National debt vs. national happinnes

October 5, 2011

During the last couple of years there has been much discussion about debt. Is it good or not? In a family setting, common sense tell us that debt is not good. At the same time it also says that in many instances such as getting a house (or an education in some countries), it’s necessary to get into debt. For business it gets more complicated; incurring into debt or not has many variables. But what is really complex, is for a national economy. The public in general do not want their governments to get into excessive debt, in particular, to foreigners. If you have an education in economics, you know Keynes talked about it.

It’s my opinion that no matter what political orientation, politicians are not motivated to avoid debt at long term. Thus, this creates a great problems for many local, regional and national governments. Of course, this all gets very political, which by definition, ‘politics’ means how to spend our money.

Without getting very philosophical, political, technical or economic, I wondered : Are citizens happier if their countries are more in debt?

I checked real quick Wikipedia for a list of countries by external debt (public+private), and public debt by GDP. Then I compared it to the Map of Happiness. I had no idea what was the correlation going to be. I choose some countries and plot it. This of course is full of caveats, is just a quick and dirt view. I think an economists from Norway has done similar things (in a serious way), but I can’t find it now.

External debt vs. Happiness.
x = external debt (public + private) per capita in $USD; y = happiness index (from Map of Happiness)

x = public debt per GDP; y = happiness index (from Map of Happiness)

Well friends, the verdict is clear, and I had not idea it was going to be like this:

The more debt a country has, the more likely the citizens will be happier.

Bliss ignorance?

3 Responses to “National debt vs. national happinnes”

  1. Jason Says:

    A third variable to add would be the credit rating of the debt (well if credit ratings were very accurate too). But I imagine like in Greece (which I don’t see on here), but if their debt was high and their happiness isn’t, it is because of what we see today.

    It is always interesting seeing charts like this because I know in economics and such it is a good enough correlation. For engineering, we would call this noise and dismiss the result :)

  2. Monkey GO Says:

    Interesting point of view. Wondering what you think of its implication on society as a whole though?

  3. Carlos! Interesting analysis. You should check out ‘the spirit level’ a similar analysis but based on income inequality across developed nations. thanks for the follow, loving the blog man!

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