Charting the Relationship Between Wealth and Happiness, by Country

https://www.visualcapitalist.com/relationship-between-wealth-and-happiness-by-country/

by gmays • 4 years ago

5 2 4 years ago

Thank you for posting.

So, let's remind everyone the difference between correlation and causation. Many people may look at these colorful charts and walk away with the idea that "therefore, having more money or liquid assets makes people happier". But that's (a) not actually implied here, and (b) not what economics shows regarding utility curves.

Firstly, the line of best fit has a fairly large standard deviation across all the data here, meaning it's not as amazing a correlation as it might seem. More importantly, rather than assuming cause and effect, I highly suspect the reason for the trend at all is a third common factor. In the chart regarding inequality vs happiness, the line of best fit (since that's what the article likes to examine) has a negative slope. You may also notice that many of the countries with lowest inequality... are also countries with highest average wealth. And I don't think that's a coincidence.

Obviously there's more to happiness than quantifiable monetary value, but I suspect if we examined a 3D chart combining average wealth, income inequality, and happiness, we'd see a new pattern emerge, one which shows that more population-wide wealth simply provides an easier opportunity to share that wealth, which results in higher happiness (as far as money-induced happiness goes, at least).

Charting the Relationship Between Wealth and Happiness, by Country

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