Can behavioural economics explain our change of direction? New Gallup data points to a possible reason; the proportion of the country 'struggling' has been on the rise

In a recent report, the Gallup Organisation looked at what their life satisfaction score suggest for a number of countries.

They promoted the report with an article entitled "Is your country ready for change?".

And in that article they noted New Zealand was one country 'ready for change'. In fact, we got it at the September 23, 2017 election.

So it is worth looking deeper at what they are saying. As far as New Zealand is concerned, their's is an apparently accurate insight.

The essence of their argument is that rather than follow economic signals, (ie GDP per capita) we should follow what people think of "life evaluation".

Their polling over a decade long period (actually since March 2006 through to February 2017) allows them to track many variables, one of which is life satisfaction.

They score these results in three bands:

- suffering
- struggling
- thriving.

What stands out for New Zealand, is that the number of people saying they are 'thriving' has fallen from 71% in 2007* to 60% in 2017.

That is the largest fall for all 74 countries included in this survey, except for six others. New Zealand's score fell even more than that for the US. Countries with higher falls than New Zealand included Greece, Spain, Egypt, Singapore, Belgium and India. Governments have changed in all of them, except Singapore.

These data and trends are part of the discipline known as behavioral economics. The field's underlying theory is that about 30% of what people do is rational; the other 70% is emotional. This new discipline has led to Nobel Prizes, bestselling books, new agencies within governments and even new majors at universities. What it hasn't led to is new national statistics.

The most famous national statistics - GDP, household income and unemployment - focus on the rational side of what people do: what they spend, how much they make and whether they have a job. This report quantifies the other 70% of what makes a great life - the emotional side.

There are almost 80 questions in their survey, but this is one related to well-being. They ask:

Please imagine a ladder, with steps numbered from 0 at the bottom to 10 at the top. The top of the ladder represents the best possible life for you and the bottom of the ladder represents the worst possible life for you. On which step of the ladder would you say you personally feel you stand at this time?

They also ask how how they think they will score in five years time.

Gallup classifies people as “thriving” if they rate their current lives a 7 or higher and their lives in five years an 8 or higher, and “suffering” if they rate both their current and future life situations a 4 or lower. Those in the middle are “struggling.” (People do not rate themselves as falling into one of these three categories, they only give a view of what rung they are on.).

Across countries, Gallup finds people’s life ratings are highly related to income, education levels and reported disease conditions. Individuals who are thriving have fewer disease conditions, fewer sick days, higher incomes, are more highly educated and have better work environments.

Countries with a higher percentage of thriving adults in their population also report that the area they live is a good place to live for people of different ethnicities, races and cultures. Compared with thriving individuals, struggling individuals are much more likely to worry.

But at '60%', New Zealand still stands out as a country with a high 'thriving' score.

Gallup have been kind enough to allow us access to the full country reports for New Zealand and Australia. However, we do not have access to all the rest of their data. So the above table is populated with what has been publicly released by them. (If you know of data for other countries, we will be happy to add to this table.)

The New Zealand score for 'suffering" in 2017 is 2%; the 'struggling' score is 38%. These have changed in ten years from 1% and 28% respectively.

Over ten years the New Zealand and Australian scores have shifted as follows

New Zealand is still near the top of the global comparatives, but it has fallen relatively more than most. The +10% rise in the 'struggling' category should concern policy makers. And apparently it concerns voters, who recently voted for a change in Government here in New Zealand.

* it was 66% in 2006. So the fall from 2006 to 2017 is much less dramatic at -6%. And looking over prior and post scores, the very high 2007 score has the look of an outlier. In 2016 the New Zealand 'thriving' score was 57%; in 2014 it was 62%; in 2011 it was 60%.