Why Are Nordic Countries So Happy?

Author: Jessica Yu, Graphic Designer: Acasia Giannakouros

The BRB Bottomline:

Why are citizens of Northern European countries, long associated with cold and dark weather and social isolation, some of the happiest people in the world? In this article, Community columnist Jessica Yu will examine the factors contributing to high levels of Nordic happiness and their long-term sustainability.

British businessman Cecil Rhodes once said in the 1800s, “to be born English is to win first prize in the lottery of life.” Today, Rhodes’ words may still ring true, if you replace “English” with “Nordic.” Nordic countries, referring to a set of five nations — Iceland, Denmark, Norway, Sweden, and Finland — are not only ranked among the top spots for human development, but also for happiness

But why are these countries so “happy?” Upon first glance, many of these countries have the reputation of being socially distant due to low temperatures, and are associated with cold, monochromatic designs, which do not align with traditional connotations of “happiness.” Hence, the source of the happiness of Nordic citizens is an especially interesting phenomenon that is worthy of discussion and further investigation.

The Recipe for Happiness

Ingredient #1: Trust

To begin, one of the leading contributions to the happiness of Nordic countries is the high level of trust between citizens, which leads to social cohesion. This so-called social cohesion leads to an increased level of trust, which can make living in a community a more pleasant experience. Notably, four Nordic countries, including Denmark, Norway, Sweden, and Finland, are among the top countries in measures of social cohesion

High levels of trust in Nordic countries can be attributed to a large degree of mutual understanding between citizens. To understand mutual understanding in Nordic countries, it is important to investigate the modern history of the region. The development of the economic structure of many Nordic countries was not centered around corporate-owned farms, but rather through family-driven agriculture. Therefore, due to this ownership structure, the division of class in Nordic nations is not as dramatic as that of other capitalist societies, such as the Americas or other parts of Europe. Furthermore, because Nordic citizens face similar sets of problems and difficulties as a result of this shared ownership structure, it is easier for them to relate to fellow citizens. Thus, it is naturally easier for Nordic people to achieve “connectedness to other people, good social relations, and a focus on the common good,” the definition of social cohesion, according to the World Happiness Report’s official report

It is also worth mentioning that trusting fellow citizens, and even the government, can combat nationwide sources of “unhappiness” as well. For example, research found that trust is “essential for a country in terms of securing a quicker rebound from a crisis.” Cooperation is crucial when facing disasters such as earthquakes, floods, or economic crises, and a high level of trust between citizens can make finding solutions more efficient when high levels of collaboration are critically in need. 

Ingredient #2: Quality of Public Services

A second defining characteristic that stands out among Nordic countries is their high quality of institutional services. The World Happiness Report divides government quality into two dimensions: the democratic dimension, in which institutional quality is measured by how much access to power is provided to citizens; and the delivery dimension, in which institutional quality is measured by assessing the government’s ability in exercising power. 

There is no doubt that Nordic countries espouse a very democratic culture, as citizens are granted an abundance of freedom to make life choices. Moreover, the delivery dimension is more correlated with life satisfaction, and the governments of Nordic countries are among the top on any scale and ranking of government efficiency — the institutions are very efficient and effective in improving citizens’ well-being. For starters, when compared with the American government, Nordic governments stand out for being very efficient in government spending. As a case in point, the Swedish government, starting in 2000, also controls a strict budget surplus of 1% during each economic cycle. In addition, government intervention has afforded the citizens additional rights and privileges that are not often found in other countries. For example, the Danish government allows firms to fire workers easily, but employers also have a notice period of dismissal, which ensures that employees have an adequate amount of time to secure new employment. 

While granting citizens more benefits and rights than their American counterpart, the governments of Nordic countries are also a lot more adept in allocating their tax revenues to essential policies that efficiently benefit citizens. As expected, Nordic governments spend much on more institutional services as a proportion of their GDP than the American government does. However, the governments of Finland, Denmark, and Norway actually also have spent a smaller percentage of the country’s GDP on the same basket of services provided to Americans with better quality and results. Not only are the citizens trustworthy of each other, but the governments also have earned credibility from citizens by delivering successful policies and effective institutional services.

Ingredient #3: Equality

Lastly, Nordic countries are well-known for their low levels of income inequality, a contributing factor to why Nordic countries enjoy high levels of happiness.

The most straightforward way to look at the income inequality of a country is through its Gini coefficient, of which Iceland, Denmark, Norway, Sweden, and Finland all had between 0.244 and 0.300 in 2018. As defined by the UN, a Gini coefficient between 0.2 to 0.3 indicates “relative equality” (while a Gini coefficient of 0.3 to 0.4 is considered very good). With relatively low levels of income inequality, social mobility in society is high; money is mostly granted to those who work hard regardless of their socioeconomic status at birth, as opposed to through factors such as generational wealth. 

However, it is also important to note that according to the World Happiness Report article, after controlling the GDP per capita of countries, the correlation between income equality and happiness is unclear. Hence, the effect of income inequality on happiness needs to be viewed with a full picture of society in mind and the effect of other factors should be considered. There are also criticisms regarding how too much equality in the system leads to relatively low productivity and thus limits economic growth. Pressures from specific social conditions also exist, such as an increasingly aging population and an increasing number of immigrants who might not necessarily be used to unique Nordic cultural practices.
Nevertheless, even if equality has its consequences, it also creates perceptions of fairness and a sense of security, increasing the mental well-being of citizens. Therefore, the relative economic equality of Nordic societies is indeed a source of life satisfaction, but after critical assessment, it might not be as dominant a factor as the previously mentioned two factors.

The Future of Nordic Nations

The COVID-19 pandemic and its aftermath, such as nearly world-wide inflation and the strong possibility of a recession, have certainly worsened global economic conditions; we don’t know yet how it will affect Nordic countries in the future. For years, Nordic citizens have been accustomed to egalitarian policies and trustable governments that had generously benefitted them. However, if the economy can no longer support the current high amounts of government spending, or if resources are shifted away from citizens to fight inflation, Nordic residents may be at risk for being more unhappy than other regions because of their high expectations.
Despite these new pandemic-induced challenges, the social programs of Nordic nations still currently seem quite successful. While the Nordic model may not be completely suitable for other countries, or even sustainable in the long-term, it can still inform our understanding of how other regions around the world can be improved. Key ingredients for its success thus far, such as social cohesion and low levels of inequality, are phenomena to study, and potentially emulate, that could benefit individuals worldwide.

Take-Home Points

  • Nordic countries have always been the “happiest” nations, regardless of low temperature and relative geographic isolation. 
  • Historical factors and the unique agricultural ownership structure in the region have led to high levels of trust among citizens, which allows them to come together when faced with domestic challenges. 
  • Governments of Nordic countries are very efficient at delivering power and services, allowing citizens a wide range of high-quality services and benefits without being in an unreasonable amount of debt.
  • Relative economic equality has ensured a level of fairness of work in the society, albeit having controversies in recent years.
  • It is questionable whether the “Nordic model” is sustainable in the long-term and would be suitable for other countries, but we can continue to learn from it.

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