Have our lives improved since the financial crisis or are we just more optimistic?

By November 7, 2013Uncategorized

The OECD published a fascinating report this week on life satisfaction across the OECD. Whilst some results we’re predictable – satisfaction in Greece has dropped as steeply as its unemployment rates have climbed – others were surprising.

In the Better Life Index, Britain performed alongside the Nordic countries, Switzerland, Australia, New Zealand and Canada, as one of the top performing countries. Why after years of economic doom and gloom and declining living standards is this case? Many of the other countries on the high performing list survived the global recession with their economies relatively unscathed and their public finances intact. And how have countries such as Germany who whose economic model and stewardship are often lauded, performed lower than us on issues such as life satisfaction?

As is often the case with statistics, the devil is in the detail – what people were asked, when, and in what circumstances. As The Guardian noticed, a lot of the data in this was collated from the period of relative calm before the spending cuts began to hit home in 2010/2011. But there’s also another potential answer to this.

The life satisfaction indices where we edge German 6.8 to 6.7, and the happiness index where we score 85% compared to Germany’s 81% are measures based on subjective self-reflection. As the OECD describe, life satisfaction asks participants to rank their “general satisfaction with life”.  This works by respondents selecting there general satisfaction with life on a scale of 1 to 10, or in the case of happiness selecting what ratio of positive to negative experiences they experience on an average day.

This data is fascinating and I thoroughly recommend reading through the report, but as we’ve argued before, subjective questions are often a reflection not just of their actual life experiences but of the psychological state through which we perceive and reflect on our lives and experiences. This is not a criticism of the data, but a challenge for its interpreters.

Time and time again through conducting research where we use our segmentation tool Values Modes, we see how people’s perceptions are refracted through their key psychological needs. Whereas a young immigrant in East London who fits the values group Prospector may work long hours in an unfulfilling job and live in grinding poverty, they may view their life more positively than their next door neighbour, a retired Settler, with a comfortable pension and a higher standard of life.

This is because our memories and our self-perceptions are notoriously unreliable. The way our brains take in information relies on a variety of heuristics that interpret our experiences. We often can see what we want to see; remember what is easiest to remember.

With life satisfaction, a crucial subconscious factor is optimism. For optimistic people’s hard experiences are more likely to be shrugged off and positive ones dwelt up as reinforcing examples to ourselves of how jolly good our life is. As the heat map below shows, those who are pessimistic are more likely to be Settlers. This means they are more likely to be sustenance-driven, motivated by an unmet need for safety and wary of change; whereas the socially liberal Prospectors or Pioneers are more likely to be optimistic.

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On a population level, areas with a values profile with higher amounts of optimistic residents often produce higher levels of satisfaction irrespective of the realities of life. As a country, the British Values Survey has show British values to also be shifting in this direction.

Is this behind the OECD results? And if so, what does that tell us about the Germans?

Daniel Jackson is a Senior Project Officer at The Campaign Company.  If you want to see what your own primary values set is, why not take the simple Values Questionnaire here

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