Sunday, March 27, 2016

The Cost of Happiness and the Human Development Index (HDI)

People all have the selfish pleasure of discovering people and things in the world necessary for a desirable future. Among the many things for a desirable future are education, income, and healthcare, but living longer is not really the only desirable future. Living well necessarily includes the selfish pleasure of discovery as well as compassion for others and the skills and competence necessary to live a desirable life.

The human development index (HDI) was created by the UN to rank the desirability of countries and social systems. Basically the HDI factors in per capita GDP, per capita education, and life expectancy along with a bunch of other factors to get an HDI. The means to live a desirable life is provided by a per capita GDP and a compliant political system, the selfish pleasure of discovery, the compassion of others, a valuable skill set and political system that per capita education provides, and of course, a life expectancy that means living long enough to then have that desirable life.

As a result, the HDI represents a kind of happiness for each country. While the U.S. has an index of 91.5 and ranks about 8th, Norway leads all with 94.4 even as Sweden lags with 90.7. The HDI shows the overwhelming success of capital free markets in buying HDI points and the indisputable failure of social big government to even acquire a reasonable HDI.

However, HDI happiness is not cheap and the graph below shows the how much 100 HDI points cost in terms of tax as %GDP. The U.S. pays about one third as much as Norway for the same happiness, 11.5 versus 28.9 taxes%GDP per 100 HDI's. The U.S. pays a much lower %GDP for its HDI than many less efficient countries that overpay for their happiness. The U.S. along with Switzerland, Germany, Canada, and Japan pay for happiness with much more efficient economies than Norway, France, or UK.

Happiness and its cost.
Thus the U.S. could choose to buy another 3 HDI points to equal Norway for just one third of the cost that Norway buys its HDI. That is, instead of adopting the very inefficient big government approach of Norway, the U.S. could choose to simply invest more of its own capital free market enterprise and accomplish the same HDI value far more effectively than Norway and certainly also Sweden, France, and the UK.

China and Russia, for example, are at HDI's of 72.7 and 79.8, respectively, and while China pays 14.6% GDP as taxes per 100 HDI points, Russia pays 18.9% GDP as taxes per 100 HDI of happiness. The higher costs of happiness are very apparent as the inefficiencies of socialist tyranny versus the individual freedom of capitalist free market economies.

A desirable life is much more than just living longer and necessarily includes the pleasure of discovery as well as a compassion for others. It is clear that knowledge about the world and the competence to contribute to civilization both allow each of us to truly discover a desirable future.