Each year, the World Happiness Report attracts attention with rankings that label some countries as the “happiest” and others as the “unhappiest.” These lists often spark national pride, disappointment, debate, or even competition. However, while very informative, such rankings overlook an important point: They compare countries without considering differences in their starting conditions.
To illustrate, consider two factories, one large and one small. The large factory produces more goods in total, but it also has substantially more machines, workers, and resources. The small factory produces less in absolute terms, yet relative to its size and resources, it may actually be more efficient. Evaluating the small factory by the same standards as the large one would fail to recognize its superior efficiency relative to its means.
The same logic applies to nations and happiness. Wealthier countries tend to report higher life satisfaction than poorer ones, but wealth alone does not determine how happy a nation is. Certain low-income countries are remarkably efficient at generating happiness, while certain wealthy countries underperform relative to their resources.
In my recent study, published in the European Journal of Social Psychology, I developed a new measure, wealth-adjusted life satisfaction (WALS), to capture this difference. WALS asks not just “how happy is this country?” but also “how happy is this country given its wealth?” In other words, how effectively does a country turn economic resources into subjective well-being?
The findings, based on data from 116 countries, challenge one of the most common assumptions about happiness: that wealth automatically brings happiness. Instead, the results reveal a more complex, and more hopeful, story.
A new way to compare countries
Standard life satisfaction scores are closely linked to national wealth. The correlation between GDP per capita and average life satisfaction is very strong, meaning that wealthier countries generally rank higher, while poorer nations tend to cluster near the bottom.
However, this approach overlooks important nuances: Countries with similar GDP levels can display very different levels of happiness. By adjusting life satisfaction scores for GDP per capita, WALS provides a more context-sensitive measure of well-being. Statistically, WALS is derived by removing the portion of life satisfaction explained by wealth. This study calculated WALS scores for 116 countries using data from the 2020 Gallup World Poll. The resulting global map of WALS and the country rankings are presented below. A positive WALS score indicates that a country is happier than its wealth would predict, a negative score indicates lower-than-expected happiness, and a score near zero suggests that a nation’s happiness aligns with expectations given its wealth.
Surprising winners and losers
When countries are ranked by WALS, the list looks different from the familiar World Happiness Report.
Some of the top performers are relatively low-income nations. For example, Nicaragua, Nepal, and Kyrgyzstan all score much higher on WALS than their GDP would suggest. Despite limited material resources, citizens in these countries report life satisfaction levels that rival or exceed those of far wealthier countries. On the other hand, some affluent places underperform. South Korea, Hong Kong, and Bahrain, all with relatively high GDP per capita, report lower levels of happiness than expected. These societies produce substantial wealth but seem less effective at turning it into subjective well-being.
The analysis also revealed distinct regional patterns, as shown below. North America and Australia–New Zealand reported the highest wealth-adjusted life satisfaction as regions, indicating that these regions not only experience high absolute happiness but also perform well relative to their wealth. In contrast, East Asia and the Middle East/North Africa (MENA) regions scored lowest on WALS.
What explains why some nations achieve greater happiness with fewer resources? To address this question, I examined a broad set of social, cultural, and psychological variables. Several factors emerged as particularly important, as countries with high levels of these factors tend to have higher WALS scores:
- perceived job quality (satisfaction with the psychological aspects of work, including autonomy and engagement);
- a sense of freedom to make decisions;
- experiences of enjoyment; and
- social capital (including volunteering, helping others, and opportunities to form new friendships).
Country clusters
When countries were grouped by both wealth and WALS using a clustering algorithm, three distinct patterns emerged:
Cluster 1: Countries with low WALS scores across a wide range of wealth levels. The nations in this cluster are underperforming to varying degrees in converting resources into happiness.
Cluster 2: Wealthy countries that also score high on WALS, indicating that they effectively translate their high wealth into high subjective well-being.
Cluster 3: The most impressive group, countries with low GDP per capita but surprisingly higher life satisfaction than expected given their wealth levels. Despite economic challenges, many of these nations manage to generate levels of life satisfaction comparable to or higher than their much richer counterparts. Additional analyses showed that this cluster of countries is characterized by collectivist and religious values, relatively high perceived job quality, and strong prosocial engagement. This final cluster shows that happiness is not the exclusive domain of wealthy nations once context is taken into account.
Why this matters
These findings have several implications.
First, they challenge the assumption that national wealth alone determines happiness. While higher income provides resources that can support well-being, it is not sufficient. Societies that focus solely on economic growth may overlook other essential drivers of life satisfaction, such as job quality, a sense of personal freedom, strong social connections, and positive emotional experiences. Policies that combine economic development with investments in these non-economic factors are more likely to foster lasting improvements in national well-being.
Second, the results highlight that unadjusted life satisfaction rankings, such as those in the World Happiness Report, capture only one dimension of national happiness. Measures like WALS, which account for wealth, provide a complementary perspective for studying well-being beyond GDP.
Finally, the findings suggest that some lower-income nations offer valuable lessons. International comparisons often assume that knowledge flows from rich countries to poorer ones, yet WALS shows that some low-income societies have effective ways to sustain happiness despite material constraints. Recognizing these strengths creates opportunities for mutual learning across cultures and regions. WALS reveals a world more diverse in its capacity for happiness than standard rankings suggest, reminding us that no nation, rich or poor, holds a monopoly on the good life.
The study’s findings suggest that nations are not only distinguished by their levels of wealth or average life satisfaction, but also by how effectively they transform prosperity into subjective well-being. This points to an often-neglected ambition for societies: Rather than focusing solely on raising incomes or boosting survey scores of happiness, the deeper challenge is to ensure that resources are converted efficiently into lives of meaning and fulfillment.
The question then becomes: What practices or values allow some countries, regardless of income, to achieve more with what they have, and what might the rest of the world learn from them? By looking beyond economic measures and toward cultural, social, and psychological insights, we can begin to understand the conditions that best sustain flourishing communities. For policymakers, this perspective presents both a challenge and an opportunity: Because it is rarely part of conventional political or economic debate, there is an urgent need to introduce it into the public arena through a scientific lens.
Ultimately, building societies that prioritize the wise use of resources for human well-being may be the clearest path toward a more hopeful and humane future.