Increasing GDP per person explains a significant part of life satisfaction or happiness and longer and healthier lives

A few days ago Nextbigfuture noted that China’s one belt one road plan is to spend 9% of China’s GDP over decades to build out the ports, airports, rail, factories and cities of countries in Asia and Africa and Europe as China’s develops a modern Silk road. This spending of trillions of dollars will boost many of the countries in Asia and Africa from poor and developing to near developed or fully developed.

Most of the countries on the silk road have a per capita GDP that is less than half of China’s. The per capita GDP of Africa’s countries are also very low.

Several commenters have argued that being a developed country is not a desirable thing.

The Economist had found that gdp per person explains more than 50% of the inter-country variation in life satisfaction, and the estimated relationship is linear. Surveys show that even in rich countries people with higher incomes are more satisfied with life than those with lower incomes. In 24 out of 28 countries surveyed by Eurobarometer, material wellbeing is identified as the most important criterion for life satisfaction

The most obvious explanation behind the connection between life expectancy and income is the effect of food supply on mortality. Historically, there have been statistically convincing parallels between prices of food and mortality. Higher income also implies better access to housing, education, health services and other items which tend to lead to improved health, lower rates of mortality and higher life expectancy. It is not surprising, therefore, that aggregate income has been a pretty good predictor of life expectancy historically.

If we look at the world today, however, the relationship between income and life expectancy begins to weaken once income reaches a certain level.

It could be argued that in emerging and developing countries, where labor tends to be very cheap, it makes sense to invest in labour-intensive services such as sanitation and healthcare as their net cost to society is actually very low, and gains can be substantial. Fighting obesity and smoking – two increasingly pressing issues in the developed world – could add more healthy years to life expectancy averages in today’s rich countries.

Yes, a richer country can screw up the gains of life satisfaction (happiness proxy) and health and longevity but it is still better to be richer than poorer.

OECD countries do not move around that much based on adjusting the factors that make up a better life index. Here I used the interactive OECD tool to focus on health, safety, life satisfaction and environment. The rankings still tie closely to increasing GDP per capita.