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July 3, 2012

In Focus: A Better Life

IStock_000001419386LargeSarah Boumphrey, Global Head of Countries & Consumers at Euromonitor International 

As the global economy continues to bounce along the bottom and with risks ever more on the downside, many people have been increasingly searching for an alternative to consumerism and debt. It has become widely observed by social scientists that we are wrongly evaluating our lives by using per capita GDP as a standard for progress and many consumers would agree with this observation.

As increasingly-connected consumers are inundated with marketing messages and advertisements 24 hours per day on their digital devices the number of consumers increasingly devoted to fulfilling material “needs” rather than “wants” continues to grow. The University of British Columbia’s World Happiness Report alerts us to the evidence that psychologists have found repeatedly that in the high-income world individuals who put a high premium on higher incomes generally are less happy and more vulnerable to other psychological ills than individuals who do not crave higher incomes.

There are various attempts to quantify happiness and wellbeing. These focus on a combination of factors including work-life balance, health, security and sustainability. 

The Organisation for Economic Cooperation and Development (OECD) re-launched its Better Life Index in May 2012. The Index measures wellbeing and aims to go beyond traditional measures such as GDP:

Top 5 Countries Ranked by Life Satisfaction

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Chart 1
Source: OECD Better Life Index

Note: Data measure overall life satisfaction as perceived by individuals. Life satisfaction measures how people evaluate their life as a whole rather than their current feelings. It is measured via the Cantril Ladder (also referred to as the Self-Anchoring Striving Scale), which asks people to rate how they value their life in terms of the best possible life (10) through to the worst possible life (0). The score for each country is calculated as the mean value of responses to the Cantril Ladder for that country. Data are available for 36 countries and refer to 2008-2011.

Bottom 5 Countries Ranked by Life Satisfaction

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Chart 2
Source: OECD Better Life Index

Note: Data measure overall life satisfaction as perceived by individuals. Life satisfaction measures how people evaluate their life as a whole rather than their current feelings. It is measured via the Cantril Ladder (also referred to as the Self-Anchoring Striving Scale), which asks people to rate how they value their life in terms of the best possible life (10) through to the worst possible life (0). The score for each country is calculated as the mean value of responses to the Cantril Ladder for that country. Data are available for 36 countries and refer to 2008-2011.

  • Norway and Switzerland are the only countries which rank in the top five with regards to life satisfaction and are also in the top five in terms of household income and household wealth. Indicating what many already know – money does not buy happiness;
  • In terms of work-life balance, Danes were able to devote the longest time to leisure and personal care at 16.06 hours on a typical day whereas the Japanese devoted the least amount of time to themselves at 13.96 hours per day. Turkey had the largest percentage of employees working very long hours – defined as those working more than 50 hours per week – at 43%, which compares with an OECD average of 9.5%.

The UN measures Inclusive Wealth in its UNU-IHDP and UNEP Inclusive Wealth Report 2012, released at the Rio + 20 Earth Summit in June 2012, which takes into account natural, manufactured, human, and social forms of capital in an effort to measure human wellbeing and sustainable development:

  • The report analysed 20 countries; China had the fastest growing per capita Inclusive Wealth Index (IWI) between 1990 and 2008. Followed by Germany and France. Nigeria meanwhile saw its per capita IWI fall by an annual average of 1.8%. This compares to an annual average increase in per capita real GDP of 2.5% during the same period – making it the 4th fastest-growing in terms of real GDP;
  • 30% of assessed countries, which showed a positive trend when measured by Real GDP per capita, were found to have a negative per capita Inclusive Wealth Index. These countries are: Nigeria, Colombia, South Africa, Venezuela, Russia and Saudi Arabia.

Top 5 Countries Ranked by Growth in Inclusive Wealth Index

Annual Average Growth

Chart 3
Source: UNU-IHDP and UNEP Inclusive Wealth Report 2012

Note: Data refer to average annual growth 1990-2008 and are based on a ranking of 20 countries.

Bottom 5 Countries Ranked by Growth in Inclusive Wealth Index

Annual Average Growth

Chart 4
Source: UNU-IHDP and UNEP Inclusive Wealth Report 2012

Note: Data refer to average annual growth 1990-2008 and are based on a ranking of 20 countries.

In this context, companies will find that less is more for many consumers who crave simplicity. Offering these shoppers fewer choices through more limited product ranges, products and services that simplify life and are easy to use is key to success in a world where happiness reigns supreme.


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