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The Relationship Between Money and Happiness

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Charting the Relationship Between Money and Happiness

Charting the Relationship Between Money and Happiness

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Can money buy you happiness?

It’s a longstanding question that has many different answers, depending on who you ask.

Today’s chart approaches this fundamental question from a data-driven perspective, and it provides one potential solution: money does buy some happiness, but only to a limited extent.

Money and Happiness

First, a thinking exercise.

Let’s say you have two hypothetical people: one of them is named Beff Jezos and he’s a billionaire, and the other is named Jill Smith and she has a more average net worth. Who do you think would be happiest if their wealth was instantly doubled?

Beff might be happy that he’s got more in the bank, but materially his life is unlikely to change much – after all, he’s a billionaire. On the flipside, Jill also has more in the bank and is likely able to use those additional resources to provide better opportunities for her family, get out of debt, or improve her work-life balance.

These resources translate to real changes for Jill, potentially increasing her level of satisfaction with life.

Just like these hypotheticals, the data tells a similar story when we look at countries.

The Data-Driven Approach

Today’s chart looks at the relationship between GDP per capita (PPP) and the self-reported levels of happiness of each country. Sources for data are the World Bank and the World Happiness Report 2017.

According to the numbers, the relationship between money and happiness is strong early on for countries. Then later, when material elements of Maslow’s hierarchy are met, the relationship gets harder to predict.

In general, this means that as a country’s wealth increases from $10k to $20k per person, it will likely slide up the happiness scale as well. For a double from $30k to $60k, the relationship still holds – but it tends to have far more variance. This variance is where things get interesting.

Outlier Regions

Some of the most obvious outliers can be found in Latin America and the Middle East:

Latin America vs. Middle East

In Latin America, people self-report that they are more satisfied than the trend between money and happiness would predict.

Costa Rica stands out in particular here, with a GDP per capita of $15,400 and a 7.14 rating on the Cantril Ladder (which is a measure of happiness). Whether it’s the country’s rugged coastlines or the local culture that does the trick, Costa Rica has higher happiness ratings than the U.S., Belgium, or Germany – all countries with far higher levels of wealth.

In the Middle East, the situation is mostly reversed. Countries like Saudi Arabia, Qatar, Iran, Iraq, Yemen, Turkey, and the U.A.E. are all on the other side of the trend line.

Outlier Countries

Within regions, there is even plenty of variance.

We just mentioned the Middle East as a place where the wealth-happiness continuum doesn’t seem to hold up as well as it does in other places in the world.

Interestingly, in Qatar, which is actually the wealthiest country in the world on a per capita basis ($127k), things are even more out of whack. Qatar only scores a 6.37 on the Cantril Ladder, making it a big exception even within the context of the already-outlying Middle East.

Nearby Saudi Arabia, U.A.E., and Oman are all poorer than Qatar per capita, yet they are happier places. Oman rates a 6.85 on the satisfaction scale, with less than one-third the wealth per capita of Qatar.

There are other outlier jurisdictions on the list as well: Thailand, Uzbekistan, and Pakistan are all significantly happier than the trend line (or their regional location) would project. Meanwhile, places like Hong Kong, Ireland, Singapore, and Luxembourg are less happy than wealth would predict.

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Chart of the Week

Ranked: The Richest Countries in the World

These countries hold 74% of the world’s $204 trillion in private wealth. See the 10 richest countries, and how their totals have changed over time.

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Ranked: The Richest Countries in the World

Since the 2008 financial crisis, global private wealth has been steadily growing.

In fact, overall private wealth worldwide reached $204 trillion in 2018, which is a 26% increase over the past decade.

This week’s chart, which uses numbers from the Global Wealth Migration Review 2019, examines the top 10 richest countries and the growth of private wealth from 2008 to 2018.

RankCountryPrivate Wealth in $USD (2018)10-yr change (%)
#1🇺🇸 United States$60.7 trillion27%
#2🇨🇳 China$23.6 trillion130%
#3🇯🇵 Japan$19.1 trillion18%
#4🇬🇧 United Kingdom$9.1 trillion4%
#5🇩🇪 Germany$8.8 trillion7%
#6🇮🇳 India$8.1 trillion96%
#7🇦🇺 Australia$6.0 trillion48%
#8🇨🇦 Canada$6.0 trillion23%
#9🇫🇷 France$5.9 trillion-7%
#10🇮🇹 Italy$3.8 trillion-14%

Combined, the 10 countries above represent 74% of total private wealth worldwide.

These trends are staying consistent with the numbers seen in 2017. Asian countries such as China and India showed the highest uptick in wealth gains, holding their #2 and #3 spots on the list, while European countries such as France and Italy actually saw a decrease.

Trends in the Wealth Landscape

Over the last 10 years, China has experienced the largest increase in wealth at 130%. This growth also means that China now boasts more high-net-worth individuals (HNWIs) than any other country except the United States.

While India doubled its total private wealth over the 10-year period, wealth per adult remains at just 22% of the global average.

The U.S. continues to lead in wealth numbers, holding 30% ($60.7 trillion) of the world’s total private wealth. Unsurprisingly, the U.S. remains home to the most millionaires in the world.

The World’s Millionaires: Top 3 Countries

  • United States: 17,350,000
  • China: 3,480,000
  • Japan: 2,809,000
  • World total: 42,155,000

Source: Credit Suisse

Australia now tops the above list in terms of highest wealth per adult, and it is second in the world only to Switzerland in the context of major nations.

Despite the recent turmoil and uncertainty stemming from Brexit, the United Kingdom still saw overall growth in the past decade, moving from #5 to #4 rank on the list of countries with the highest private wealth.

Projections from New World Wealth estimate that total global wealth will reach $291 trillion by 2028, driven by strong growth in Asia.

Rising Wealth Inequality

Unfortunately, this growth is also linked to the growing problem of wealth inequality gap across the globe, and the gap seems to get bigger every year.

The average global wealth per adult is approximately $27,000 – but of the total adult population, 64% have a net worth of less than $10,000. The bottom half of adults in the world now own less than 1% of all household wealth.

By contrast, 85% of all household wealth is owned by the richest 10%, and the top 1% own almost half (47%) of the world’s household wealth.

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Chart of the Week

The eSports Boom, and the Numbers Behind the Sector’s Explosive Growth

Everything you need to know about the eSports Boom, including the sector’s rapid growth, massive prize pools, and the most valuable eSports companies today.

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The oldest professional sport teams can trace their start back to the mid-19th century, a period when casual past times such as baseball or football transitioned into more organized leagues.

Since this tipping point, pro sports has thrived around the world, and the business of sports has evolved into a multi-billion dollar ecosystem for teams, leagues, players, merchandisers, sponsors, broadcasters, and event spaces.

Today, this evolution still continues – and it is being driven by the emergence of eSports (electronic sports), an exciting frontier for fans and business alike.

eSports Extravaganza

Today’s chart breaks down the eSports boom, including data on the sector’s rapid growth, prize pools, and the most valuable eSports companies today.

Visualizing the eSports Boom, and the Numbers Behind Its Explosive Growth

Despite having a reputation in the media and in popular culture as being on the fringes, it is clear that gaming is now a truly mainstream phenomenon.

In fact, the global gaming industry has now eclipsed $135 billion in revenue worldwide – a figure that is twice as much as the film and music industries combined.

With hundreds of millions of avid fans around the world, demand to watch the most elite gamers has reached a fever pitch – and now, it’s not uncommon to see sold-out arenas, big name sponsorship deals, and massive prize pools in the name of eSports.

Defining the eSports Ecosystem

Like any professional league, eSports creates the foundation for an entire ecosystem of opportunities.

Players
Players are central to the ecosystem, since they are the stars and they have their own personalities. One famous star is Kuro Takhasomi (KuroKy), who has brought in a whopping $4.2 million in prize money from Dota 2 tournaments so far. He has earned more than any other player in eSports.

Teams
Because the games played are mostly team-based, there is a crucial element of teamwork involved. eSports franchises are currently selling for millions of dollars. It’s worth noting that these franchises don’t just employ players – they also hire staff that can better ensure the success of players, such as coaches, trainers, and personal chefs.

Games and Developers
Some of the most important games in the eSports world right now include: Dota 2, Counter-Strike, League of Legends, Overwatch, Fortnite, and Call of Duty.

Competitions
Leagues and tournaments can offer massive prize pools for players. The biggest single pool so far was $25.5 million, offered for a Dota 2 tournament in 2017 (“The International”). It’s the second-largest prize pool offered in any kind of sport, behind the U.S. Open (tennis).

Organizers
Running eSports events is big money, and organizers of events can tap into sponsorship and fan revenue. Sometimes game publishers will organize the events, but third-party ones also exist in the ecosystem.

Sponsors
Sponsors like Coca-Cola, Intel, and Mercedes-Benz have shelled out millions of dollars to sponsor events and reach the massive audiences associated with eSports. In more recent news, SAP signed a deal to sponsor one of the biggest names, Team Liquid.

Broadcasters
Broadcasters, both traditional and online (YouTube, Facebook Live, Twitch, etc.), are also in to get a part of the action. Recently, game developer Blizzard signed a broadcasting deal with Disney to broadcast Overwatch League playoffs on ESPN, ABC, and Disney XD.

What do you think is the most exciting part of the eSports boom, and why?

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