Summary:
In current geopolitics, the BRICS nations can set new standards for future economic development. This article explores how these countries should progress in their future development paths. Keeping happiness as an objective, this article suggests that social expenditures are much more critical than macroeconomic fundamentals.
Figure 1: The Ladder of Happiness of BRICS nations from 2014 to 2023
 |
| Source: World Bank Open Data, The size of the bubble represents the level of the Cantril Ladder Index of that country in that year |
Introduction
The Cantril Ladder, a simple yet effective tool for gauging subjective well-being, poses a straightforward question: "Imagine a ladder with the best possible life at the top step (10) and the worst possible life at the bottom step (0). On which step do you feel you personally stand at this time?"[1] By quantifying subjective experiences, this scale offers valuable insights into individual life satisfaction. While individual well-being is a complex interplay of personal circumstances and psychological factors, macro-level variables can significantly influence happiness. This study delves into the relationship between these broader economic factors and Cantril Ladder scores, focusing specifically on the BRICS nations as they represent a significant portion of the global economy. Understanding the factors that influence the happiness of their citizens is crucial for policymakers and researchers alike.
Our panel data analysis indicates that three key
variables—GDP per capita, expenditure on health and education, and the
unemployment rate—significantly influence Cantril Ladder scores within the
BRICS nations. The following sections delve into the specific impact of each
variable.
Panel data analysis of BRICS countries
Table 1: Random effect regression result of the
Cantril
Ladder index on macroeconomic and social expenditure variables
|
|
Model-1 |
Model-2 |
|
CPI |
-.002 (0.003) |
0.0032 (.002) |
|
Log of GDP Per Capita |
0.471** (0.189) |
1.262*** (0.09) |
|
Unemployment |
-0.058*** (0.01) |
-0.058*** (0.006) |
|
Health Expenditure (% of GDP) |
0.332*** (0.05) |
|
|
Expenditure on Education (%
of GDP) |
|
0.629*** (0.057) |
|
Intercept |
-0.083 (1.79) |
-8.61*** 0.996 |
***,**,* represent 1%, 5%, and 10% L.S. respectively,
S.E. in the parentheses
However, the relationship between income and happiness is not always linear. Studies have shown that while increased income can boost happiness to a certain point, additional wealth may not significantly increase well-being beyond a certain threshold.
Unemployment, a scourge of modern economies, can cast a long shadow over individual well-being. Job loss can lead to a host of negative consequences, including financial insecurity, increased stress, and a diminished sense of purpose. These factors can significantly impact people's perceptions of their lives and, consequently, their Cantril Ladder scores. Our analysis reveals that a 1% increase in the unemployment rate is associated with a statistically significant 0.058 decrease in the Cantril Ladder score. This finding underscores the detrimental impact of unemployment on subjective well-being. Moreover, high unemployment rates can have broader societal implications, such as increased social unrest and political instability, further eroding people's sense of security and overall well-being.
Government investment in education and healthcare is a cornerstone of societal progress. By prioritizing these sectors, nations can foster long-term economic growth, enhance social development, and improve the overall well-being of their citizens. Our research shows that investing in education and healthcare can significantly boost people's happiness. A 1% increase in health expenditure is linked to a 0.33 increase in the happiness index, while a 1% increase in education expenditure is associated with a 0.629 boost in happiness.
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