The Country Where Happiness and Inequality Go Hand in Hand

The Country Where Happiness and Inequality Go Hand in Hand

Why you should care

Contentment in Costa Rica tops the charts, but that doesn’t mean all things are equal. 

  • POPULATION
  • SPOKEN LANGUAGE
  • GDP PER CAPITA
  • CAPITAL CITY
Geo facts & figures

The 2018 World Happiness Report named Costa Rica the happiest country in Latin America — not all that surprising when Costa Rica has for years topped global happiness rankings, alongside the usual Scandinavian suspects of Norway, Sweden and Denmark.

And yet. In the capital city of San José, the average gross salary is a reasonable $37,462. Four hours away in Limón, however, the gross average salary is just $9,096. At Doris Metropolitan, one of San José’s popular eateries, a mojito costs nearly $7. So one meal for four people there would consume .3 percent of a Limón resident’s annual salary.

How can happiness go hand in hand with such massive inequality? Despite being the happiest country in the region:

Costa Rica scores 48.7 on the 2016 GINI Index of wealth distribution, putting it in line with countries like the Ivory Coast and Cameroon.

“Like every country in Latin America, Costa Rica has grown into its inequality,” says Randall Brenes of Costa Rica’s U.N. Development Program. And for Brenes, the root cause is a crisis of education. “Children tend to get the same level of education as their parents. So, if the parents weren’t educated, their children won’t have as many educational opportunities.” But there’s more at play than this oft-lamented driver of systemic privilege and inequality. Two other prime factors would be Costa Rica’s service economy and its location.

The path to understanding how a country with deepening inequality can also score high on the happy meter has to start by abandoning Western notions of what happiness means. In its chapter on Latin America, the 2018 World Happiness Report states: “High happiness in Latin America is neither an anomaly nor an oddity. It is explained by the abundance of family warmth and other supportive social relationships frequently sidelined in favor of an emphasis on income measures.” Thus, markers of happiness are not universal — a big salary for some is less significant to others — and variables that at first glance seem contradictory become, on closer inspection, totally comprehensible. Large measures of inequality and happiness can, in fact, coexist.

This is not to say that high inequality in Costa Rica isn’t a legitimate concern. According to Alice H. Shackelford, the country’s U.N. resident coordinator, “poverty and inequality especially affects those on the margins of Costa Rican society, particularly Afro-Costa Ricans.” The problem has deep and complex roots that extend to other countries in the Americas, says Emmanuel Saez, professor of economics and director of the Center for Equitable Growth at the University of California, Berkeley. “Latin American countries never managed to reduce durable inequality in the middle of the 20th century,” he says.

Does that mean Costa Rica’s future will continue to ride on high inequality and high happiness? Absolutely not, say the experts. Shackelford and Brenes agree that even if the Costa Rican government hasn’t explicitly made combating inequality a top priority, its anti-poverty work, along with the work of nongovernmental organizations, is an important first step toward lessening the divide.

And while the plague of income inequality may seem like a recent phenomenon, history can be instructive here — providing a resource both for attacking the problem and crafting sound policy. The best course of action for the Costa Rican government, Saez suggests, would be to look elsewhere for success stories. There’s historical evidence from the U.S. and Europe showing that countries “can decrease their level of income and wealth concentration through progressive policies [such as] progressive taxation, anti-trust regulations and financial regulation,” he adds.

The end goal for Costa Rica, then, is to implement policies that will create an inclusive economy and banish inequality — while hanging on to its position atop the happiness podium.

Correction: The original version of this story contained a typo referring to the country’s island location.

OZYAcumen

Numbers and factoids — fodder for your next cocktail party.