confident that the current optimistic expectations of the Chinese people will not be fully reflected in their average happiness levels in five years time because expected improvements in the quality of life in China over that period are likely to be accompanied by a further elevation in perceptions of the ‘best possible life’. Even if optimistic expectations are met concerning economic growth and other relevant factors, it is likely that there will be little increase in average happiness levels in China. Changes in the average happiness data provide little information on the extent to which people in China perceive that their lives are improving.

If we want to know the extent to which Chinese people perceive that their lives are continuing to improve we need information on the rating they give to their past lives that is comparable to the rating that they give to their current lives. As noted above, in the past the Gallup organization has in the past collected data on ‘life five years ago’ when collecting evaluations of ‘life today’. Unfortunately, this information has not been collected in recent surveys. Hopefully, the relevant information will be collected regularly in future.

How does meditation affect word mongering?

Teach Us to Sit Still seemed like an appropriate title for a book to read on the flight from London to Sydney a couple of weeks ago. The book, written by Tim Parks (a successful author who was shortlisted for the Booker Prize for his novel, Europa) turned out to be an even better choice than I had expected. The book provided me with a timely reminder of the benefits of Vipassana meditation. When I became too tired to read, I put on my eye mask and spent a couple of hours observing the sensations arise and pass away. That is something that I should do more regularly.

Tim has a delightfully dry sense of humour, which he has used to good effect in this book to tell the story of how he overcame severe pelvic pain that had made his life miserable. The medical profession was unable to find the cause of his problem, but Tim found that ‘paradoxical relaxation’ helped. This technique involves calmly identifying and observing tension without trying to relax it; the paradox is that the muscles eventually relax themselves.

Tim’s massage therapist told him that ‘paradoxical relaxation’ had some similarity to Vipassana meditation and he decided eventually to attend a Vipassana course. Although his immediate problem was cured, Tim felt that there was much work still to be done – predators ‘prowled the borders of the small haven of comfort’ he had staked out.

Tim approached Vipassana with irreverent scepticism, but this did not prevent the experience from having a profound impact. I want to focus here on the impact it had on his desire to continue to be a successful author.

At one point in his first meditation course, Tim is reflecting on the relationship between novels and life. He notes that the novels that ‘most accurately, intensely and wonderfully’ imagine life tend to keep us away from life: ‘If it is life we want, we put the book down’. This leads him to consider his own thought processes:

‘First the emotion, then the excited reflection on emotion, attempting to divert it from its initial function, to enroll it in my career project, to turn it into smartness and writing’.

During his second meditation course Tim accepts that the time has come to face up to ‘simply being here, instead of taking refuge in writing about being here’. He comes to consider the possibility that his former illness might be a consequence of his successful writing career:

‘Nor was it unthinkable that the strange pains I had been feeling had in some way to do with all those years sitting tensely, racking my brains over sheets of empty paper, building up hopes, rejoicing over some small achievement, overreacting to setbacks and disappointments. And it was true that if you placed yourself, or your attention, as it were beside these pains, if you just sat together with them and let them be, not reacting or wishing them away, they did in the end subside. Likewise the thoughts’ … .

The passage goes on with Tim acknowledging that he had sensed the first hints of equanimity. He concludes:

‘All you have to do now is stop writing … and you’ll have clinched it. You’ll have changed forever’.

When Tim tells the meditation teacher, John Coleman, that he is thinking of giving up his writing career, Coleman responds:

‘You know a lot of people come to these retreats and get it into their heads they should retire to a monastery or something. I can’t see why’.

Tim didn’t think that response was helpful; it didn’t resolve the conflict that he saw between word mongering and experiencing life.

So, how did Tim resolve that conflict? Well, he obviously didn’t stop writing. He has written a couple of other books since writing Teach Us to Sit Still, including the novel, Sex is Forbidden (first published as The Server). And some of the things he has written suggest that he still sees the potential for conflict. For example in an article entitled ‘The Chattering Mind’, for the NYR Blog, Tim suggests that modern authors are obsessed with mental suffering and impasse: ‘Slowly you get the feeling that only mental suffering and impasse confer dignity and nobility’.

I have just read Sex is Forbidden to see whether it sheds any light on the effect that meditation had on Tim’s writing. This novel tells the story, in first person, of a rather naughty young woman who has spent several months at a meditation institute both as a meditator and as a voluntary helper (server) following a traumatic experience. Despite segregation of sexes at the institute, the young woman almost ends up in another relationship with an older man, after she stumbles on his diary and reads it. The main character is likeable, the challenges facing her are interesting and the story-line seems plausible. At the end, however, I was left unsure of how well Tim had actually managed to capture what might be happening in the mind and emotions of the young woman. (I went looking for reviews by women, but the only review I found that attempted to deal with the issue was by an opinionated man.)

The relevant point, however, is that while this novel is focused on mental suffering it manages to end on a hopeful note. We know that while the main character is unlikely to live happily ever after, her chances of living a happy life have improved.

Tim made a similar point in an interview with Jan Wilm:

 ‘So has meditation changed my writing? I’m not sure. … What I am talking about in a lot of my books is this process whereby you get yourself into a position from which there is no way out. Which is also a way of saying, the whole way you’ve structured your mental life actually doesn’t fit the nature of reality, because when you carry on in the way your map tells you to, you always end in a place on the territory where there’s nowhere to go. A lot of life feels like that to me. The different thing about The Server—and I was quite surprised about this when I wrote the end of the novel—is that here there is a feeling that, if nothing else, that period in the meditation retreat has helped these two people to avoid one more catastrophe, one more dead end. And that the girl, if not the man, has maybe moved on ever so slightly. She is not stuck, she seems able to move forward. I was quite surprised by my optimism’.

Why was Northern Ireland a highlight of our tour of the British Isles?

There were many highlights of our recent tour of Britain and Ireland, but the visit to Northern Ireland will stick in my memory. Before we went there I knew that it was now a safe place for tourists to visit, but I had not grasped how much the conditions of life of the people who live there have improved since the Good Friday agreement was signed 15 years ago.

My first surprise was that crossing the border from the Republic to Northern Ireland was less noticeable than crossing from England to Wales. If we had not been told to look out for a change in the colour of the lines marking the edge of the road, we would not have known that our bus had crossed the border between the Republic of Ireland and the United Kingdom.

As expected, you don’t have to drive far in Northern Ireland before seeing evidence of division, with some communities displaying the Union Jack and others displaying the flag of the Republic. There are also plenty of murals, like this one, to let you know the feelings of the local communities.

However, people seem to be able to travel freely. Apparently it has become common for Protestants living in Northern Ireland to take a drive into the Republic. They have an incentive to do this because fuel is cheaper in the Republic. That is probably attributable to some kind of regulatory distortion, but it is nevertheless a hopeful sign when people put aside their prejudices to take advantage of economic opportunities.

Ronan McNamara, our local tour guide in Derry, or Londonderry (if you prefer), gave us a message of hope. He suggested that the vast majority of people in Northern Ireland now just want to get on with living their lives and leave sectarianism behind.

I was also surprised to learn that the unemployment rate in Northern Ireland is now below the average rate for the UK. (The unemployment rate for NI was 6.9% in June 2013, compared with 7.7% for the UK. The corresponding figure for the Republic was 13.5%, reflecting the uneven impact of the global financial crisis.)

We saw some symbols of hope in both Londonderry and Belfast.  The Peace Bridge is a cycle and footbridge across the River Foyle in Derry, which opened in June 2011, to improve access between the largely unionist 'Waterside' and the largely nationalist 'Cityside'.

The so called ‘peace walls’, built to separate the Protestant and Catholic communities in Belfast, are still very much in evidence and the gates are still closed at night. But the black cab drivers take tourists to see the murals on both sides of the walls. We were encouraged to add our messages to one of the walls.

I was impressed by the message left by Angus from Australia, last year.

The message I left would come as no surprise to regular readers of this blog.

Our trip to Northern Ireland has left me with a somewhat different perspective on the ‘troubles’ in Northern Ireland. I had to visit Belfast before I fully appreciated that the ‘troubles’ were the last smouldering embers of ongoing sectarian violence that has infected the British Isles since the dissolution of the monasteries during the reign of Henry VIII. It will help me to make the point if I present a couple more photos taken in Northern Ireland in historical context, relating to other things we saw as we travelled around the British Isles.  My efforts in doing this have been aided by the gruesome stories of warfare that our travel director, Paul Murphy (from Glasgow), told us as we travelled though the peaceful countryside of Britain and Ireland.

The ruins of Glastonbury Abbey are an appropriate place to begin. Before Glastonbury Abbey was closed by Henry VIII in 1539 it was one of the largest and most famous English monasteries. The dissolution of monasteries combined revenue-raising with religious persecution as buildings and other assets were seized by the Crown, to be sold off or leased, while monks and nuns were dispersed.

Now, fast forward to 1623 and the reign of James I. Although James was tolerant toward loyal Catholics, he decided that the best way to subordinate the people of Ulster (which was the last part of Ireland resisting British rule) was by colonising the area with Protestants from England and Scotland. Part of this colonisation involved building the heavily fortified city of Londonderry, so named because of investment from the City of London. The city walls are still intact despite the siege of 1689.

Before we can discuss the siege of Derry we need to skip past the English civil war, Oliver Cromwell’s suppression of the Royalists in Ireland, which led to confiscation of land owned by Catholics in Ireland, and the restoration of the monarchy which brought James II, a Catholic, to the throne. Although James II showed some degree of religious tolerance, influential members of Parliament became increasingly concerned about his religious beliefs and his close ties with France. So they brought about the Glorious Revolution of 1688, which involved Parliament inviting William of Orange to ascend the English throne as William III of England, jointly with his wife, Mary II of England.

I have previously suggested on this blog that the Glorious Revolution was an important milestone in replacing tyrannical government because it was followed by the Toleration Act of 1689, which gave formal recognition to religious pluralism and was an important step toward giving equal rights to followers of all religions. That is still my view, but some of my ancestors (those from Ireland) would have had some difficulty in accepting that the revolution brought about by William and Mary was glorious.

James II fled to Ireland and assembled his supporters to begin undoing the Protestant land settlement. In April 1689 he presented himself before the walls of Derry - and so the siege began. After 105 days, however, Williamite ships allowed supplies into the starving town. William of Orange subsequently met James at the Battle of the Boyne and defeated him. That is why we see William III portrayed prominently in this mural in a Protestant area of Belfast.

Our story continues as the Williamite forces went on to control Ireland, with the exception of Limerick, which they lay siege to. The Jacobite forces surrendered after the signing of the Treaty of Limerick, promising religious toleration among other things, on the Treaty Stone in the photo below.

That might have been a good place to end this story, but the Irish parliament, representing landowners who subscribed to the (Anglican) Church of Ireland, dishonoured the Treaty. While Catholics were not prevented from practicing their religion, a series of penal laws prevented them from owning land, practicing law, holding public office and bearing arms. Catholics and Calvinists were also required to pay tithes to support the Church of Ireland.

In 1745, on the other side of the Irish sea, the Jacobites led by Bonnie Prince Charlie attempted to take back the English throne. His army had some initial success, but he failed to obtain the English and French support needed to beat government forces. His army was massacred on the battlefield at Culloden, shown below.

In the aftermath of Culloden, the Scottish Highlands were disarmed, Gaelic was banned and the wearing of tartan was made a hanging offence for a time.

Discrimination against Catholics began to diminish from about 1760 onwards, in response to agrarian unrest in Ireland and the emergence of a reforming minority, urging greater respect for individual rights, among those in power in London. The process of granting equal rights to people of all religions occurred gradually in a series of steps and is still not complete. The Church of England still has links to the state and while citizens of the United Kingdom have freedom of religion, the sovereign does not have that freedom.

One of the things I think we can learn from the history of the British Isles is that freedom of religion and respect for individual rights emerged as a kind of stalemate from a long series of conflicts. Those in power gradually came to accept that it was counterproductive to try to force people to change their beliefs or to discriminate against them because of their beliefs. They came to accept that suppression just led to rebellion at a later stage.

When we travelled around the British Isles we saw a great deal of evidence that this was a very violent part of the world only a few hundred years ago. But without visiting Northern Ireland, this evidence would have seemed as though it had been planted for the benefit of tourists. Britain and Ireland are, for the most part, incredibly peaceful places where the vast majority of people are obviously willing to ‘live and let live’. It was good to learn that there are now strong grounds to hope that Northern Ireland will be able to stay on track to become as peaceful as the rest of Ireland and Britain.

How much will the change of government change Australia?

I returned to Australia last Saturday, just in time to vote, after having spent a month travelling around Britain and Ireland. That means I had the good fortune to miss the election campaign.

However, missing election campaigns is not always an unmixed blessing. The last time I missed an election campaign, in 1983, when the Hawke government was elected, the country seemed to change in my absence in ways that I found difficult to understand. Prior to leaving Australia I think there was a fairly common perception, which I shared, that Bob Hawke was a divisive figure in Australian politics. After I returned just a few weeks later, it took some time for me to adjust to the fact that Hawke had come to be widely viewed as a national leader, capable of bringing the nation together to deal with difficult issues. The mood of the country seemed to have changed while I wasn’t looking.

I don’t think I missed much by being absent during the most recent election campaign - there doesn’t seem to have been any marked change in public mood. It was predictable that voters who were having doubts in 2010 about the leadership offered by the old Kevin Rudd, would realize during the campaign that the new Kevin was still the same person. It was also predictable that people who were having difficulty bringing themselves to vote for Tony Abbott prior to the campaign would not suddenly see him as offering inspiring leadership. The issue was whether Tony would be able to demonstrate during the campaign that he had learned how to keep his foot out of his mouth. 

How much will the change of government change Australia? There are some who argue that when the government changes, the country always changes. Paul Keating famously put that view to voters in 1996, as his period as prime minister was drawing to a close.  I suppose some of the people who decided to vote for John Howard would have disagreed with Keating’s warning, but others would have actually wanted the country to change.

In my view, the Howard government did not actually change the country to a huge extent relative to the course that had been set by the Hawke and Keating governments. The size of the federal government (measured in terms of cash payments as a percentage of GDP) contracted from 25.6% in 1995-96 to 23.1% in 1999-00, and then rose again, peaking at 25.1% in 2000-01. The trend toward greater centralisation of power in Canberra continued unabated. There was a change of style and some change of emphasis – possibly including greater enthusiasm for privatisation of government business enterprises - but the direction of policies did not change to any great extent until the final term of the Howard government.

In its final term the Howard Government introduced ‘work choices’ in an attempt to further free up the labour market. The net result, however, was one step forward and two steps backward. The reform encountered so much political opposition that it helped Kevin Rudd and Julia Gillard to gain power and introduce tighter labour market regulations than had existed prior to the Howard reforms.

In my view, the Rudd-Gillard-Swan governments changed the country to a much greater extent than could reasonably have been anticipated in 2007, when Rudd came to power. As well as the change of direction in industrial relations, the emphasis of policies turned towards redistribution of wealth as opposed to wealth creation with the introduction of an additional tax on mining profits. The change of style of government in the Rudd era – a prime minister with delusions of infallibility announcing policy on the run – made government seem chaotic. The Rudd-Gillard-Swan governments also brought about a substantial expansion in size of government – cash payments rose from 23.1% of GDP in 2007-08 to 26.1% in 2009-10. On the positive side of the ledger, the changes to health policy are possibly having positive outcomes (but I haven’t seen the evidence) and changes to education policy might also be positive. However, these policy changes have occurred at the expense of further centralisation of power in Canberra.

There seems to be a widespread expectation that the Abbott government will cut back the size of government, but I’m not sure that view  is warranted. The government will probably reduce the number of federal public servants, but when election  promises of increased spending are taken into account it seems unlikely that there will be a substantial reduction in government spending.

It is possible that the new government could take action to reform federal-state relations, by retreating from some policy areas that are more appropriately dealt with by the states. However, I will not be holding my breath waiting for that to happen. As noted a few years ago in my review of Tony Abbott’s book, ‘Battlelines’, he seems to be in favour of greater centralization of power in Canberra.

Perhaps the government will move on tax reform in its second term of office. But the most likely outcome will be a higher rate of GST to raise more revenue. If we continue to drift toward a European style welfare state, we will need a European style tax system to fund it!

I am not sure that we can even expect the new government to maintain policies favourable to free trade. Policies proposed with respect to ‘dumping’ suggest a lack of understanding of normal business practices and the role of international competition in the economy.

The main change the Abbott government seems likely to bring about is a return to more orderly government processes. In that respect, the contribution of the new government could be quite similar to that of the Fraser government in the 1970s, which brought to an end the chaos of the Whitlam years. In fact, the more I think about it the more I think that, with the exception of policies toward asylum seekers, the Abbott government could end up looking quite similar to the Fraser government. There will be plenty of talk about tough decisions, but I don’t think there is likely to be much action.

Postscript:
I had intended to mention that I was prompted to begin thinking about this question by a post last week on Jim Belshaw's blog. Jim's post was entitled: 'What can we expect of a new Coalition Government?'