Hamish McRae: World happiness can tell us a great deal about governments

Economic Life: To increase its citizens' happiness, the main thing a government should strive for is competence

Happy in your work? Or relieved to have a long weekend off? This Easter holiday will be the last moment of calm before the election campaign, so it seems sensible to try to stand back from the unpleasantness of our politics, not to mention the unpleasantness of our economics, and focus on something more uplifting: what makes us happy.

This has been an area in which there has been huge interest, not least among the politicians. The Government has appointed a "happiness tsar", the economist and Labour peer Lord Layard, and I am sure we all wish him more success than the Government's drugs tsar achieved. At the TED conference in February David Cameron quoted Robert Kennedy's criticism of gross national product as an inadequate way of measuring real wealth in society. Naturally companies the world over struggle to make their employees, if not happy, at least content in their work. That is not necessarily through altruism, for high labour turnover adds to costs and diminishes quality.

But there is a problem. An article published yesterday in the Journal of Occupational and Organizational Psychology examined what makes people enjoy their jobs. Which way round does the relationship work: are people happy in general because they enjoy their jobs, or do they enjoy their jobs because they are generally happy people?

Rather surprisingly, it seems it is that latter. The lead author of the study, Professor Nathan Bowling of Wright State University in the US, explained: "These results suggest that if people are, or are predisposed to be, happy and satisfied in life generally, then they will be likely to be happy and satisfied in their work ... However, the flipside of this finding could be that those people who are dissatisfied generally and who seek happiness through their work, may not find job satisfaction. Nor might they increase their levels of overall happiness by pursuing it."

So I suppose the message to employers would be that they should try to hire happy people, rather than put their effort into making less happy ones happier. It is perhaps a message that should carry further. The first of Robert Louis Stevenson's "12 rules to live by" is: "Make up your mind to be happy. Learn to find pleasure in simple things". But this begs the question as to what does make people happy in the first place.

Here economists, as usual, have carried out an abundance of research and the difficulty is to pick one's way through it. The best starting point that I have found is the work at the University of Leicester, where Adrian White, an analytic social psychologist there, produced the first ever global projection of international differences in subjective wellbeing; the World Map of Happiness.

A couple of obvious points first. One is that, in general, people in rich countries are happier – or at least feel they are happier, for remember that this is subjective wellbeing – than people in poor ones. But an even more striking one is that people in small countries are happier than people in large ones.

The largest of the top 20, Canada, has only 33 million people and most of the rest have fewer than ten million. Of the big countries, the US does rather well at 23rd, Germany is 35th, the UK 41st and France 64th. China is middle of the pack at 82nd and is happier than Japan at 90th, while India and Russia languish at 125th and 167th. Finally there is a little sad group at the bottom: the Democratic Republic of the Congo is 176th, Zimbabwe 177th and Burundi is 178th.

Most of the data is as one might expect but there are some other intriguing results, and some puzzles. The Gulf region is as happy as Western developed nations; so too is Venezuela. Japan is not as happy as it ought to be, given its wealth and health. Why is Portugal less happy than Spain? Pakistan is less happy than India but Bangladesh scores higher than either. Malaysia is significantly happier than the rest of south-east Asia. Argentina is happier than France.

Now, I should say that this study was published more than three years ago and the data will be older still. So it may be that the economic downturn has knocked the enthusiasm of two of the recession's biggest casualties, Iceland and Ireland. But the fact that people in small countries seem to thrive does raise political questions: for example, might Scotland and Wales be happier if they were independent of England?

What other policy implications are there? I suppose from a British perspective one lesson that has been drawn is that were the UK to become more like the Nordic nations we would be happier as a result. It has been argued that were the government to tax more and try to iron out inequalities, that would make for a happier society. But there are two problems with that argument, even if it were a practicable policy. One is that people seem to dislike government intervention; the other that the US is happier than the UK by a significant margin.

Besides, Canada, Australia and New Zealand, all of which have a smaller government relative to GDP than the UK and which are closer culturally than the US to the UK, seem to score higher in the league than we do. The French have a big government and they don't seem to be particularly happy with their lot.

So there are no simple rules that governments can follow to make voters feel happier. It is not just that we are not Denmark or Switzerland, to take the top two in the list. It is that Denmark and Switzerland are very different societies from each other, organised in quite different ways. To take just one measure of that difference, the government in Switzerland spends 33 per cent of GDP, while in Denmark it spends 52 per cent.

No, it seems to me that insofar as it is within the capacity of government to increase the happiness of its citizens, the main thing it should strive for is competence. It matters less how big government is but how good it is. In their different ways both Denmark and Switzerland have competent governments. There is no point in castigating successive British governments for their incompetence or otherwise. There is a perception that we have not been doing very well, a perception fostered by all political parties who are arguing that there is waste to be trimmed. But insofar as one can make international comparisons the UK seems to be about the middle of the pack: not dreadful but not very good either.

But maybe that does give a new government the bones of an agenda that might make citizens happier. If it transpires that the next government proves measurably more competent than its predecessors – measured of course independently – then maybe it would be on the path to pushing us up the happiness league a few notches. Meanwhile, I suggest to politicians about to enter the fray that, win or lose, they should heed Robert Louis Stevenson's rule number 10: "Don't hold postmortems or spend time brooding over your mistakes."