Economists can measure unemployment, GDP growth, and housing prices. But do they know how to measure happiness? If they did, what would we even do with the results?
Each year, the OECD produces the Better Life Index, a comprehensive report on the well-being of advanced countries based on a long list of factors, including income, housing, and life satisfaction. In the 2012 survey released this week, Australia took the top spot. The U.S. finished third.
Does that mean Australia is objectively the best place to live in the world? Absolutely not. Even the architects of the index would tell you that the "good life" is utterly subjective, and different people have different values. If you equally measure income and work-life balance (two real metrics in the OECD study), you assume that everybody in the world values money and down-time the same. In the real world, some people like smaller houses, some prefer long vacations, and some choose to work in banking because they like having money and don't care for down-time.
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