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VIDEO: The World’s Happiest Countries

Posted on: April 5, 2011

Think about it for a minute: What does happiness mean to you?

For most, being happy starts with having enough money to do what you want and buy what you want. A nice home, food, clothes, car, leisure. All within reason.

But happiness is much more than money. It’s being healthy, free from pain, being able to take care of yourself. It’s having good times with friends and family.

Furthermore, happiness means being able to speak what’s on your mind without fear, to worship the God of your choosing, and to feel safe and secure in your own home.

Happiness means having opportunity–to get an education, to be an entrepreneur. What’s more satisfying than having a big idea and turning it into a thriving business, knowing all the way that the harder you work, the more reward you can expect?

With this in mind, five years ago researchers at the Legatum Institute, a London-based nonpartisan think tank, set out to rank the happiest countries in the world. But because “happy” carries too much of a touchy-feely connotation, they call it “prosperity.”

Legatum recently completed its 2010 Prosperity Index, which ranks 110 countries, covering 90% of the world’s population.

To build its index Legatum gathers data from 12 sources the Gallup polling group, the Heritage Foundation and the World Economic Forum. Each country is ranked on 89 variables sorted into eight subsections: economy, entrepreneurship, governance, education, health, safety, personal freedom and social capital.

The core conceit: Prosperity is complex; achieving it relies on a confluence of factors that build on each other in a virtuous circle.

“To use economic measurements alone to gauge the success of a nation would be equivalent to assessing the entire condition of a man simply by looking at his bank balance,” writes Peter Mandelson, former U.K. economic minister.

To that end, the inputs used to create the index are both objective and subjective: that’s because it’s not enough to know hard data like a country’s unemployment or inflation rates. It also matters how hard people think it is to find jobs, how convinced they are that hard work can bring success.

This can get complicated. In Nepal, for example, inflation is 11%, unemployment 46%. Yet a surprisingly high 50% of the people say they are satisfied with their standard of living and 81% have confidence in their banks. Could be they’re scared of voicing their true opinion in a shaky democracy, or maybe the Nepalese are just endemically happier people. Legatum adjusts for this, adding a variable called “ability to express political opinion without fear.”

What’s the most prosperous country in the world? Norway. What’s it got that the rest of the world doesn’t? The biggest bump comes from having the world’s highest per capita GDP of $53,000 a year. Norwegians have the second-highest level of satisfaction with their standards of living: 95% say they are satisfied with the freedom to choose the direction of their lives; an unparalleled 74% say other people can be trusted.

Cynics (particularly those leaving comments on Legatum’s excellent website) say Norway’s ranking is a fluke, that it’s a boring, godless (just 13% go to church) homogeneous place to live with a massive welfare state bankrolled by high taxes. Without massive offshore reserves of oil and gas that it exports to the world through state-controlled Statoil ( STO – news – people ), Norway’s GDP would be far smaller.

And yet joining Norway in the top 10 prosperous countries are its Scandinavian sisters Denmark, Finland and Sweden, with equally small and civilized Switzerland and the Netherlands also in the club. None of these countries are blessed with great hoards of oil and gas.

Here are the Top 3: 1.Norway (in picture above), 2.Denmark and 3.Finland

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