Gallup needs to learn about sunk costs

I’m a sucker for the global “well-being” rankings, so naturally I took a look at the headline that said Panama came in number one.  That didn’t really shock me—Latin America generally does well in these rankings, and Panama is fairly prosperous by Central American standards.  But I was surprised top see the entire top 10 of the Gallup-Healthways Global Wellbeing Index:

Screen Shot 2014-09-19 at 7.18.26 PMNotice that Sweden is bracketed by Guatemala and El Salvador.  Just to be clear, I’m NOT saying that the people in those two countries are not just as happy as the Swedes; for all I know they are happier.  I have no idea how to measure happiness. But if you are talking about country rankings, people are going to assume you are making some sort of statement about socio-economic/political systems.  And if a large share of the people in these highly successful societies are risking murder, rape and dying of thirst in order to flee to a country where they don’t speak the language, so that they can get jobs cleaning toilets or picking vegetables in the hot sun all day long, then I have to wonder whether these rankings actually mean much of anything.

In a rational world the Gallup/Healthways organization would have noticed these countries pop up in the top ten, and refrained from releasing the report.  Instead they just went ahead.  The internet is full of garbage anyway, why not add one more item that will draw in suckers like Scott Sumner, and increase the number of hits to our advertisers.  It’s not like Gallup has much of a reputation to protect, after the recent presidential elections.

So this is my revenge.

They also have a bottom ten:

Screen Shot 2014-09-19 at 7.30.53 PM

You know those people living in Mali, caught in the vicious civil war?  Yup, they’re better off than the residents of this town:

Screen Shot 2014-09-19 at 7.33.18 PM



25 Responses to “Gallup needs to learn about sunk costs”

  1. Gravatar of dtoh dtoh
    19. September 2014 at 16:08

    The underlying (and I think incorrect) assumption is that happiness is the be all and end all. IME most people would pick a cell phone or sending their kids to a good school over happiness.

  2. Gravatar of mbka mbka
    19. September 2014 at 19:56

    Scott, dtoch,

    if you ask me the keys to this idiocy are survivorship bias and human sense of purpose under danger mixing in with legitimate happiness and socio-economic data. This makes the whole contaminated data set inexplicable and useless. It goes some way to explain Croatia and Sweden and Austria in the middle of some quite dissimilar countries. It’s hard to tell in which direction the bias pans out though because say, you find countries like Austria and Croatia, similar in culture, history, and right next to each other, in completely opposite scores.

    Survivorship bias means that in countries with much hardship, the weak, old or unhappy don’t live very long. The still surviving tend to be happy because if you fight and win every day, you feel great. The fight gives purpose, the daily win is a great ‘upper’. The future is so uncertain that it is nearly 100% discounted. People live in the present and fully enjoy it. When the end comes it comes swiftly.

    Survivorship bias also means that people in poor countries generally appear young and healthy. That’s because the old and unhealthy, you don’t see them on the streets. Few disabled people either. They don’t survive too long. To me, the number of people in wheelchairs I see participating in normal life is a key marker for development. In the best countries, say Sweden, you see the disabled in normal roles in everyday life. In many other places if you’re disabled, you get parked at home. In the worst places you won’t even get a wheelchair and your life will be terrible and short.

    The age distribution itself of any of these countries is similar in nature and effect to survivorship bias. Old and ageing countries will probably score lower than young and growing countries.

    I have some anecdotal observations here. The countries in the top and bottom, ironically, I know many of them. I’m surprised Burkina Faso didn’t score higher. I lived there in the 70s and have never seen a happier country (and they still don’t have a war, or Ebola, as of now). I lived in Benin too, in Austria, and I’ve been to say Croatia or Sweden enough to have an idea. But see: I can guarantee you that whoever was ten years old in 77 in Burkina Faso, as I was, is mostly dead now. Friends, neighbors, who were 30 in 77? Deceased now. And so, none of them gets counted in the happiness data, as I would, in my grumpy middle age. That’s a very real survivorship bias.

    So why is Burkina Faso in the bottom and Guatemala in the top? Age distribution and survivorship bias favor both of them, but Guatemala probably has better socio-economic data. Why is Austria thriving and Croatia isn’t? Age and survivorship bias disfavor both of them, but socio-economically, Austria is better. Why is Sweden “as good as” Guatemala? Age and survivorship favor Guatemala, socio-economics favor Sweden, so it’s a tie. Why is Croatia near Benin? Age and survivorship favor Benin, socio-economics favors Croatia. It’s a tie.

    Basically without correcting for age and especially, survivorship bias, the results will be a draw of luck.

  3. Gravatar of TravisV TravisV
    19. September 2014 at 20:40

    Prof. Sumner,

    What city / country is that a picture of at the end of this post?

  4. Gravatar of Tom Brown Tom Brown
    19. September 2014 at 23:09

    TravisV, I was wondering the same thing since the usual trick of right clicking and selecting “view image” provided no new information: but if I had to guess, I’d say Croatia. Croatia has some beautiful coastline from what I understand, right across the Adriatic Sea from Eastern Italy.

  5. Gravatar of Tom Brown Tom Brown
    19. September 2014 at 23:12

    … Googling “Beautiful Croatian coastal village” in Google images confirms it (the same shot comes up amongst a bunch of good ones).

    Here’s a page:

  6. Gravatar of Benjamin Cole Benjamin Cole
    19. September 2014 at 23:43

    Well…if a higher-income, developed society emerges, but it results in social anomie, alienation, demolition of extended families, neighborhoods of strangers and ultimately for many, childlessness….

    Anecdote time: A friend of mine lives in Menifee, CA. An Inland Empire suburb. Said he was disturbed as one of his neighbors died a few months back, and then his neighbor’s wife died a few weeks ago. He didn’t know. He found out when the neighbor’s house had a yard sale, and the surviving children (strangers) told him.

    I prefer free markets, capitalism and libertarianism. But does such a set of beliefs lead to social disaster, limited families, neighborhoods of strangers? Nothing says my way is good for families or happiness. There is nothing “pro-family” or “pro-neighborhood” about free markets and capitalism. It is an amoral system (amoral, not immoral).

    Years back I heard a Panama pol refer to his nations’ “fraternity.” It seemed like a genuine sentiment.

    The “happy” nations on this chart, aide from mostly being Latin (and maybe genetics count) are in a stage that incomes have risen but social structures—families, friendships, neighborhoods—have not yet been obliterated.

    Maybe attachment to family and land and neighborhoods will forever keep such nations in the “middle-inome” trap.

    Maybe that is a key to happiness. Maybe preserving neighborhoods and encouraging social stability and local job formation—even at the cost of some material gain—are good ideas. Or maybe Americans are derived from restless genetic stock and would move on anyway.

    Not sure this Gallup study is that bad.

  7. Gravatar of mbka mbka
    20. September 2014 at 00:24


    I have a lot of sympathy for the things you’ve said. Once people have at least a modicum of material function, it will be the personal relationships that bring happiness. To me, the big differences in “feel” between societies aren’t so much in whether they’re more capitalistic or socialist, but in whether they’re rule based or relationship based. The relationship based ones always feel better, but they’re also invariably more tribalistic.

    Unfortunately, the warm and intact humanity of these societies also breed the nepotism and overall corruption that makes them low functioning in the objective criteria department. And that eventually eats into overall happiness through objective measures of tragedy – early death, violence, being stuck in one’s origins etc.

    This is all stuff that has been ruminated on before, from Freud’s Civilization and its discontents, to Popper’s Open society and its enemies. As society becomes a better oiled machine, it becomes less humane as a result. When I was younger I had this dream of a society that would be both humane (cozy) and rule-based (just). I’m not sure now if it can be done. At this stage in my life I strongly prefer the objective criteria of functioning even though I am aware that that generates security, rather than happiness.

  8. Gravatar of mbka mbka
    20. September 2014 at 00:31

    Let me add this. I still remember when I arrived in Burkina Faso in 1977, from Europe. My first thought was: “How can people live in this way?”, just from the material living conditions there. But eventually I lived years in Africa, the places overall felt happy, and I loved it. Fast forward, when I arrived in L.A. in 1995, again from Europe, my thoughts were exactly the same: “How can people live in this way?”. This time, because of the personal relationship living conditions in L.A. And again, after some years, I got used to America and started to appreciate L.A. too. I still don’t know what it all means.

  9. Gravatar of dtoh dtoh
    20. September 2014 at 01:42

    I tend to believe people make good decisions. When material things are more important they choose the material things. As a society becomes more affluent, people try to rekindle some of the benefits of small close communities…. but in different ways. They figure out new ways to do things that meet and fulfill their desires. But those desires change as people learn and experience new ways of living. I don’t think you will find many people in recently developed countries who would choose to go back and permanently live in close knit rural communities. The lack of freedom, the lack of privacy, and the social strictures are very unappealing after living in a freer and more modern environment.

  10. Gravatar of benjamin cole benjamin cole
    20. September 2014 at 04:10


    I enjoyed your commentary. For the last two years I have lived in rural Thailand (wife, kids) after spending most of life in Los Angeles.

    Like you, I wondered about rural Thailand at first. Now the thought that my 13-year-old should grow up in L.A. seems…not sure. He would not be able to drive a scooter, and know his numerous cousins etc.

    You are right; we are not the first to mull these tensions.

    For a while, I thought Italy might become the place to live—but they seem to be sinking, although maybe that is the ECB and not the Latinate corruption and warmth. I still love Italy, and the architecture and friendliness. If I died in Rome or Florence, how bad could it be?

    I am sorry we never met up in Los Angeles. I was born there in 1955, and lived a few other places (DC,Texas,NYC) but L.A. always seemed right. Weather. So much to do. But it is also a place you do not know when a neighbor has died, in most neighborhoods. It has also become a place that people leave, unlike my youth. After age 50, people start moving away from L.A. But if you are attached to great place like a Cal Tech or something, L.A. can be tops.

    Well, to each his own.

  11. Gravatar of dtoh dtoh
    20. September 2014 at 04:30

    Benjamin Cole,
    What part of Thailand?

  12. Gravatar of ssumner ssumner
    20. September 2014 at 05:14

    dtoh. Whose underlying assumptions?

    mbka, Interesting idea. As I said, I have no views on who is happy.

    Travis, Croatia.

    Ben, Good points. As I said, I find it plausible that the people are happy, but it’s also clear they desperately want to flee from these countries at almost any cost.

    Also recall that members of this “fraternity” murder each other at the highest rates in the world.

    You said:

    “I am sorry we never met up in Los Angeles. I was born there in 1955, and lived a few other places (DC,Texas,NYC) but L.A. always seemed right. Weather.”

    I was also born in 1955, and as a kid tried to persuade my family to move to LA. No luck.

  13. Gravatar of Brian Donohue Brian Donohue
    20. September 2014 at 05:28

    Excellent comments from mbka and benjamin cole.

    The poll tells us something I think. Not sure what. Great food for thought.

  14. Gravatar of Steven Kopits Steven Kopits
    20. September 2014 at 05:58

    The photo is of Dubrovnik, Croatia.

    Back in the oil socialist days, eastern Europeans, were prohibited from leaving the Soviet bloc, which precluded travel to Yugoslavia.

    As a result, East Germans, for example, summered regularly at Lake Balaton in Hungary, about ninety minutes from Budapest.

    East Germany collapsed when Miklos Nemeth, the Hungarian (socialist) Prime Minister in 1990, opened the borders letting the East Germans into free Austria. This led the tottering socialist bloc in eastern Europe to implode, taking Lake Balaton’s comparative advantage with it. The Balaton, although some 70 kilometers long and central Europe’s largest freshwater body, has a muddy bottom and the great disadvantage of having been developed in the communist era.

    When the borders opened, many Hungarians and other Central Europeans migrated their summering grounds (accessible by car) to the Croatian coast, which is truly beautiful, and has ancient cities like Split and Dubrovnik. The beaches tend to be rocky, but the water is clear.

    I have an ambition at some time to take a sailing trip down the Dalmatian coast, from say, Trieste to Dubrovnik. In season, a 47ft sailboat is about $5,000 for a week. Not cheap, but not outrageous either. It sleeps 10.

  15. Gravatar of benjamin cole benjamin cole
    20. September 2014 at 06:43

    Dtoh: 30 kilometers outside Pak Chong, Nakhon Ratchasima.

    Scott: Back then, the smog would have killed you. Maybe you were better off.

  16. Gravatar of Doug M Doug M
    20. September 2014 at 12:21


    In the middle ages Dubrovnik controlled some high quality salt mines. Through the renaissance Dubrovnik, was an independent republic, and used its independence to trade between the frequently warring Ottoman, Venician, and Hapsburg empires.

    The legend is, that ships that came to Dubrovnik were required to contribute a stone. These stones were used to build the city walls.

    The city was targeted by the Serbs in the civil war that accompanied the breakup of Yugoslavia. Shelling this historic town turned international opinion against the Serbs.

    The damage has since been restored.

  17. Gravatar of dtoh dtoh
    21. September 2014 at 00:09

    Benjamin Cole,

    What’s your sense of how things are changing in rural Thailand. Whenever I go I feel like it’s developing very rapidly. Well maybe not the rural areas, but the provincial cities.

  18. Gravatar of ssumner ssumner
    21. September 2014 at 11:23

    Since I googled Dubrovnik, I’m glad to hear that’s what I got.

  19. Gravatar of mikef mikef
    21. September 2014 at 13:45

    I don’t know anything about how this list was determined…but I’ve got to believe that a country’s mood is generally very dependent on whether population is optimistic or pessimistic on the future. The whole right track/wrong track poll. Most people in Venezuela probably supported Chavez and thought that the future was bright (ignorance is bliss).

    But even a population that has been through hell and back can be very happy if big changes have been made to make them more optimistic. It does not surprise my that Latin America is thought to be happy. The future is brighter than the past, they have large extended families, they have religion.
    Once to reach a certain level of wealth, and you are living within your means, then I don’t think adding to it adds to your sense of well being.

    Of course, younger populations are naturally more optimistic so it helps to have that. Assuming they are gainfully employed. If you are not, you are not going to be happy. Any country with 50% youth unemployment (Croatia/Greece) is not going to be happy place regardless of whether it looks like paradise and has perfect weather.

  20. Gravatar of ssumner ssumner
    22. September 2014 at 04:57

    Mike, Doesn’t Central America have lots of youth unemployment?

  21. Gravatar of mikef mikef
    22. September 2014 at 08:05


    According to

    Greece and Croatia are the worlds highest at nearly 60% which is up from 30% a couple of years ago…and Honduras has < 8%. I suppose with so many of the youth migrating it keeps the rate down. Much of the employment is in the informal sector so I would think that it would be difficult to measure.

  22. Gravatar of mikef mikef
    22. September 2014 at 08:35

    Actually, according to the CIA fact book

    Guatemala only has a 7.5% youth unemployment rate. There is a lot of violence which I think is the main reason for the migration. Second is just the search of a better life. Remittances are so high in those countries that the thought of migrating to the US is like going to the promise land…

  23. Gravatar of Scott Sumner Scott Sumner
    22. September 2014 at 17:07

    Mike, Thanks for the info, I assumed jobs were harder to get–but I guess the real problem is low wages.

  24. Gravatar of Major.Freedom Major.Freedom
    22. September 2014 at 17:23

    Given that there is still significant unemployment, low wage rates are definitely not a problem, and in fact would be a benefit. Some income is better than zero income, and some production financed consumption is better than tax or inflation financed consumption.

  25. Gravatar of Major.Freedom Major.Freedom
    22. September 2014 at 17:24

    Given that there is still significant unemployment, low wage rates are definitely not a problem, and in fact would be a benefit. Some income is better than zero income, and some production financed consumption is better than tax or inflation financed consumption.

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