The OECD ranks Australia first on social and economic indicators but when it comes to life satisfaction we are 11th

There’s nothing like a long weekend to remind you that there is more to life than work.



Economists are frequently criticised for thinking they can measure life by dollars and cents. It’s the type of criticism that was nicely put by Robert F. Kennedy when he suggested that GDP measured everything “except that which makes life worthwhile”.

Certainly economists, politicians and journalists are guilty of focussing on GDP in a way that suggests individuals aren’t important. Total GDP, rather than GDP per capita, gets the biggest attention. This logic is akin to thinking things have improved at a party where eight people were invited to bring two plates of food each, and a ninth person turns up with only one plate. While such a situation has seen a 6.25% increase in food, there has actually been a 5.6% fall in the amount of food each person has to share.

You can understand why politicians like using total GDP, given it always grows by a bigger number, and it is much harder to fall compared with GDP per capita:

In GDP per capita terms, Australia definitely did have a recession during the GFC, though we can still get comfort from the fact that our decline in 2008-09 was the second smallest in the advanced economic world, behind only South Korea.

But even this measure misses a lot of life. It tells us nothing about health or education systems, whether or not we feel safe, or the state of our environment. Indeed, GDP per capita also assumes everyone gets an equal share of the pie, when we know that is not true.

Across the OECD, Australia ranks a bit below average on inequality – doing better than our English speaking peers in US, UK and Canada, but lagging well behind most European nations.

It is because of the complexity of life that is not revealed in GDP numbers that the OECD also attempts to measure other aspects. It recently released the 2014 edition of its Society at a Glance, which covers social as well as economic indicators.

The report found that Australia was above average across a number of measures. It examines not just the overall figures across various aspects, but also any changes since the GFC and differences across society.

For example, while income inequality is important, its importance lies in what benefits or disadvantages that income brings (or denies) people. Thus, the OECD measures people’s health according to their income:

While there are some methodological differences which might explain the very small difference between the health status of the rich and poor in New Zealand, the figures demonstrate that while Australia’s income equality might be worse than the OECD average, our health equality is much better.

Similarly, Australia is a very tolerant society (or at least we think we are):



But, while more than 90% of people in Australia think where they live is a good place for migrants to live, this level has fallen since 2007. This fall is not something to be proud of – especially given we don’t even have the excuse of other nations whose tolerance has declined – a weak economy and the fear of losing jobs to foreigners.

Much of the data used in the Society at a Glance report is also contained in the OECD’s Better Life Index. This index tries to put in everything that the GDP leaves out, and enables users to vary the index according to the level of importance they hold for certain issues.



Rather nicely for us, when all aspects are rated equally, Australia comes out on top, just ahead of Sweden and Canada. The US, mostly due to its income, comes in sixth, while the UK and New Zealand lie 10th and 11th, respectively



The data breakdowns highlight some of the benefits and problems each nation has.



For example, Australia lags behind most of our peers in percentage of dwellings without basic facilities but we are equal second on the measure of average rooms per house. This reflects that, while on average Australia’s housing situation is very affluent, there are significant sections of society going without – especially the Indigenous population.

Similarly, while our average take-home pay and job security are high, more of us are working longer hours than our counterparts in the UK, Canada and US.

For all the talk about our poor education system, the OECD rates it very highly. And while our air quality is among the best, we lag behind the UK for the percentage of the population satisfied with the water quality (although one could be mischievous and suggest those in the UK are just more tolerant of poorer water!).



Australia’s life expectancy remains among the highest in the world, and our lives are certainly much safer than in many OECD nations – our level of assault and murder well below the average.

And yet, despite our good fortune both monetarily and socially, when it comes to our life satisfaction we rank only equal 11th.

Given that most of the data used is from 2012, it may be that the flood of negativity from one side in politics and various parts of the media during that time caused us to fail to appreciate just how good we had it.



Whatever the reason, economic or social, Australia, like many nations, has things to work on, but perhaps we also have more things to cheer about.



Last week I noted that budgets are as much about what kind of country we want to have as they are about surplus and deficit. And before Tony Abbott and Joe Hockey wish to start making drastic changes, it’s worth noting that most of the world thinks the kind of country we have at the moment is pretty damn good.