Creative Class

How has the economic crisis affected the happiness and well-being of Americans? Newly released data from the Gallup-Healthways Well-Being Index enables us to take a look.

At the national level, not so much: The mid-year 2009 score is 65.1, a moderate decline from 65.5 in 2008. (Catherine Rampell of Economix provides a nice summary of the survey methods, indicators, and key findings.)

But, rising unemployment appears to have a significant relationship to the happiness of states, according to our analysis of the Gallup-Healthways data.

Not surprisingly, the biggest declines in overall happiness occurred in work-related well-being. The Gallup-Heathways Well-Being Index is made up of six separate sub-indexes – life evaluation, emotional health, work environment, physical health, healthy behavior, and access to basic necessities. Five of these indexes fell between 2008 and 2009, with the biggest decline occurring in the work environment index: More than three-quarters of states saw their work environment score fall in 2009.

This is broadly in line with happiness research. It had been long thought that happiness essentially levels off after a moderate income level is crossed. But an influential study by Betsy Stevenson and Justin Wolfers found a strong association between happiness and economic conditions. A 2005 study found that a significant increase in Finland’s unemployment rate (from three to 17 percent) did not produce a significant drop in overall well-being.

The new Gallup-Healthways Index also covers the 50 states. Interestingly enough, the “happiest states” in 2009 – Hawaii, Utah, and Montana – were more or less the same as in 2008; the same is true of the “unhappiest states” – West Virginia, Kentucky, and Arkansas. Drilling down a little further, Utah topped the list in life evaluation, Hawaii in emotional health, Idaho in work environment, North Dakota in physical health, Vermont in healthy behavior, and Iowa in basic access.

Still, it’s clear that the economic crisis has been harder on some states that others. Older industrial states of Michigan, Indiana, and Ohio have seen their unemployment rates soar in the double digits, while the housing crisis has wreaked havoc on once fast-growing states like Florida and Arizona.

The availability of state-level data for before (2008) and after (2009) the crisis provides a useful lens for examining the effects of worsening economic conditions on state happiness.

So my collaborator, regional economist Charlotta Mellander, looked at the relationships between happiness and economic factors like output, income, and unemployment. Let me emphasize that what I am reporting here are correlations or associations. While these findings do not imply causation, they remain interesting nonetheless.

First off, the relationship between happiness and economic output has apparently become weaker. The relationship between the two which was correlated (.33) and statistically significant in 2008, is no longer so (.27 and not statistically significant in 2009).

Second, the relationship between income on happiness also seems to have weakened (falling from a correlation of .43 in 2008 to .30 in 2009 – both significant at the .01 level).

Third, unemployment appears to be the biggest short-run factor affecting state happiness. Two measures of unemployment – a higher state unemployment rate and a bigger increase in that rate between 2008 and 2009 – were associated with both lower levels of state well-being and a bigger drop in state well-being between 2008 and 2009.

The first chart graphs the relationship between 2009 state unemployment rate and state well-being. Hawaii and Utah, above the line; and West Virginia, Kentucky, and Arkansas below it, are clearly outliers. Still, the fitted line shows a reasonably close association between unemployment and happiness among states. The correlation coefficient of -.44 between the two (statistically significant at the .01 level) lends additional support to this.

The second chart graphs the relationship between state happiness and the change in the unemployment rate between 2008 and 2009. Hawaii and Utah, and West Virginia, Kentucky, and Arkansas are again outliers. But the fitted line shows a clear association between the two. And while the correlation coefficient between the two is weaker than above (-.34 and statistically significant at the 0.05 level) it nonetheless supports the association.

The connection between state happiness and unemployment also came through when we looked at the relationships between the change in state well-being between 2008 and 2009 and the two measures of unemployment – the 2009 unemployment rate and change in unemployment between 2008 and 2009. The correlations for each are statistically significant (-.30 for the 2009 unemployment rate and -.34 for change in the unemployment rate between 2008 and 2009, both significant at the .05 level).

Given all of this, it’s safe to say that unemployment plays a reasonably big role in the happiness – or should I say, unhappiness – of states.

I continue to be astounded by the unrelenting interest in “singles maps” and singles ratios. A bluntly titled blog devoted to San Francisco’s lop-sided gender ratio cites this 2007 study (and an earlier 1991 one) which identified a singles’ tipping point of sorts. The study found that:

[A]s the sex ratio augmented in favor of women, at first, as you would expect, the women simply turned fussy and went for richer and more powerful men. But at a certain point a curious thing happened: the amount of socioeconomic status a guy needed to get girl increased way more than the math would predict. Specifically when the ratio was tilted in favor of women by 10%, low status men became not 10% less likely to get a girl but 200-300% less likely and high status men 30% less likely.

In other words, increase the number of males in a system too much and the number of females interested in pairing up GOES DOWN, due to some mysterious psychological trigger. Women won’t pick and choose, they won’t choose at all. They abandon the enterprise. Romance dies. Society crumbles. Imagine a bar with 100 girls and 100 guys. The bouncer admits 10 more guys and competitively speaking it’s as if, for the low status guys, 130 guys walked into the room (and for the high status guys, 30 guys). The bar might as well close for the night.

The original paper is here. Map at Gene Expression via Marginal Revolution.

Some topics, like some years, seem never to go out of fashion. So with the ranking of cities. This is in part due to the almost endless ways in which the pie can be sliced and the endless interest in the different types of fruit. Surveys throw up different results. In one of the newer slices, Tyler Brule ranks the most livable cities in the world in the FT. The index is based on Monocle’s “world’s most livable cities.”

Zurich, Switzerland wins as the most livable city in the world followed by Copenhagen and Tokyo. But Copenhagen is the most interesting result. I have spent some time in Copenhagen recently and have been curious about several things. The Danes are the happiest people in the world, are the most entrepreneurial, and now have one of the most livable cities. Curious. I wonder what the Baltic states have that the rest of us do not? Is it the homogeneous culture, is it the low level of stress? In the sixties the Danes decided not to teach children how to read because it was too stressful. College students get a stipend to go to school. And the city, well it is also a very livable place with almost everyone on bicycles, including women with babies in the winter.

Vancouver ranks first, Toronto fourth, Calgary fifth. Melbourne, Perth, and Sydney all make the top 10. Vienna, Helsinki, Geneva, and Zurich round out the top 10. Props to my former hometown Pittsburgh, which topped the list of U.S. cities coming in 29th on the global list. Here are the top and bottom 10 from The Economist.

Silicon Valley, according to a new Milken Institute report on North America’s high-tech regions. But Seattle, Cambridge, and D.C. are among the nation’s leading high-tech hot spots. The report also charts the tech turnarounds in Rustbelt regions like Kalamazoo, Michigan and Scranton-Wilkes Barre, Pennsylvania, as well as documenting the rise of leading high-tech regions in Canada and Mexico. Here’s the top ten.

Outside the U.S., the report finds that:

• Toronto, ON jumped 10 places from 2003, showing impressive gains in building and attracting high-tech businesses in manufacturing and reproducing of optical media, biopharmaceuticals, and medical and diagnostic laboratories.
• Baja California has become a key manufacturing center for high-tech giants such as Casio, Honeywell, Sanyo, and Sony. The state finished in second place in 2003, just after San Jose, in the ranking for manufacturing of semiconductors and other electronic components. It also leads North America in medical equipment and supplies manufacturing.
• Vancouver, BC showed the greatest rise among the top-10 metros for software publishing, climbing from 14th place in 2003 to ninth place in 2007.

My colleague Charlotta Mellander compared these Milken high-tech rankings with our own regional demographic measures for the top 50 U.S. and Canadian metros and found significant correlations to:

• Economic Output: Measured as gross metropolitan product per person (0.475).
• Talent: The Creative Class (0.46),Super-creatives (0.34), and Human Capital – percent of population with a BA and above (0.3).
• Openness and Tolerance: The Mosaic Index – a measure of openness to foreign-born people (0.45); and also to the Gay Index (0.315) when San Jose – the extreme outlier – is excluded from the analysis.

Here’s the map from the Social Science Research Council’s American Human Development Project.

The pattern is more or less what you would think. Catherine Rampell from Economix notes that:

Connecticut, which has the highest development of all American states, is roughly comparable with Ireland (the fifth most-developed country worldwide). But Mississippi has an H.D.I. level roughly on par with that of Turkey (#76 in the international development rankings).

MapScroll and Economix clear up any remaining confusion about an earlier, problematic map. Check out the project’s website and terrific interactive maps.

Map from the Toronto Star.

Indianapolis takes first place and Boston second (so much for the curse of the Bambino). New York is 12th, D.C. 35th, L.A. 14th, Chicago 23rd. The ranking, by the Toronto Star, calculates the winning percentages since 2000 for the 37 U.S. and Canadian cities with at least two professional sports teams.

Mercer’s annual ranking of the world’s “most liveable cities” is out. Vienna took the top spot. But Swiss cities do very well with Zurich and Geneva taking the second and third spots, with Bern in 9th.

Canada does well too - with Vancouver fourth, Toronto 15th, Ottawa 19th, Montreal 22nd and Calgary tied with Singapore for 26th.

Australia and New Zealand punch above their weight – Auckland is fifth, Sydney 10th, Wellington 12th, Melbourne 17th, Perth 21st, Adelaide 30th, and Brisbane 34th.

Germany has four cities in the top 20, Dusseldorf is sixth, Munich seventh, Frankfurt eighth, and Berlin 16th; plus, Nuremberg 23rd, Hamburg 28th, .

Scandinavian and Nordic cities do reasonably well – Copenhagen is 11th, Stockholm 20th, Oslo 24th, and Helsinki 30th .

The ”Am-Brus-Twerp” mega-region has two top-20 cities – Amsterdam at 13th, and Brussels 14th.

Below are the top 20 and here is the full list:

For comparison purposes, here’s my own list of the world’s top 20 city-regions based on our measure of economic output derived from satellite images of the world at night.

Two things stand out.

First, the world’s biggest city regions are not necessarily the “most liveable,” at least according to the Mercer criteria. Tokyo is 35th on the Mercer rankings, London 38th, and NYC 49th just inching into the top 50 worldwide.

Second, American cities get creamed (again). Honolulu at 29th is the top-rated American city, followed by San Francisco 30th, Boston 35th, Portland 41st, D.C. and Chicago tied for 44th, New York 49th, and Seattle 50th. L.A. fails to make it into the top 50.

While I find such lists informative and fun, in my book Who’s Your City, I say that there is really no such thing as a single best city:  Invoking the old and somewhat cliched adage, “different strokes for different folks,” I argue the thing that really matters is to find location that best fits you.

So, how does this list jibe with your own list of the world’s best cities? And, most of all, which city is the one that seems best for you?

This graph is the initial installment of Martin Prosperity Institute research updating the Creativity Index. The work has developed a matched data set on the 3Ts of economic development – technology, talent, and tolerance – for 374 North American metro regions. The study shows that while some Canadian metros like Ottawa compare favorably to their U.S. counterparts, Canadian metros tend to lag on talent. More here. And lots more to come in the future.