Ways to Improve Happiness in America

Happiness levels of Americans vary across the country. However, there are steps that all states, even those with the highest happiness levels, can take to increase the aggregate well-being of their citizens.

Happiness economics is a relatively new academic field studying well-being, quality of life, and life satisfaction. Aristotle described happiness as a human’s ultimate desire and a central purpose of human life. Objective analyses, however, find that people most often obtain happiness from self-fulfilling relationships, wealth, and material possessions.

The “Easterlin Paradox” is a key concept for happiness economics that has been reassessed and argued for decades. Richard Easterlin found that, within a country, people with higher incomes are more likely to report being happy. However, across countries, higher GDP does not necessarily generate higher well-being. For example, the people of Mexico report higher happiness levels than the people of Spain, despite the fact that Spain’s GDP per capita is nearly twice the comparable figure in Mexico.

In an EconTalk podcast, called “Stevenson and Wolfers on Happiness, Growth, and the Reinhart-Rogoff Controversy,” two academic economists claim that, contrary to the Easterlin Paradox, “the correlation between GDP per capita and measured life satisfaction is 0.8.” Money does seem to buy happiness at the country level.

On the other hand, the economists add that the data show that one of the biggest factors reducing happiness within countries is income inequality. “It’s clear that you can increase aggregate well-being in society by doing some of that redistribution,” they note.

Taking one dollar from a rich person and giving it to a poor individual would tend to increase societal happiness, because the relative gain to the poor individual exceeds the loss to the rich person.

In addition, the World Happiness Report of 2016 found that inequality is strongly associated with unhappiness around the world.

Residents of countries with large welfare systems generally report higher levels of happiness due to the equality of opportunity. The Nordic countries – Denmark, Finland, Norway, Iceland, and Sweden – are often called the “happiest” countries in the world. The United States ranks 13th as the happiest country in the 2016 World Happiness Report, rising from its 2015 ranking of 15th. Public policies such as universal healthcare and universal education are redistributive measures that can help to maximize the well-being of the general population in a country.

How Do the U.S. States Fare?

Gallup conducts a poll on the well-being index of state populations. In 2015, the survey found that Hawaii ranked the highest in well-being and was the “happiest” state in America. The top five states also include Alaska, Montana, Colorado, and Wyoming. West Virginia was ranked 50th with the worst well-being, based on the data. Other low-ranked states include Kentucky, Ohio, and Indiana.

States with the lowest well-being and least happiness tend to be the South and the Southern-Midwest. On the other hand, states that report the highest well-being are often out West, such as California, Utah, Colorado, Wyoming, and Montana.

Illinois is ranked 35th out of 50 states, with a score of 61.5. The national index is 0.2 points above Illinois, at 61.7. Illinois does rank higher in well-being, however, than Kentucky, Ohio, and Indiana.

Why Some States are “Happier” than Others

There are many factors that influence well-being. Scores on Gallup’s “Well-Being Index” are determined based on five factors: purpose, social, financial, community, and physical. These elements represent how a person is motivated, supported, and energized – and ultimately if he or she feels happy with  life.

Interestingly, states with high Gini coefficients and high income inequality tend to be the states that rank lower in terms of “well-being.” Southern states, which tend to be the “least happy” states, also tend to have the highest income inequality. Western states are often the highest in well-being and have relatively low income inequality compared to the rest of the country, which the moderate correlation (-0.36) shows in the figure below. This correlation implies that the country-level findings by Stevenson and Wolfers may also be applicable at the state-level in America.

Screen Shot 2016-03-15 at 11.35.57 AMNote: Data for the following correlations was collected from each state’s Well-Being Index Score from Gallup-Healthways and data from the Measure of America of the Social Science Research Council for all 50 states.

However, there are a few outliers in the data. California is ranked 10th in well-being, but has a high Gini coefficient ranking of 0.47. This is also true for Texas and Florida, who are ranked 11th and 12th in the 2015 well-being index, but have high levels of income inequality.

The poverty rate is also a key factor for well-being scores. Another moderate correlation finds that a lower poverty rate is related to greater well-being in states. The (-0.45) correlation shows that those who are living in poverty tend to be less happy due to the added stress, disruption, and deprivation.

Screen Shot 2016-03-15 at 11.35.30 AM

In general, people with higher levels of educational attainment also report to having higher “well-being.” As the share of a state’s population with bachelor’s degrees increases, the state’s well-being score goes up as well. The figure below depicts another moderate correlation (+0.42).

Individuals who earn bachelor’s degrees may feel happier because have made a profitable investment in themselves. One study found that young females who completed a bachelor’s degree or higher earned 91 percent more at their jobs than women who did not. Those who invest in higher education are more likely to have well-paying careers, be connected to political and social circles, and positively contribute to state economies.

Screen Shot 2016-03-15 at 11.34.49 AM

How Can the United States Improve “Well-Being” Scores?

Maximizing happiness is the goal of economics. “Well-being” varies by country, state, and local communities; however, some factors particularly influence happiness levels. Residents of more equal communities (especially where economic gains are distributed more evenly across the population) with less poverty and greater education tend to report higher levels of happiness. Through higher incomes and improved job security, education makes provides higher levels of personal satisfaction.

The biggest influence on happiness is, and continues to be, money. Wealthier countries and wealthier states are able to provide more programs to reduce both income inequality and poverty. And countries with larger social safety nets tend to report greater happiness due to improved equality of opportunity. Public policies such as universal healthcare and universal education are redistributive measures that can help to reduce inequality, reduce poverty, and maximize well-being.

Other to reduce economic inequality and increase happiness levels across the United States include facilitating union organizing, supporting worker training programs, raising the minimum wage, and ending residential segregation. Policies that promote middle-class wages create states with self-sufficient and financially-secure populations. Though economic growth remains the most effective way to improve well-being, some redistribution of wealth through government programs and taxes can enhance opportunities, reduce inequality, and boost overall happiness.

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