562.2 The risk of neglecting uncertainty when using happiness rankings for public policy

Friday, August 3, 2012: 12:48 PM
Faculty of Economics, TBA
Oral Presentation
Ariel AZAR , Universidad Diego Portales, Chile
Esteban CALVO , Universidad Diego Portales, Chile
Global happiness rankings have flourished during the past decade, getting increased attention in public policy debates throughout the world. Policymakers and academics are demanding new measures of societal well-being that go beyond income. International organizations such as the UN and OECD are supporting the development of multidimensional measures of well-being, including happiness indicators together with more traditional indicators such as GDP per capita. The media has been very receptive of the newly developed happiness indicators and published numerous colorful maps that illustrate national levels of happiness across the world. Unfortunately, these rankings and maps have been repeatedly misinterpreted in public policy debates, treating differences between countries as if they were estimated without uncertainty. Ignoring the uncertainty underlying happiness rankings inevitably leads us to exaggerate differences between countries. That is, countries ranked in different positions in a happiness ranking may be treated as if they were statistically different from each other when they are not. Therefore, we argue that happiness rankings –whether presented in maps, figures, or tables– should always account for uncertainty by including confidence intervals and a reference point to assess statistical differences across countries. Using the World Values Survey cross-national data on life satisfaction for 91 countries, we illustrate how to build happiness ranking that correctly account for uncertainty. We take Chile as a reference point to make comparisons, and repaint the world map of happiness by classifying countries as statistically happier, unhappier or not different from Chile. The results suggest that when looking for lessons to become a happier society, Chile should mainly look to its Latin American neighbors, rather than to many higher income countries around the world that rank above Chile in the happiness ranking. Overall, these results suggest a serious risk of neglecting uncertainty when using happiness ranking to inform public policy debates.