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Thursday
Feb052015

What's up with graft and the World Misery Index?

The 2014 World Misery Index ranks 108 countries for how much "misery" the people in a country are experiencing. The amount of misery is arrived at by adding the unemployment, inflation, and bank lending rates, and subtracting the percentage change in real GDP per capita. A higher misery index score reflects higher levels of “misery.”

Steve H. Hanke created the index. He's a professor of applied economics at Johns Hopkins University in Baltimore.

By his scoring, the five most miserable countries at the end of 2014 were (first is worst): Venezuela, Argentina, Syria, Ukraine, and Iran.

The five least miserable were Brunei, Switzerland, China, Taiwan, and Japan.

The United States ranked 95. That means it was the 14th least miserable nation of the 108 countries on the table. The UK ranked 86. (Remember, a lower rank means more misery.) Italy ranked 55. Bulgaria was 52. Russia was 42, and Spain was 16.

Countries not included in the 2014 table didn't report enough data, Prof Hanke said.

Is there a connection between the World Misery Index and perceived levels of corruption? Prof Hanke himself said last year: "Historically, corrupt countries have high inflation."

High inflation is one of the elements of the misery index. Two others -- unemployment and bank lending rates -- are usually driven higher by high inflation. So when Prof Hanke says corrupt countries have higher inflation, that means there's a link between the amount of corruption in the country and the misery there.

The correlation isn't perfect. There are other economic policies and factors at play -- personal savings rates, currency reserves, and so on. But by the numbers, the correlation between corruption and misery is there. The ten most miserable countries in the world have an average rank on the corruption perceptions index of 108. The ten least miserable countries have an average CPI rank of 30.

According to Prof Hanke's Misery Index, here are the world's ten most and least miserable countries (with their rank on the corruption perceptions index in parentheses):

1    Venezuela (161)

2    Argentine (107)

3    Syria (159)

4    Ukraine (142)

5    Iran (136)

6    Brazil (69)

7    Sao Tome and Principe (76)

8    Serbia (78)

9    Jamaica (85)

10  South Africa (67)

____

99   Germany (12)

100 Singapore (7)

101 Malaysia (50)

102 Norway (5)

103 South Korea (43)

104 Japan (15)

105 Taiwan (35)

106 China (100)

107 Switzerland (5)

108 Brunei (no CPI rank)

The full 2014 Misery Index is here.

______

Richard L. Cassin is the publisher and editor of the FCPA Blog. He can be contacted here.

Reader Comments (1)

Do people take this Misery Index very seriously? I note, for example, that Brazil ranks higher than Sudan for "misery." Not meaning to pick on Sudan, but a quick look at population and economic factors (e.g., infant mortality, GDP per capita) strongly favors Brazil (without directly factoring in misery generating causes affecting Sudan such as economic sanctions and ongoing war). The index appears only to measure inflation, unemployment and lending rates. This seems a bit too limited to measure, in any meaningful sense, the level of misery actually experienced by people in these countries. I suspect that parents struggling to feed their children in Darfur do not sit around the kitchen table discussing mortgage rates.
February 5, 2015 | Unregistered CommenterChris Jones

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