Which of life’s circumstances are important for life satisfaction, and which—if any—have permanent as opposed to merely transitory effects has been the subject of lively debate. For economists, who usually assume that higher incomes represent a gain to the satisfaction of individuals, the role of income is of particular interest. It is often argued that income is both relatively unimportant and relatively transitory compared with family circumstances, unemployment, or health (for example, Easterlin, 2003). Comparing results from a given country over time, Easterlin (1974, 1995) famously noted that average national happiness does not increase over long timespans, in spite of large increases in per capita income. These findings suggest little or no long run relationship between a nation’s income and its average level life satisfaction. Many studies comparing people within countries have found only a small effect of income on life satisfaction relative to other life-circumstances such as employment or marital status (for example, Helliwell, 2003; Blanchflower and Oswald, 2004). Kahneman et al. (2005) argue that even these measures overstate the effects of income. They suggest that more income may do nothing for experienced happiness, and that the observed correlation between life satisfaction and income comes from a “focusing illusion,” which prompts respondents to compare their incomes with some standard set by their own previous incomes or by the incomes of others. It is therefore possible that, over the long run, increases in income will generate no increase in life-satisfaction. This result is consistent with the micro-level evidence from the German Socioeconomic Panel by Di Tella et al. (2005), who regress life satisfaction on income and on several lags of income, and find that life-satisfaction adapts completely to income within four years. In this work, income growth only provides only a temporary boost to life satisfaction.

Given this evidence from individual countries over time and across people within countries, one might reasonably infer that there should be no correlation between levels of life satisfaction across countries at different levels of income. One argument, due to Veenhoven (1991), is that more income improves happiness only until basic needs are met; beyond the point where there is enough income so that people are no longer hungry, their children do not die from readily preventable diseases, and absolute poverty has been eliminated, additional gains in income no longer matter for happiness. While this story seems plausible, there is a contrary view that it is only after these basic needs have been met that the possibilities for intellectual and cultural development can be fully explored. This belief is akin to Robbins’ (1938) account of the Brahmin who claimed to be “ten times as capable of happiness as that untouchable over there.” In fact, although the United States and Japan may have failed to become happier as they grew richer, low-income countries, such as India or Nigeria, are less happy than high-income countries (for example, Ingelhart and Klingemann, 2000; Graham, 2005; Layard, 2005; Leigh and Wolfers, 2006, or the careful and balanced survey by Diener and Oishi, 2000). However, controversy continues over whether, among the high-income countries, additional income brings additional life satisfaction.

The main source of previous empirical evidence on life satisfaction in countries around the world is the World Values Survey, which is conducted by a network of academics around the world who coordinate their efforts. Interviews have been carried out with samples of people of more than 80 countries, which together include over 85 percent of the world’s population. The coverage includes the high-income countries of the world, together with a smaller number of low-income countries, as well as a group of countries from Eastern Europe and the former Soviet Union. The World Values Survey has been carried out in four waves: 1981, 1990–1991, 1995–1996 and 1999–2001. Data for the World Values Survey is available from a variety of sources, including the Interuniversity Consortium for Political and Social Research (ICPSR) survey data archive available on-line at the University of Michigan. For details on the World Values Survey, see <http://www.worldvaluessurvey.org>. Several of the studies based on the World Values Survey data have concluded that high-income countries are happier, but that among the high-income countries, there is no relationship between national income and national happiness (for example, Ingelhart and Klingemann, 2000, Figure 7.2; Layard (2005, p. 32) who writes that for “the Western industrial countries, the richer ones are no happier than the poorer.”

In 2006, the Gallup Organization ran a World Poll using samples of people in each of 132 countries; with the exception of Angola, Cuba, and Myanmar, where the samples are urban, the samples are nationally representative of people aged 15 and older. The questionnaire covered many aspects of well-being, including an overall measure of life satisfaction, as well as several aspects of health and economic status. Because the survey used the same questionnaire in all countries, it provides an opportunity to make cross-country comparisons. No previous poll has provided national samples of so many countries, particularly poor countries. For details on the Gallup World Poll, see <http://www.gallupworldpoll.com/content/24046/About.aspx>. Here I focus on the life satisfaction question about life at the present time, measured on an eleven point scale from 0 (“the worst possible life”) to 10 (“the best possible life”), and the health satisfaction question (“are you satisfied or dissatisfied with your personal health?”). I look at how the answers to these questions vary with age and with the objective circumstances of the country, particularly the levels and rates of change of per capita income and life expectancy.

“Life satisfaction” and “happiness” are not synonyms. Questions about life satisfaction ask respondents to make an overall evaluation of their lives. The results are often interpreted as measures of happiness, but happiness can also be thought of as relating to affect, and can be measured from experiential questions, for example, about smiling a lot, or feeling happy, or absence of depression, often during the day before the interview. The World Poll also includes such questions, and experiential happiness measures based upon them do not always line up with the evaluative measures from the life satisfaction question.

Figure 4 shows the global relationship between the fraction of people who are satisfied with their health, age, and GDP per capita. Countries are plotted as circles with diameters proportional to population; these show the fraction of people satisfied with their health in the population as a whole. Variation of health satisfaction with age is plotted as a series of fitted nonparametric regression curves that show average health satisfaction against GDP per capita for seven different age groups; I am assuming that the GDP per capita figure is a suitable indicator for all age groups in each country. The figure shows that people are more likely to be satisfied with their health in high income countries, and that they become less satisfied with their health as they age; as we might expect for health, the effects of age are much larger than the effects of national income. Remarkably, the rate at which health satisfaction deteriorates with age is greater in low-and middle-income countries than in high-income countries, where income seems to provide some protection against the effects of aging on self-perceived health. At the top right of Figure 4, the 50–59 age group is actually less satisfied with its health than is either of the two older groups, and this pattern can be confirmed in individual rich countries such as the US. It is most improbable that this reversal can be attributed to any objective health conditions or disabilities. Perhaps the 50–59 group is particularly intolerant of the first signs of aging

In health satisfaction, as in life satisfaction, the countries of Eastern Europe and the former Soviet Union report extraordinary low levels – in fact, these countries represent 11 of the 20 lowest countries in the world in health satisfaction, including Ukraine (rank 1), Russia (3), Georgia (4), Armenia (5), Belarus (6), Moldova (8), Hungary (9), Latvia (12), Estonia (13), Romania (15), Kazakhstan (17), and Bulgaria (19). More understandably, other low-ranking countries in health satisfaction include such high mortality countries such as Haiti (2), Rwanda (7), Uganda (10), Burundi (11), Cambodia (14), Chad (16), Benin (18), and Cameroon (20). (South Korea ranks 21^st for no immediately obvious reason.) In all of these countries, the fraction of people reporting themselves satisfied with their health is between a half and two-thirds, which is worth contrasting with the situation in some of countries worst-hit by the HIV/AIDS epidemic, Tanzania (71 percent), Zimbabwe (75 percent), Botswana and South Africa (both 78 percent), and Kenya (82 percent). Indeed, the percentage of Kenyans satisfied with their health is the same as the proportion of Britons, and is a percentage point higher than the fraction of Americans though at least some of this comes from the younger average age of the Kenyan respondents. If we age-adjust to the British population, the fraction of Kenyans satisfied with their health is ten points lower than in Britain or the US. Even so, it appears that the declines in life expectancy in the countries of the former Soviet Union have had a much larger effect on reported life satisfaction than have the much larger declines in life expectancy in the African countries affected by HIV/AIDS.

We can also examine the way that health satisfaction declines with age and how that decline varies internationally. In the 15–19 age group, almost everyone is satisfied with their health. In the rich countries, satisfaction falls relatively slowly, and in the United States, actually improves with age after age 50—probably coincidentally overtaking the generally more stoical British at around the age at which the respective age-specific mortality curves cross. In the Eastern European and former Soviet Union group, health satisfaction falls very rapidly with age, and very large fractions of the elderly report themselves as dissatisfied with their health.

Table 3 explores the correlates of health satisfaction, following the same general procedures as in Table 2, regressing average health on a set of possible covariates. Because age is a much more important determinant of health satisfaction than of life satisfaction, all of these regressions control for the age structure of the population. Column 1 shows, consistently with the figure, that the fraction of people satisfied with their health is higher in higher income countries although, even allowing for the fact that the scale is a tenth as large, the effect is a good deal smaller than for life-satisfaction. As was the case for life satisfaction, recent economic growth is negatively associated with health satisfaction conditional on the level of GDP per capita; once again, the countries of Eastern Europe and the former Soviet Union drive much of this result. In column 2, neither the level of life expectancy nor its increase from 1990 to 2005 have any effect on health satisfaction. This lack of a link between reported health satisfaction and at least these objective measures of health is disturbing, so I investigate it further. Declines in life expectancy are associated either with HIV/AIDS (itself mostly in sub-Saharan Africa), or with the transition countries of Eastern Europe, so I constructed three dummy variables, one for the Eastern European countries, one for sub-Saharan Africa, and one the dummy for HIV prevalence that has already been described. The first of these dummies (“east”) attracts a negative and significant coefficient, the second (sub-Saharan Africa) an insignificantly negative one, and the third (HIV) a coefficient that is neither negative nor significant. This result is perhaps not surprising given the evidence in Figure 4, where it is clear that the poor health satisfaction in the transition countries could not be attributed entirely to the objective decrease in life expectancy. These results also reinforce the fact that even high levels of HIV prevalence do not much affect the health satisfaction reports—or at least not in proportion to their dire effects on mortality. I have also interacted the dummies with the change in life expectancy (results not shown) to test the possibility that the changes in life expectancy have different effects in the different areas, or with different causes, but the estimated effects are neither significant nor informative.

One variable which is correlated with average health satisfaction is what people think of their health care system. The Gallup World Poll asks people to report whether or not they have confidence in their health care or medical system. The average level of confidence for each country is entered in the last row of the last column of Table 3, where it has a positive and statistically significant coefficient. Of course, because this response is itself subjective, we do not know whether it is a useful indicator of the actual performance of the health care system. Put differently, both health satisfaction and healthcare confidence may be functions of third factors which themselves vary by region, time, or age group. It would certainly be unwarranted to interpret the last column of the table as evidence that health care systems are effective in delivering health.

The degree of confidence in the health care system varies widely from country to country, as shown in Figure 5, and although it is correlated with income, the correlation is weak. Almost all the inhabitants of high income countries are well-satisfied with their health care and medical systems; that the United States is an exception in this regard is well-known. Davis et al. (2007) find that while the United States does not lag in the effectiveness of healthcare, but does so in other dimensions such as equity, access, and safety. Experience is much more diverse among the low-income countries of the world, but people in some low-income countries such as Vietnam, Thailand, Malaysia, and Cuba have great confidence in their health care and medical system, and the majority of those in low-income countries show greater public confidence than does the United States, even though the people of those countries experience much worse health outcomes. The ranking of the United States in the World Poll (88 out of 120 nations, five of which do not have income data and so do not appear in Figure 5) is even worse than in WHO (2000), which ranked it 37^th out of 191 (the WHO ranked Sierra Leone 191^st which is only three places behind the US in the World Poll), though it should also be noted that the WHO’s methodology has been effectively challenged by several commentators, see particularly Williams (2001).

In spite of these arguments, reports of life satisfaction, at least on average, may provide a useful summary of the different components of peoples’ capabilities. Some of the results in this paper support that position, more so than I had originally expected. In particular, the very strong global relationship between per capita GDP and life satisfaction suggests that, on average, people have a good idea of how income, or the lack of it, affects their lives. It is not true that the people of India are as satisfied with their lives as the people of France, let alone Denmark; nor is it true that people in sub-Saharan Africa, or Afghanistan, or Iraq, or Cambodia, are as satisfied as people in India. Beyond that, the misery of many of the countries of Eastern Europe and the former Soviet Union seems plausible enough, as does the special misery of the elderly in those countries.

It is far from clear why questions of life satisfaction should be so closely related to national incomes. A good deal of the literature emphasizes the relative nature of such responses; when people answer such questions, they must surely assess their life satisfaction relative to some benchmark, such as their own life in the past, or the lives of those around them. Indeed, in their recent review, Clark, Frijters, and Shields (2007), argue that life satisfaction is sensitive to respondent’s income relative to those with whom they most closely associate, which implies that there should be no relation between average national life satisfaction and national income, unless there is some other aspect of national income that raises everyone’s life satisfaction together. A simpler interpretation of the World Poll findings is that, when asked to imagine the best and worst possible lives for themselves, points 10 and 0 on the scale, they use a global standard. Danes understand how bad life is in Togo and other poor places, and the Togolese, through television and newspapers, understand how good life is in Denmark or other rich countries. If this is correct, the high correlation is a consequence of the globalization of information, and could not have existed in its absence. Such an interpretation is also consistent with the Easterlin paradox. The “best possible life for you” is a shifting standard that will move upwards with rising living standards, so that we might expect the Danes to continue to report eight out of ten as national income rises, provided they stay in the same position in the global income rankings. Indeed, it is hard to see how they could do differently faced with a scale that has a maximum of ten. According to this view, average national life satisfaction will be a useful measure in the cross-section, but not over time.

When we turn to health and its effects on life-satisfaction, the poll results diverge from what would be required in a “capabilities approach” to an understanding of the sources of human well-being. Longer life expectancy surely enables people to do more with their lives, and is arguably the best single indicator of population health. Yet, conditional on income, longer life expectancy has no apparent effect on life satisfaction. Instead, it is changes in the expectation of life that seem to have an effect, no matter whether life expectancy is high or low. Even satisfaction with health, a more focused question, is not related to life expectancy. The extraordinary low health satisfaction ratings for Eastern Europe and the countries of the former Soviet Union are a testament, not to their poor population health, but to a decline in health among a population that was used to a better state of affairs. In the high-income countries, it is people in their 50s, not in their 60s or 70s, who report the least satisfaction with their health. Clearly, the health of people in their 50s is better than that of their elders, but this is an age when people experience serious health problems for the first time; perhaps it is not poor health that is hard to bear, but the first intimations of mortality. In the low-income countries, and particularly in Africa, where the joint evolution of man and parasites has ensured that, for hundreds of thousands of years, morbidity has been a constant companion throughout life (Iliffe, 1995), health satisfaction declines rapidly with age. But this pattern does not make health satisfaction a good indicator of health capabilities in the poorest countries. After all, countries with high rates of HIV prevalence do not systematically report poorer health satisfaction, a finding that is in line with earlier reports that self-reported health measures are often better in places where people are sicker, and presumably more adapted to being sick (Sen, 2002; Chen and Murray, 1992).

In spite of the positive relationship between life satisfaction and national income, and in spite of the plausibility of unhappiness and health dissatisfaction in the countries of Eastern Europe, neither life satisfaction nor health satisfaction can be taken as reliable indicators of population well-being, if only because neither adequately reflects objective conditions of health.