Tag Archives: Alternative Indicators

The Netherlands: small happy cities in a ‘madly cool country’

The population of the Netherlands is two-faced. When we are among ourselves, we like to complain: about our politicians, the weather, taxes, the healthcare system, declines in fixed jobs, and immigration. In this year’s elections, parties with populist policies won over 25% of the vote.

While we tend to be pessimistic about society as a whole, most people are very satisfied with their own lives. Despite our complaints, the Netherlands is one of the happiest countries of the world. Indeed, when we speak to foreigners, we paint a proud picture of our country. We speak of the Netherlands as a country that is hard-working but not too serious, innovative, well-organised, and with high standards of life. PM Rutte’s daily job is to tell Dutchmen they live in a ‘waanzinnig gaaf land’, which means something as a ‘madly cool country’. A Financial Times feature just before the elections broadly supported the claim.

Indeed, if we look at the stats, it is fair to say ‘The Netherlands second’, as the viral video presenting the country to President Trump did this year did. Dutch economist Mathijs Bouman mapped the Netherlands’ performance on a range of indicators, comparing various rankings on competitiveness, innovation and human development. His conclusion? The Netherlands is the best country of the world, second only to… Switzerland. Only when the World Happiness Report was added, the Netherlands jumped over the United States to second place.

The Netherlands second. Source: Mathijs Bouman, http://mathijsbouman.nl/nederland-is-het-beste-land-ter-wereld-op-zwitserland-na/

The Netherlands second. Source: Mathijs Bouman, http://mathijsbouman.nl/nederland-is-het-beste-land-ter-wereld-op-zwitserland-na/

Happiness: the last frontier

With good scores on so many levels, it is time to reach the last frontier: make society even happier. And the Dutch are getting to business: over the last years, society’s happiness and alternative indicators have gained more attention in the Dutch public debate. Last year, the Dutch Parliament supported steps to create a ‘Monitor Broad Well-being’, to better assess quality of life in the Netherlands.

A happiness atlas

Researchers and marketeers are also spending time on the topic. Recently, a study crowned the central Netherlands town of Ede the happiest city of the Netherlands.

The Atlas of Municipalities, prepared with the support of the Happiness Research Centre of the University of Rotterdam, compared happiness levels in the 50 largest towns. Mid-sized towns like Ede, Apeldoorn and Gouda rank to the top, while most of the larger cities like Groningen, Amsterdam and The Hague are on the bottom of the table. Rotterdam, the second-largest city, even closes the list of 50. The map below outlines the top-10 in turquoise, and the bottom 1o in red.

This map shows cities ranked 1-10 (in turquoise) and 41-50 (in red) in the Atlas of Municipalities. Source: Trouw, based on data of the Atlas. https://www.trouw.nl/home/het-geluk-is-te-vinden-in-een-middelgrote-stad-ede~aeb4553a/

This map shows cities ranked 1-10 (in turquoise) and 41-50 (in red) in the Atlas of Municipalities. Source: Trouw, based on data of the Atlas.

What is happiness, anyway?

Let’s dig in a little bit deeper into what this all means. First of all, what is happiness anyway? For the purposes of the study, it is “the extent to which an individual find satisfaction in their own life as a whole”. ‘Happiness’ is then measured via three metrics: an overall judgement of a respondent’s life satisfaction as a whole, the extent to which one is a happy human being, and the extent to which one felt happy in the last four weeks. Ede overall scored best at this, with 89% of the local population scoring at least an average of 7 out of 10 among the three.

Second, how is Ede different than others? The researchers identified seven factors that account for the differences in happiness levels across Ede and the other cities. These, include the size and composition of the population, the employment rate, health, religion, and the attractiveness of life in the city. That however doesn’t mean that Ede is the only city doing well on those factors, or on happiness. Overall, smaller cities tend to perform better than bigger ones: here, life is less chaotic, while there is more on offer than on the countryside.

Marginal differences

The differences between cities appear quite marginal and probably are not statistically significant. 17 out of the 50-sample score 88 or 89%, no fewer than 42 are in the 85-89% bucket, and even number last Rotterdam houses 82% of happy people. As such, the meaning of being ranked first, second, or even thirtieth, is fairly limited.

Other indices in the Atlas convey this point even more. The happiness index is only an annual theme of the Atlas, which annually compares cities on a range of metrics. Some of these metrics are pooled into indices, for instance mapping ‘attractiveness’ and social-economic performance.

The ‘attractiveness’ index aims to compare how attractive cities are as a place to live for the Dutch population. It looks at factors such as the jobs within range of the city, the share of owned and pre-war homes, distance to nature, and the culinary and cultural offer. The social-economic index, as the name says, looks at elements like employment, the population share on welfare and with low education levels, and the poverty rate.

Both rankings offer a radically different overview than the happiness ranking: ‘Happy’ Ede finds itself back at the 15th place as for its social-economic performance. ‘Unhappy’ Rotterdam is found a more attractive place to live than Ede (respectively 17th and 22nd on the attractiveness index).

Spotting strengths and weaknesses

The takeaway? Indices help to spot cities’ strengths and weaknesses, especially when you dig in the underlying data via the OECD-type dashboard approach the Atlas offers. But different measurements give different results. While it is fun to publish such rankings and see how our cities perform, one cannot a lot of value to small differences or annual movements in the Netherlands. And the key message remains that life in the Netherlands is good. We can be among 82% of happy fellow citizens, or among 89% in Ede. In this sense, the Dutch do live in a ‘madly cool country’, as Prime Minister Rutte said.

The World after GDP

Guano mining at the Chincha island off the Peruvian coast. Source: Wikipedia.

Guano mining at the Chincha island off the Peruvian coast. Source: Wikipedia.

Guano – basically bird dung with an exceptionally high quality as fertiliser – was a highly demanded product. Mainly found on Pacific islands off the coast of Peru it was a popular agricultural fertiliser since the 1840s. From the 1850s, demand sky-rocketed, and competition for guano deposits was fierce. It was guano that was at the basis of the United States imperialist tendencies. The Guano Island act of 1856 allowed US citizens to take control of unclaimed islands.

Why is this relevant, and what does it have to do with GDP?

Guano soon made the people mining it rich. But the environment suffered: it took few decades to exhaust all reservers and leave the islands containing deposits bare. Favouring short-term economic gain over long-term environmental sustainability destroyed the islands.

Guano is just one example, but fits a long human tradition of discovering, using, and then exhausting precious resources, without batting an eye about the environmental consequences – very often driven by the desire to achieve economic growth and increase GDP. But compared to the 1850s, we have a lot better understanding of how these patterns go, and a larger awareness that alternative strategies are possible.

The World Before and During GDP

The World After GDP by Lorenzo Fioramonti. Editor: Polity books

The World After GDP by Lorenzo Fioramonti. Editor: Polity books

The World After GDP, a new book by Lorenzo Fioramonti, offers some of thoughts to escape this trap. It starts by the notion that today, with the exceptions of few isolated and traditional populations, human beings above all are consumers. Private consumption is what is at the basis of GDP and keeps economies going.

GDP however has a bit different origin: it started as a tool to help the English king and French sovereigns in the 17th and 18th century determine how much tax their populations could sustain. The modern institution of GDP developed as of the 1930s, when economic Simon Kuznets helped the US administration understand the national income. Over time, GDP evolved from a metric to see the size of the economy to a goal per se.

Revise GDP, but don’t dethrone in favour of another flawed indicator

The beyond GDP argument that Fioramonti also makes has already been widely discussed on this blog. Fioramonti discusses, and welcomes, the many contenders of GDP. He dedicates some attention to the Human Development Index, the OECD’s Better Life Index, Gross National Happiness, the Social Progress Index, and more. He also notes that the criticism has resulted to some top-down changes to GDP, such as statistical revisions to add up the black market to national economy. The change to consider investment in research as a benefit rather than a cost is another example.

The Nordic leaders (Sweden, Norway, Denmark, Finland, Iceland) poking fun at US President Trump and Saudi king Salman

The Nordic leaders (Sweden, Norway, Denmark, Finland, Iceland) poking fun at US President Trump and Saudi king Salman. What if they would lead the G7?

Ultimately, Fioramonti very sensibly states that all those alternative indicators, like GDP itself, only display one approach to wellbeing. Therefore he speaks out against replacing GDP by another, again inherently subjective and likely flawed, indicator. At the same time, these sections are full of careful reflection on the beyond GDP revolution, and contain interesting ideas. For instance, his mapping of alternative G7 is provided an interesting narrative. The strongest 7 countries of sustainable development does not contain any of the largest economies, but brings Costa Rica, Colombia, Panama, Ireland, South Korea, Chile and New Zealand together. The G7 of happiest countries includes Denmark, Switzerland, Iceland, Norway, Finland, Canada and the Netherlands. A G7 lead by these countries would be, well, a lot of different.

A bottom-down revolution?

Apart from the top-down changes, Fioramonti also sees a bottom-up pressure on GDP. This is where his book stretches beyond the usual beyond GDP literature. While he has a point that there is an increasing community of ‘de-growth’, authentic consumption, local produce and peer-to-peer services, the question is how much we really should read into this. Does someone who drinks a regional craft beer really has his lower contribution to GDP in mind when he sips away, or does he simply value the idea of getting something from close by?

And, isn’t there a lot in the ‘sharing economy’ that has little to do with sharing? AirBnB and Uber, referred to at multiple occasions by Fioramonti, do not only have positive effects. For instance, in reducing the cost of a car ride in New York, Uber drives people out of the metro and into congested traffic. AirBnB makes it easier for people to travel, but creates it own ‘buy to rent on AirBnB’ market, pushing residents out of inner cities and seeing them replaced by one-time consumers. Modern technologies thus simply are used to generate returns in a more modern way. While the book is well thought through and a worthy read, it may stretch the argument a bit to call this a post-GDP world.