OECD Better Life Index Ranking
Luxembourg performs relatively well compared to other countries in the OECD index, being top in income and wealth, above average in social connections, civic engagement, work-life balance, and other factors, but below average in the education sector. Although money cannot buy happiness, it allows people in Luxembourg to achieve higher living standards. Based on the report, the average household income per capita is USD 39, 264, higher than the OECD average of USD 33,604 a year, with a considerable gap between top 20% richest versus poorest communities. Conclusively, people in Luxembourg have a satisfaction rate of 74% compared to the OECD average of 72%.
Happiness Index Ranking
Based on the 2021 UN World Happiness Report, Luxembourg increased in its rank of 10th place in 2020 to 8th place in 2021, due to the good economic performance of the country amidst the pandemic.
No survey in 2020
The authors of the World Happiness report conducted interviews with residents of different countries to assess their varying levels of happiness. The data collected was then crossed with the national GDP, the international indices of solidarity, freedom, or corruption, which allowed Luxembourg to improve its ranking in 2021. Although Gallup did not conduct a survey in 2020, the average happiness score was build on the figures during the 2018-2019 survey. A key factor in the improved ratings was Luxembourg’s resistance of the economy during a world health crisis.
John Helliwell, one of the experts who conducted this study also reported that the people perceived the pandemic as a “common and external threat that harms everyone and that resulted in a greater sense of solidarity and empathy”, explaining the noticeable figures in this indicator to evolve positively similar to Luxembourg’s case.
Happy Planet Index Ranking
Luxembourg ranked 139th out of 140 in the Happy Planet Index, which demonstrates the inefficiency of their economy despite having one of the countries with the highest GDP per capita. For life expectancy and well-being, Luxembourg ranks 16th globally and has low levels of inequality when it comes to these indicators. Although it excels in those social components, its HPI score is heavily affected by its massive Ecological Footprint, with one of the biggest in the world by a significant margin.
General Trends
Luxembourg GDP/ per capita vs Happiness Index (2009-2019)
Graph Analysis
Over the years 2009-2019, there has been an evident positive correlation between the income or GDP per capita and the Happiness score of Luxembourg. Although there is a notable relationship, it cannot be deduced that one is the causation for another. Money allows people to achieve higher quality of life, such as purchasing cars, but also can inversely affect their well-being by causing a massive Ecological Footprint.
Regardless of this, Luxembourg has said to be improving its well-being over time. Angel Gurría, OECD Secretary-General mentioned in his 2019 speech that, “Luxembourg is in an enviable position, with growth that outpaces its neighbours and high levels of well-being for its citizens. However, some of its challenges is “to ensure that Luxembourg remains prosperous and that this prosperity is widely shared, through reforms that enhance economic resilience, inclusiveness, and sustainability.” One of the key focuses on his speech is addressing the housing situation by making construction more expensive to hold unused land. This would be conducted by “introducing land value taxes on land zoned for housing construction, or by imposing sanctions for failing to use building permits.” This is only one of the problems that Luxembourg seeks to address to improve the wellbeing of its citizens.
Read the full speech: https://www.oecd.org/about/secretary-general/economic-survey-of-luxembourg-july-2019.htm
Overall, looking across different well-being indexes would be considered more reliable compared to GDP per capita. As aforementioned, having higher income allows citizens to achieve a better quality of life; However, this cannot be mistaken as a causation for a higher happiness index. Therefore, I would advise looking into best measures of performance (OECD, Happiness Index, Happy Planet Index). These measures can provide the government with reliable data to identify problem areas and effectively seek solutions for the betterment of its citizens and Luxembourg’s economy.
http://happyplanetindex.org/countries/luxembourg
https://www.oecd.org/about/secretary-general/economic-survey-of-luxembourg-july-2019.htm
