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.

  2007 change 2017
  % % %
New Zealand 71* -11 60
       
Israel 53 +13 66
Austria 48 +10 58
Australia 62 -5 57
USA 66 -10 56
Germany 35 +13 48
Belgium 59 -14 45
UK 52 -8 44
Singapore 49 -15 34
Spain 55 -22 33
China (PRC) 14 +7 21
Greece 44 -23 19
India 16 -13 3
Source: Gallup World Poll

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

    Australia New Zealand
    % %
2007 Suffering 2 1
  Struggling 36 28
  Thriving 62 71*
       
2017 Suffering 2 2
  Struggling 41 38
  Thriving 57 60
Source: Gallup World Poll

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%.

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

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28 Comments

I would be prepared to wager that those at the very bottom did not even partake in this survey, so that percentage is probably even worse than that.

Great stuff David. I'm familiar with Gallup's 'Social Class Self-Identification' Index, which measures how a representative individual perceives their socio-economic class. Between 2011-15, those who identified as "working class or lower" reached up to 48%, which is a damning indicator on the idea that most Americans think of themselves as middle class (coincidentally, those who perceived themselves as middle class was at historical lows based on Gallup's data).

http://news.gallup.com/poll/199727/americans-identification-middle-class...

How would this work in the case of NZ? For ex, houses in traditionally battler suburbs like Glenfield might have appreciated beyond their owners' wildest expectations. That could possibly impact someone's perception of themselves, moving them from identifying themselves as "working class or lower" to "middle class."

Of course, this is the whole issue of how priming asset prices is crucial for govts to remain "popular". In the case of NZ, perhaps people don't buy the bullshit, hence the shift towards a new ruling power as you allude to.

I'd suggest that the primary reason why the government changed is that W Peters overpayments were leaked to the press during the election campaign. The basic pardigm was still intact, that one party got the most votes of all parties, but had insufficient votes to govern without the "king maker" weighing in. The over payment leak kinda defined the decision....

There may be some underlying societal changes but they did not change the overall outcome. I'd instead suggest that Labour did a wonderful political move via ditching the negative leader and bringing in a fresh new "relentlessly positive" representative that didn't have the baggage associated with just about any politician that had to do the inevitable compromises that come with the job.

The fine print at the bottom seems quite significant. It would appear that NZer's sense of thriving is fairly consistent and at a level that would be the envy of many countries. It is also a bit of a common personality trait of NZers to moan about things. Interesting that Singapore has fallen so much. It would be good to see the details on all countries for all years.
The report can be downloaded here after you answer some personal questions. Not sure how much detail it has.

David points out "But at '60%', New Zealand still stands out as a country with a high 'thriving' score." If you feel you've uncovered some specific insight, then feel free to share it.

Of course, you would expect a country that has been experiencing massive asset price inflation, housing in particular, to show a higher sense of well-being compared to a country such as Japan. Furthermore, a Singaporean's reality is different to a NZer's reality and less reliant on a housing bubble.

I haven't uncovered anything, just that readers may not read further than the part where it details the dramatic fall since 2007 having confirmed their preconceived narrative and miss the asterix. The asterix points to the possibility that this figure is likely to be an outlier. I should probably have more faith in the readers.

It's not an "outlier" as it is an index based on an aggregate, not a data point. It intuitively sense for that aggregate to be high in 2007 as it coincided with the bubble leading up to the GFC.

An anomaly then? David Chaston was describing it as having the look of an outlier.

In the world of statistics and data analysis, an "outlier" is usually a data point within a data set. At a very simplistic level, you could use a boxplot to identify outliers. Intuitively, it makes sense that the "aggregate index score" is high at arguably the greatest period of debt-driven expansion in human history. Why David Chaston might think it is possibly at the extremes of the margin of error is that the relative score in Australia for the same period is 62. Considering the cultural, social and economic similarities, it should be considered.

Nevertheless, David also points out that the "struggling score" has increased by 10% pts since 2007 and that could be far more relevant. When looking at data, you need lateral thinking to make sense of what you're looking at.

I don't think we need to think laterally here at all, 2007 was an anomaly for the purposes of this survey. It kind of screwed up the results.

You don't know if it's an anomaly. It's a Gallup survey and will be representative from year to year, which is how Gallup polls are designed to ensure that the data has meaning.It hasn't "screwed up" any results. The data is what it is.

"Thinking laterally" is related to how you look at the data. Like understand T2B / B2B on 5-point scales. Both are relevant to each other. You did just jump for the sparkly number.

Th purpose of data analysis is not to take umbrage at what you don't want to see or what doesn't fit with your narrative or agenda.

Really just saying read the whole article carefully and not just the headline as there is more to the story than there being a dramatic drop in the numbers of thriving people in NZ.

Getting back to the data, the headline could instead state "New Zealand self reported well being essentially unchanged for much of the last decade". All of the years noted excepting 2007 have similar thriving values.

I'd say that ZS makes a valid point. Further, the underlying point made in the article is rather contradicted in the aforementioned asterisk.

Add: alternate headline "New Zealand self reported well being the highest in the world excepting a single country", but that most certainly doesn't fit the narrative of motive for change in .gov

Given the insularity of many Kiwis and the increasingly negative focus of NZs media, I'm not surprised at this survey result. It is somewhat meaningless to compare NZ with other countries where 'emotional' inputs are differently influenced by peoples political and social environments, media culture is more mature and proximity to other countries provides an observable base for comparisons and thus more realistic setting of expectations.

Fair point. To what extent do you think the NZ media is influenced by emotion? I would think it has much influence, particularly considering that the Hosk's communications are admired while causing anguish at the same time.

You talk about the media as it's very important in shaping NZers feelings of well-being. I'm not disagreeing with that and I think most people's opinions are shaped by the media. Fairfax Media's key revenue driver in Australia is its property arm Domain. Not sure sure about NZME, but property does at least drive traffic, reach, and frequency. The NZ media is saturated with property-related content. And that makes sense as it is the single biggest driver of wealth in the country, which has an impact on how people feel about themselves.

Property is a key national obsession so media saturation of the topic is a logical demand led response. By same process, the waning interest of punters in considering and debating issues beyond the superficial level, is delivering us an increasingly facile stream of personal opinion masquerading as journalism.

It is becoming increasingly hard to find people able to maintain a cogent debate position beyond two or three sequences. The ability of politicians to convince people, has become more morally authoritative than the veracity of their positions. Elections are won and lost on superficial media led emotiveness and perceptions, so given the endless diet of woe dished up by our hacks it is little wonder the perception Kiwis have of their place in the world, has slid.

On a brighter note, I'm pleased to see that within weeks of the coalition coming to power, they have nailed the issue of homelessness. I know this because since the election people sleeping in car stories have vanished from our media.

Or there never really was a problem in the first place...DUN DUN DUUUUN!!!

Interesting question. Years ago, Paul Holmes, was sprung faking a story about people sleeping in cars. So is Bruce Pulman Park the place to go and confirm the current situation? Plenty of lefties on this site so one of them should be able to tell us exactly where they currently park up.

Btw I’ve spent a few days down on the Kapiti Coast. Lots of boomers to target there when the revolution comes. Lot of beach area big sections and people buying brioche at the bakery. Just like Auckland only less obvious as they don’t seem to drive Audis

You're just not getting it expat @22.23. If it isn't on the telly, it isn't happening. Used to be but ain't now with this new lot in charge.

The problem facing many New Zealanders is “Compassion Fatigue”.

From someone who lives and works in the CBD (and loves it), it's staggering how homelessness in the CBD has escalated over the last few years. Staggering. It's also expanded demographically from in the past.

Macmillan quote. ‘Events, dear boy, events’
Events and political reactions is what reveals character & then voter response:
Eg the Kaikoura earthquake which may have prompted/sped up the Key resignation, then English & Bennett as leaders doomed National right from Nov 16.
The WP Super leak, suspicious, prompted suspicion with voters - so NZF gets 7%
The Arden appointment as leader - surges Labour support.
Voters and party plans are only a small part of what decides ‘events’.

Meanwhile the PMs highest priority is asylum seekers on Manus Island.

And a remarkable turnaround in position from deputy PM Peters, who a short time ago had much to say about asylum seekers who 'treat their women like cattle' and 'should stay and fight in their own countries'. Now his government is not only supporting these same people coming to NZ, it is actively lobbying the Australians. If he is capable of such a dramatic flip flop in his views, what will be next ?..... means testing NZ super ?

I agree, a fine article. Food for thought.

The key here is how much is 2007 an outlier? Just before the GFC many of us were getting pay rises beyond expectations and headhunters were targeting people at very modest levels in organisations. It felt like the best of times. Of course we now know those good times were illusory.

As for National, perhaps they got the blame, but the things that are upsetting people are beyond any government to fix. Globalisation is unavoidable and suppresses developed world incomes, while low interest rates, also global, have caused massive asset inflation. In a few years it is likely Labour/NZ First/Greens will get the blame

We didn't vote for a change of government, we got a change of government because of MMP, simple as that