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Mostly summarized from Gregory Mankiw’s Principles of Economics, 5th Ed.
PART 8 The Data of Macroeconomics
Chapter 23 of 36 Measuring A Nation’s Income
Section 12 of 15
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Gross Domestic Product (GDP) has been called the best single measure of a society’s economic well-being.
GDP measures the economy's total income and total expenditure on goods and services.
Dividing GDP by the population number gives us income and expenditure of the average person.
Level of GDP and growth rate of GDP are main measures of economic well-being.
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Some say GDP does not measure quality of life.
People of some poor countries poll as being happier than people in rich countries.
So, why do we care about GDP?
In fact, a large GDP does help us lead a good life.
GDP does not measure our children’s health, but nations with larger a GDP can afford better healthcare for children.
GDP does not measure education quality, but nations with a larger GDP can afford better education systems.
GDP does not measure the beauty of poetry, but nations with a larger GDP can afford to teach more citizens to read and enjoy poetry, and allow more leisure time for them.
GDP does not account for our intelligence, integrity, courage, wisdom, or devotion to country.
But all these laudable attributes are easier to foster when people are less concerned about ability to afford life’s material necessities.
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Correlation between country's GDP per capita and level of happiness.
Grok:
There is a strong positive correlation between a country's GDP per capita and its average level of happiness — self-reported life satisfaction.
This relationship is one of the most robust findings in happiness research, documented across decades of data from:
⦁ the World Happiness Report — using Gallup World Poll's Cantril Ladder: 0 = worst possible life, 10 = best possible life
⦁ sources like Our World in Data, drawing on World Bank GDP figures
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Strength and Nature of the Correlation
Richer countries consistently report higher average life satisfaction.
Happiness rises steadily with each doubling of income, with larger gains at low income levels (e.g., from $2,000 to $4,000) but continued (smaller) benefits even above $50,000–$100,000.
A doubling of GDP per capita is associated with ~0.23–0.26 points higher life satisfaction on the 0–10 scale.
Combined with five other factors —social support, healthy life expectancy, freedom to make life choices, generosity, and low corruption perceptions—
these explain ~75–78% of cross-country variation in national happiness averages.
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Once basic needs are met, social support, health, trust, and freedom explain more of the remaining differences.
Latin American countries often rank happier than GDP predicts.
Some high-GDP East Asian or oil-rich nations underperform.
The pattern holds individually — richer people within a nation tend to be happier than poorer ones.
Policies improving non-income factors, e.g., social safety nets in Nordics, can yield high happiness relative to GDP.
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In short:
Higher GDP per capita strongly predicts higher national happiness, especially moving from poverty to middle income, with other social factors becoming key at higher levels.

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https://ourworldindata.org/grapher/gdp-vs-happiness

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strong correlation
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