An economist could say that three “lows” and one “high” bring happiness:
- low inflation
- low unemployment
- low interest rates
- high growth
Taking the flip side, they also let us identify misery.
The World’s Misery
Now though other economists have taken the idea a step further. Johns Hopkins Professor Steve Hanke tells us that we should add interest rates and growth to the equation. More precisely, he totals the unemployment, inflation, and bank lending rates. Then, from that number, he subtracts the percent change in per capita GDP growth. When the first three rise, they are the “bads.” But if the last one goes up, it is a “good.” You can see that high numbers are alarming.
From a list of 98 countries, these are Dr. Hanke’s most miserable five in 2017:
The States’ Misery
From a list of the 50 states, these were the five most unhappy:
U.S. Misery
However, even with such a low index number, the U.S. is not among the 10 least miserable countries:
Our Bottom Line: Misery Index Questions
- With unemployment, we are looking at the tip of the iceberg. Although we can have too low a participation rate, too many discouraged workers who left the labor force and part timers who want full time jobs, still the unemployment rate can be attractively low.
- As for the inflation rate, the index assumes that low inflation numbers are good, even when they are too low.
- And thinking of unemployment and inflation together, equal weighting could sometimes be misleading. Unemployment can generate much more misery than inflation.
My sources and more: The more you look, the more misery indexes you find and the more interesting it becomes. The Hanke list and some analysis were at Cato while this paper had the U.S. states numbers. Meanwhile, there were many possibilities at Bloomberg.
Please note that several sentences from today’s post were in a previous econlife.
This post was slightly edited after publication.
Ideal for the classroom, econlife.com reflects Elaine Schwartz’s work as a teacher and a writer. As a teacher at the Kent Place School in Summit, NJ, she’s been an Endowed Chair in Economics and chaired the history department. She’s developed curricula, was a featured teacher in the Annenberg/CPB video project “The Economics Classroom,” and has written several books including Econ 101 ½ (Avon Books/Harper Collins). You can get econlife on a daily basis! Head to econlife.
