Creative Class

Last week, The Economist released its Big Mac Index (via Catherine Rampell of The New York Times Economix) which basically compares how much it costs to buy – you guessed it – a Big Mac in countries across the world. The magazine explains the index as a:

…lighthearted attempt to gauge how far currencies are from their fair value. It is based on the theory of purchasing-power parity (PPP), which argues that in the long run exchange rates should move to equalise the price of an identical basket of goods between two countries. Our basket consists of a single item, a Big Mac hamburger, produced in nearly 120 countries. The fair-value benchmark is the exchange rate that leaves burgers costing the same in America as elsewhere.

And it goes on to note a number of caveats about it:

The Big Mac numbers should be taken with a generous pinch of salt. They are not a precise predictor of currency movements. The bulk of a burger’s cost depends on local inputs such as rent and wages, which tend to be lower in poor countries. Consequently PPP comparisons are more reliable between countries with similar levels of income. (more…)

Over the past week, I’ve discussed the role of class in economic performance, innovation, and entrepreneurship. But what about happiness? There is considerable debate over the happiness of nations. The Easterlin paradox suggests that there is little or no relationship between a country’s economic development and its level of happiness in comparison to others. A recent influential paper by economists Justin Wolfers and Betsey Stevenson contradicts the Easterlin paradox, finding a clear relationship between economic development (measured as GDP per capita) and happiness. In other words, countries that increase their wealth become happier, and countries that increase their wealth more than other nations become happier than others.

But what about the effects of class on happiness? Are societies in which a greater share of workers are members of the creative class on balance happier than those with large working class populations?

To get at this, Charlotta Mellander used data on happiness – measured as overall life satisfaction – from the Gallup Organization’s World Poll.

The results could not be more striking. Happy nations appear to be creative class nations.

Nations with a large concentration of the working class are far less happy. In fact they appear downright unhappy. Perhaps Marx was right after all about the alienation that comes from industrial work – or, in this case, the unhappiness found in working class locations.

Source of all graphics: Martin Prosperity Institute

We’ll be doing more on the connection between class structure and the happiness of nations in the future, so stay tuned.