01/09/2011 04:25 pm ET Updated May 25, 2011

Think Again: The Economist 's "Happy" Ignorance

The Economist is undoubtedly the smartest weekly newsmagazine in the English language. I always look forward to its quirky year-end double issue. With articles ranging from the evolution of the suit to the dangers of medieval warfare, I was not disappointed with this year's. The cover story, however, was perhaps the most interesting. It investigated recent research into happiness and discovered, encouragingly, that after one reaches the age of roughly 46, people tend to get happier as they get older.

"The notion that money can't buy happiness is popular, especially among Europeans who believe that growth-oriented free-market economies have got it wrong," the authors explain. But according to the magazine's reading of the data, "four main factors" determine happiness: "gender, personality, external circumstances and age."

Some of the research, however, proves puzzling.

"Hong Kong and Denmark, for instance, have similar income per person, at purchasing-power parity; but Hong Kong's average life satisfaction is 5.5 on a 10-point scale, and Denmark's is 8. ... the ex-Soviet Union [is] spectacularly miserable, and the saddest place in the world, relative to its income per person, is Bulgaria."

The authors would like to find an explanation in the national character of these places, because if they don't, they would have to accept the obvious. Life is happier in Denmark than Singapore because it's a much better place to live. And despite all those old jokes about (exaggerated) Scandanavian suicide rates, Danes are also happier than Americans, and the reasons are just about as good. Owing to The Economist's apparently unshakeable commitment to laissez faire economics, though, the reader is left in the dark.

There's no mention, for instance, that Denmark spends nearly one-third of its gross domestic product on government-run benefits and taxes its citizens at an equivalently high rate. In recent years, its top bracket has been well more than 60 percent, nearly double the highest rate in the United States. With these revenues, the state spends roughly 5 percent of its GDP on the unemployed and as much as 2 percent alone on "flexicurity" labor market programs to help retrain displaced workers.

This compares with a feeble 0.16 percent of such spending in the United States, which is by far the lowest in the Organization for Economic Co-operation and Development, or OECD. Partly as a result, Denmark's unemployment rate is much lower than that of the United States. According to the Economist Intelligence Unit, Denmark's "Quality of Life" index proved superior to that of America as well, with advantages like universal health care and day care, and an extremely low poverty rate that's not even a quarter of that of the United States, which is one of the worst performers in this category according to OECD figures.

American journalists tend to treat inequality as a fact of life. But it needn't be. For instance, in 2009, the average income of the top 5 percent rose. Everybody else's fell, furthering a 40-year trend during which the share of total income going to the wealthiest 1 percent of Americans has risen from about 8 percent during the 1960s to more than 20 percent in 2011.

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