Many people who swear that they have discovered the secret to overall happiness claim that it has nothing to do with money. There is an incredibly high chance that you have heard the phrase, "Money cannot buy happiness." This statement is undeniably accurate, but there is also a strong counterargument—significant evidence shows that sometimes money can enable financial security that leads you to feel happier overall.
Money can't buy happiness ... can it? The truth behind the saying
The core truth behind this counterargument is that many negative feelings and situations arise from a less-than-ideal fiscal standing. When one's credit score is low, even basic expenses such as renting an apartment, purchasing a home, or just getting a car can be difficult or impossible to finance. Similarly, people on a limited income can find it challenging to keep up with bare essentials such as electricity, water, and even groceries. In short, a lack of money can severely hinder one's ability to afford the fundamental "must-have" things human beings need to get by, let alone luxury items. This presence or lack of money can also impact one's health. Wealthy people can often afford better medical treatment than those with less money, especially in countries without universal health care. Moreover, an unfavorable financial status can be a major source of stress, anxiety, or depression.
What about the argument that money cannot buy cherished memories, which are arguably the most precious treasure of all? Absolutely true. Granted, money can buy many things that can help create those memories, such as vacations, tickets to concerts or sporting events, nights out on the town, trips to the movies or the amusement park, gifts for loved ones, and so on. But creating those memories is still up to the individual. Plus, there are many other treasures that money can't enable, including love, trust, friendship, and spiritual peace.
Ultimately, the adage is true: Money cannot buy happiness. To quote another common saying, "the best things in life aren't things." However, a persistent lack of money can trigger negative effects ranging from emotional stress and unhappiness to poor physical health, so having at least enough money to easily cover one's living expenses is a worthwhile and unselfish goal.
Gross Domestic Product Per Capita as a measure of national wealth
By examining the gross domestic product per capita(GDP) of each country around the globe, it is possible to rank countries based on wealth and then compare them to each other. Remember, however, that GDP per capita does not necessarily corespond to the average wage a person living in a given country earns. For example, the United States' GDP per capita in 2019 was $65,279.50, but its average annual wage was $51,916.27 and its median wage was $34,248.45. Even the wealthiest countries have some citizens living in poverty, and even the poorest countries are home to a number of extremely rich residents—but it is a fair indicator of a country's overall financial health.
The International Monetary Fund releases a definitive ranking of 236 countries and territories of the world. Here's a sneak peek at the top 10 as of October 2021 (scroll down for the full list):
The Top 10 Richest Countries in the World (by GDP per Capita, current prices US$ - World Bank)
- Monaco - $190,512
- Liechtenstein - $180,366
- Luxembourg - $115,873
- Switzerland - $87,097
- Macao (China SAR) - $86,117
- Ireland - $85,267
- Norway - $67,389
- United States - $63,543
- Denmark - $61,063
- Singapore - $59,797
Developing countries often have deficient infrastructures and immature economies, which can put their citizens and corporations at a substantial disadvantage when competing in a global market. Larger disruptions such as war, hunger, disease, and political unrest can also have a tremendous negative impact on a country's GDP (along with nearly every other aspect of life). Factors such as these are why developing nations are more likely to appear on the list of poorest countries in the world, at least for now.
Tax shelters and Gross National Income (GNI)
GDP values can sometimes be warped by international business practices. For example, some countries (such as Ireland, Liechtenstein, and Switzerland) are regarded as "tax havens" thanks to government tax rules that favor foreign businesses. For these countries, a significant amount of what registers as GDP may actually be money that international companies are funneling through that country, as opposed to income that is actually staying there.
In an attempt to compensate for these tax havens' effect on national GDPs, many economists also track each country's Gross National Income, or GNI. This metric is very similar to GDP in that it measures the total value of all the goods and services produced in a country—however, it also adds or subtracts the money coming into or out of the country through foreign businesses. This helps account for tax haven activity and gives an arguably more accurate measure of an economy's health and wealth.
The Top 10 Richest Countries in the World (by GNI per Capita, Atlas Method, current US$ - World Bank)
- Liechtenstein - $116,440
- Switzerland - $84,310
- Norway - $78,180
- Luxembourg - $73,500
- United States - $64,530
- Ireland - $64,150
- Denmark - $63,070
- Iceland - $62,420
- Qatar - $56,210
- Singapore - $54,920
It's important to note that GNI does not completely filter out all international financial interactions. It just helps to right-size the profits. For example, although their numerical values have changed, notable tax avoidance destinations Ireland, Liechtenstein, and Switzerland are all still in the top 10. What's more, if the list above were expanded to include territories as well as countries, several of the British Overseas Territories would rank extremely high, with Bermuda ($117,740), Isle of Man ($83,160), the Cayman Islands ($68,200), and the Channel Islands ($66,220) all ranking in the top 10. All four are well-known tax havens with tiny populations, so the profit from even just a few multi-billion-dollar financial maneuvers can significantly elevate per-capita GNI.
That said, in all of these countries' defense, being a tax haven is obviously only one out of a nearly infinite range of possible sources of national income. For example, most of the British Overseas Territories are also world-famous vacation destinations with a massive tourism sector. Note also that the absence of Monaco on this list is not an indication that it is a tax haven. Rather, GNI data for Monaco was unavailable.
What is the richest country on each continent?
As illuminating and arguably inspiring as it is to peruse the list of richest countries in the world, it's also worthwhile to examine the data when broken down by continent. For example, a list of the very richest countries on each of the six inhabited continents (by GDP per capita, as above) would look like this:
- Richest European Countries 2021: Luxembourg ($118,001), Ireland ($102,390), Switzerland ($93,520)
- Richest Asian Countries 2021: Singapore ($97,057), Qatar ($61,790), Israel ($49,840)
- Richest Countries in North America 2021: United States of America ($63,416), Canada ($52,790), Puerto Rico ($34,140)
- Australia/Oceania: Australia ($62,620), New Zealand ($48,350), Palau ($11,840)
- Richest Countries in South America 2021: Uruguay ($16,970), Chile ($16,800), Argentina ($9,930)
- Richest African Countries 2021: Seychelles ($13,140), Mauritius ($8,680), Equatorial Guinea ($8,630)
Click on the links to visit the individual pages and learn more.
Profiles of Prosperity: Five of the Richest Countries in the World*
*Four of which rank among the top tax haven countries in the world.
Luxembourg
The European country of Luxembourg has been classified and defined as the wealthiest country in the world. These findings are based on the gross domestic product per capita values of the countries. The GDP per capita is calculated by dividing the country's total GDP by the population size, with the result being the GDP value per capita within a country. The GDP value per capita of a country is an excellent way of measuring a country's wealth because it considers the standard of living. By taking the GDP per capita of a country and comparing it to the GDP per capita of another country, you'll be able to accurately determine which country is more prosperous than another, with a few other factors being taken into consideration as well. Looking at Luxembourg in particular, the GDP per capita reached a chart-topping $131,300 US$ in the October 2021 report.
Ireland
The GDP per capita of Ireland is $102,390 US$ in October 2021. For reference, Ireland's GDP in 2017 was $70,220 US$. So things are definitely looking up in Ireland—however, the country is another notorious tax haven, so perhaps the average Irishman hasn't found the pot of gold at the end of the rainbow after all.
Switzerland
Switzerland is yet another of the top five wealthiest countries based on its GDP per capita, which sat at a very notable $93,520 in October 2021.
Norway
With an October 2021 GDP per capita of $82,240 US$, this country is not only one of the top five richest worldwide, it's the only one not also considered an international tax shelter.
United States of America
Considering the lengths many large U.S. corporations go to hide their own profits in overseas tax shelters, it may be surprising to learn that the United States is itself considered a tax haven by many financial watchdog groups. However, many national and state-level regulations enable international clients to move their money through U.S.-based accounts while incurring minimal taxes.