Nov 18, 2008
Faster Economic Growth Hurts Life Satisfaction in Latin America and the Caribbean
Costa Ricans have the highest life satisfaction and Haitians the lowest in ground-breaking study on quality of life perceptions
People in countries that have experienced fast economic growth in recent years are less satisfied with their lives than people in nations with slower growth rates, according to a new study by the Inter-American Development Bank (IDB). The study is the latest edition of the Development in the Americas series, the IDB’s flagship publication.
Satisfaction in Trinidad and Tobago, Chile, Peru and Ecuador, countries with the fastest growth in the region in recent years, is lower than in nations such as Guyana, El Salvador, Paraguay and Guatemala, whose economies showed little or no growth.
The study, an unprecedented look into people’s perceptions in the region, uses data from the Gallup World Poll and information commissioned by the Bank to complement the survey. Citizens of Latin American and the Caribbean were asked how they perceived key aspects of their lives including the quality of education, healthcare, housing and employment, providing some surprising and on occasion counter-intuitive responses.
Satisfaction rates are not necessarily highest in the wealthiest countries or in those with the best social services or the fastest growth. Countries in the region with high per capita income, such as Brazil, Argentina, Chile and Uruguay showed moderate levels of life satisfaction, trailing countries with lower per capita income such as Guatemala, Colombia and Jamaica.
“Overall, Latin Americans are satisfied with their lives, but interestingly, people in some of the poorest countries are the most optimistic while citizens of some of the most-developed countries are the most pessimistic,” said IDB President Luis Alberto Moreno. “Not surprisingly, people with higher incomes are more satisfied with their lives than those with lower incomes, but economic growth actually breeds discontent rather than greater happiness, at least in the short run.”
Perceptions can be affected by cultural differences and a country’s recent economic progress. The study shows that fast economic growth will prompt people’s aspirations for a better life style to rise even faster. The rapid changes in the economy, and not just the level of income or consumption, end up affecting the level of satisfaction in the short run.
“Governments that focus their policies exclusively on growth are bound to lose support in the long run if they do not respond to the higher expectations that accompany growth in areas ranging from education and health to income distribution,” explains Eduardo Lora, IDB’s chief economist and coordinator of the study. “The difficulty lies in responding to these demands without killing growth.”
Life satisfaction in Latin America and the Caribbean was calculated using data from the Gallup 2007 World Poll. Participants in the poll were asked to rate their life satisfaction from zero to ten, with zero being the lowest rating possible.
Download full report here.
