Investors who are looking for a new vantage point on the global economy should spend an hour with this year’s edition of the World Happiness Report.
The report, from the Wellbeing Research Centre at the University of Oxford, attempts to scientifically measure happiness around the globe.
To be sure, happiness is a fickle thing to gauge. However, the report, now in its 12th year, conducts its work with a high level of statistical rigour. It begins with survey data on life satisfaction in 143 countries collected by pollster Gallup. The data is then prodded and poked by an international team of economists, including John Helliwell of the University of British Columbia.
The 2024 report, published this week, points to two trends that should concern Canadian investors.
The first is the lacklustre performance of Canada and the United States in terms of creating happiness. The second is the increasingly sour mood among young people in both countries.
Start with the big picture: Canada, the fifth happiest country in the world in 2012, is now only 15th of 143. The U.S., No. 11 in 2012, has sunk to No. 23.
Both North American countries now rank far behind the global happiness leaders – Finland (No. 1), Denmark (No. 2) and Iceland (No. 3).
What has caused such a big relative decline for Canada and the U.S.? In part, their slippage is because of good news elsewhere. Costa Rica and Kuwait, for instance, have shot up the life-satisfaction rankings and now occupy positions 12 and 13. The rise of these and other new happiness stars has helped push down Canada and the U.S. in the rankings.
But the decline of the North American duo also reflects a darkening mood at home. Both Canada and the U.S. are experiencing an epidemic of gloom among their young people.
In both countries, young people are far less satisfied with their lives than their parents are with theirs.
No country for the young
Boomers are doing fine. But younger Canadians are becoming
increasingly disgruntled. (Life satisfaction measured on a self-
reported 10-point scale, with 10 being happiest.)
8.0
Born
before
1965
7.5
7.0
Born
1965-
1980
6.5
Born
after
1980
2008
2013
2018
2023
the globe and mail, Source: World Happiness Report
No country for the young
Boomers are doing fine. But younger Canadians are becoming
increasingly disgruntled. (Life satisfaction measured on a self-
reported 10-point scale, with 10 being happiest.)
8.0
Born
before
1965
7.5
7.0
Born
1965-
1980
6.5
Born
after
1980
2008
2013
2018
2023
the globe and mail, Source: World Happiness Report
No country for the young
Boomers are doing fine. But younger Canadians are becoming increasingly disgruntled.
(Life satisfaction measured on a self-reported 10-point scale, with 10 being happiest.)
8.0
Born
before
1965
7.5
7.0
Born
1965-
1980
6.5
Born
after
1980
2008
2013
2018
2023
the globe and mail, Source: World Happiness Report
The gaps are huge. Canada ranks a dismal 58th in the world for happiness among people under 30 – about the same as Honduras or Ecuador. In contrast, it ranks an impressive eighth in the world for happiness among people aged 60 and over.
Similarly, the U.S. ranks 62nd for happiness among the young, but 10th for happiness among seniors.
It wasn’t always this way. At one time, the under-30 crowd was notably happier than the middle-aged and just as happy as the old. But in Canada and the U.S. (as well as in Australia and New Zealand), happiness has fallen by twice as much for the young as for the old since 2010, according to the happiness researchers.
Could growing youth unhappiness be the result of social media or job insecurity? Maybe, but gloomy youth aren’t a universal phenomenon. In central and eastern Europe, the North American pattern is flipped.
Young people in those regions are considerably happier than the old, with many countries ranking more than 40 places higher for the under-30 set than for the over-60 contingent.
According to the happiness report, young people in places such as Lithuania, Serbia and Romania are now more content with their lives than young Canadians or young Americans.
This is a remarkable and disturbing finding. Unemployment in Canada and the U.S. is low and economies are growing at a decent clip, but young people in both countries appear to feel far glummer than the broad economic numbers would suggest they should.
The report points to many possible explanations, including social ties and pandemic after-effects. Let’s add three thoughts from an investor’s perspective.
The first is that it is hard to overlook the potential role of real estate prices in these happiness shifts. Several of the countries where youthful happiness has slumped in recent years – notably Canada, the U.S., Australia and New Zealand – are also ones where home prices have soared.
It’s easy to understand why young people locked out of the housing market might feel disenchanted. It’s also easy to understand why older people, sitting on big real estate gains, might feel just fine.
A second point that follows from this is the potential for political fireworks in Canada and the U.S. Masses of deeply unhappy young people seem likely to demand radical change if the current intergenerational happiness gap continues to swell.
Finally, it’s intriguing to think about how happiness ratings may point to investing opportunities. Widespread satisfaction with life, especially among the young, would seem to go hand-in-hand with improving economies and a sense of optimism about the future.
Investors who want to bet on that relationship should note how thoroughly European countries dominate the rankings for happiness among under-30s. Nine out of the top 10 countries for youthful happiness are in Europe. (The only non-European country among the top 10 is Israel, where survey data was collected before the Oct. 7 attacks.)
The relatively high level of happiness among under-30s in Europe suggests that the continent isn’t the economic basket case that many North American investors assume it to be. Some market strategists – notably Beata Manthey at Citigroup – have been arguing what they see as a compelling case for European stocks. Maybe it’s time to start paying attention.
Ian McGugan