The Relationship Between Happiness and Development of a Country: The Case of Lithuania

1. Questions and Hypothesis

1.1. Key Questions to be Answered:

  1. Is Lithuania becoming a happier state as its human development increases?
  2. How does Lithuania's happiness level compare to its global, continental and regional average?
  3. How does Lithuania's human development compare to its global, continental and regional average?
  4. What is the relationship between development and happiness?
  5. What factors could made Lithuania happier in the future? Can we predict its future level of happiness?

1.2. Core Hypothesis

The development in Lithuania is dependent and explained by its level of Human Development Index (HDI).

2. Background Information

2. 1. Human Development Index (HDI)

The level of development is often mistakenly measured by pure income attribute, such as GDP or GDP per capita (PPP). The United Nations Human Development Index is more applicable measure to human development as it incorporates not only the level GDP, but also other metrics, such as the level of education achieved and human life expectency. The Human Developments Index (HDI) reflects the overall development level of the society as a whole, rather than its pure income.

In this analysis, the United Nations Human Development Index (HDI) is chosen as a key indicator of the development of the Republic of Lithuania.

2.2. World Hapiness Report

Since 2012, the United Nations also compile the official World Happiness Report. This report reveals the level of happiness achieved by any country in the world. The level of hapiness is based on based on respondent ratings of their own lives (i.e. by a survey), which the report also correlates with various quality of life factors.

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Looking at the top10 of the happiest countries in the world in 2020, the gut feeling kicks in that the richest countries tend to be also the happiest countries. However, is it always the case if we go deep down?

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If we take OECD country ranking of their happiness levels in 2019, one can spot that Lithuania ranks higher than Estonia, South Korea or even Japan, which are locally perceived as "the richer countries". Thus, guessing by the gut feeling, one may state that the level of happiness does not necessarily correspond to how rich or developed the country is.

This analysis looks into whether the path of the country's development corresponds to its level of happiness. As a focus of this analysis, we specifically look into the case of the Republic of Lithuania.

3. Data

In this research, I extracted datasets from Kaggle. For both World Health Report and Human Development Index, I will extract data from MySQL databases, which concern the years from 2015 to 2019. This decision is limited by the fact that no earlier data for World Health Report could be recorded earlier than 2015 and no later data could be recorded for Human Development Index later than 2019. Each dataset has up to 200 rows, which correspondes to the number of countries in any particular year.

3. Findings

3.1. Is Lithuania becoming a happier state as its human development increases?

It appears that, as Lithuania developed it also showed a positive relationship with its level of happiness:

3.2. How does Lithuania's happiness level compare to its global, continental and regional average?

3.2.1. Average Happiness Score of Lithuania Between 2015 and 2019

On Average, between 2015 and 2019 Lithuania scored 5.93 on happiness level and took 52 position in the world:

3.2.2. Average Happiness Score of the World Between 2015 and 2019

The average happiness level in Lithuania was 9% higher than the average happiness level of the world:

3.2.3. Average Happiness Score by Continent / Region Between 2015 and 2019

The average happiness in Lithuania was higher than its continental / regional average of 5.42. That is, Lithuania is happier than an averge Cental and Eastern European state, but not quite there to be as happy as an average Western European state:

3.2.4. Average Happiness Score in Central and Eastern Europe in 2019

In 2019, Lithuania ranked 42nd by in happiness rank and was almost on par with Uzbekistan, Poland and Slovakia. Only Czech Republic really stands out in the continent/region. With its current happiness level, Czech Republic qualifies to be considered a Western European state:

3.2.5. Average Happiness in the Baltic Region Between 2015 and 2019

In the Baltic region, Poland was the happiest state between 2015 and 2019 and Lithuania came in second, leaving behind Latvia and Estonia:

3.3. How does Lithuania's human development compare to its global, continental and regional average?

3.3.1. Average Human Development Score of Lithuania Between 2015 and 2019

Between 2015 and 2019 Lithuania averaged 0.87 score on human development level:

3.3.2. Average Human Development Score of the World Between 2015 and 2019

The average human development level in Lithuania was 20% higher than the average human development of the world:

3.3.3. Average Human Development Score by Continent / Region Between 2015 and 2019

The average human development in Lithuania was higher than its continental / regional average of 0.80. That is, Lithuania is more development than an averge Cental and Eastern European state, but not quite there to be as developed as an average Western European state:

3.3.4. Average HDI Score in Central and Eastern Europe in 2019

In 2019, Lithuania was among the most developed countries in CEE, left behind only by Slovenia, Czech Republic and Estonia.

3.3.5. Average Human Development in the Baltic Region Between 2015 and 2019

In the Baltic region, Estonia was the most development state between 2015 and 2019 and Lithuania came in second, leaving behind Poland and Latvia:

On the Baltic Region level, this means that Estonia is the most developed and the most unhappy state, even though Estonia's level of happiness also showed positive relationship to its human development level:

3.4. What is the relationship between development and happiness?

On an aggreggate level, cross-sectional time-series data tells us that there is a strong positive relationship between the country's development level of its level of happiness:

However, one cannot come to a conclusion that the level of country's happiness can be explained and predicted by its level of human development:

This conclusion stems from a fact that in a direct linear regression the HDI score explains roughly 65% of cases of country's happiness level. Thus, the hypothesis that Human Development Index explains the country's Happiness Level is rejected. An alternative model must be tested:

We can come to the conclusion that any country's level of happiness cannot be explained by its pure HDI Score, but rather a broader measure of its human and social development, which includes factors, such as Social Support, Freedom to Make Life Choices, Government Corruption, Generosity, along the HDI Score.

3.5. What factors could made Lithuania happier in the future? Can we predict its future level of happiness?

As an example, one can you use the model above to provide predicted values of the inputs below and come up with a predicted level of happiness for any country in the world, including Lithuania:

◉ Economy (GDP per Capita

◉ Social Support

◉ Health (Life Expectancy)

◉ Freedom to Make Life Choices

◉ Government Corruption

◉ Generosity

◉ HDI Score

If we can predict all these variables, we can also predict the future level of happiness of Lithuania:

4. Conclusion

In this piece of research, one may come up with the following findings:

◉ Historically, countries have shown a positive relationship between their level of human development, determined by Human Development Index (HDI), and its level of happiness, assessed in World Health Report.

◉ However, the core hypothesis that the level of happiness in any country can be simply explained by its human development level is rejected.

◉ One cannot predict any country's level of happiness by pure human development level. The level of any state's happiness rather depends on broader development sense, which includes by human and social development and determining factors, such as: Social Support, Freedom to Make Life Choices, Government Corruption, Generosity, along the HDI Score.

◉ In the future, in addressing the happiness level of a society in Lithuania, the Government of Lithuania should not only facus on Economy (GDP), Health (Life Expectancy) and Education, summed up by HDI, but rather focus also on social factors, such as Social Support, Freedom to Make Life Choices, Government Corruption and Generosity.

◉ By predicting the future values of these variables, the Government of Lithuania will be able to predict the future level of happiness of Lithuania with a decent level of confidence.