When it comes to measuring wellbeing, there’s a lot more to it than simply determining how much income you earn. That’s why, rather than relying on Gross Domestic Product (GDP) as to measure a country’s wellbeing, the Organisation for Economic Co-operation and Development have compiled a new ‘better life index’.
With the ‘better life index’, the Organisation measures each of its 34 member countries’ wellbeing, using 21 indicators across 11 dimensions. These cover areas such as income, jobs, housing, health, work/life balance, education, social connections, civic engagement, environmental quality, personal security and life satisfaction.
Interestingly, of the 34 countries indexed (including the original 23 ‘rich’ countries, six former communist countries plus Mexico, Chile, Turkey, Israel and South Korea) Australia ranks highest overall, followed closely by Canada, and Sweden.
However, while there is a strong correlation between a country’s level of GDP (per person) and their score on the better life index, once a country has reached a certain level of affluence this correlation becomes weaker. In other words, while income is essential to a nation’s wellbeing up to a certain point, once a country has joined the ‘rich countries’, a little extra income makes little difference.
So what does this all mean to us as individuals? Basically, the ‘better life index’ is just another reminder of what research has been telling us for years. While attaining a level of financial security is essential to wellbeing, what is even more important is how we use our money to build our lives.
For a more in depth analysis of the correlation between GDP and the better life index, as well as an up close look at how Australia ranks against the US, take a look at Ross Gittins’s SMH article, and video here.
For help planning your finances to lead a happier and more fulfilling life, contact ipac today. At ipac, we strongly believe in planning for your life, not just your money, and specialise in helping you get more happiness bang for your buck.