On March 16, the American magazine The National Review published the Hanke’s 2021 Misery Index (Economist Steve Hanke’s Annual Misery Index 2021), which measures and ranks 156 countries from the “most miserable” to the “happiest”. According to the 2021 results, Cuba ranks first and Libya last.
The Hanke Annual Misery Index (HAMI) was created by Johns Hopkins University economist Steve Hanke in the late 2000s, based on revisions of previous schemes by Arthur Okun and Robert Barro. This takes the sum of the unemployment rate, inflation rate and bank loans and subtracts the percentage change in real GDP per capita. A higher index value reflects a higher level of ‘misery’.
In his proposal, Hanke considers high unemployment, inflation and bank loans to be negative values and “make people unhappier”; meanwhile, economic growth in real GDP per capita is positive as economic growth tends to lessen unease.
Cuba in Hanke’s annual Misery Index
The HAMI calculates the welfare of countries through the lens of economics. Since its inception in 2011, its statistics included fewer than 100 countries in the world, among which Cuba was not to be found. In 2020, the calculation and registration of a total of 156 nations, including the island, began.
In 2020, Cuba ranked 117th out of the 156 registered nations, making it the bestranked country (least “miserable”) in the region, followed by countries in the region such as Ecuador at 79th and Chile at 75th. This year, the island recorded a score of 15.8, even below the world average of 23.4.
However, in 2021, Cuba ranks first in the table, followed by Venezuela and Sudan.
The calculation of the index for Cuba in 2021, according to the expert, was:
HAMI = [Desempleo (3.7 %) + Inflación (1 221.8 %) + Tasa de interés de los préstamos bancarios (2.3 %)] Real GDP growth (0.2%) = 1,227.6.
To get the figure of 1227.6 much higher than the 15.8 a year ago Steve Hanke used an inflation rate of 1221.8% per year and such Confirmed on his official Twitter account (@steve_hanke).
Based on this figure, the island’s economic growth model in 2021 will not have enough positive weight to offset the unfavorable impact of unemployment rates, inflation and bank interest rates. Inflation becomes the factor with the greatest negative impact on the result achieved.
According to the expert, the statistics that Hanke uses in his annual calculation come from various sources such as the Economist Intelligence Unit, the World Economic Outlook (World Economic Outlook) of the International Monetary Fund, the World Bank and the International Labor Organization. Therefore, to measure the misery index of Cuba, it does not include national records. It also does not identify the specific sources used to obtain each statistic.
Although there is no consensus on inflation rates on the island over the past year, the state has stated that at least a 60% increase was planned as part of the economic reform measures launched in January 2021. However, official figures from the National Information and Statistics Office (ONEI) put annual inflation at 77.33%, and economists put it at around 500%.
Hanke’s calculation uses a much higher inflation rate (1,221.8%) and does not agree with any of the above. Cuba’s first position in the HAMI table responds directly to this data.
What is meant by “misery” or “happiness” in HAMI? The Total Bill
According to Steve Hanke, “The human condition sits on a wide spectrum between ‘miserable’ and ‘happy’. In the economic sphere, misery usually arises from high inflation, high borrowing costs and unemployment. The sure way to alleviate this misery is economic growth.
On the other hand, “happiness is more likely to flourish when growth is strong, inflation and interest rates are low and employment is plentiful,” emphasizes the expert.
Many countries measure and report these economic parameters on a regular basis. According to Hanke, the country comparison can “say a lot about where in the world people are sad or happy”.
The original index was created in the 1970s by Okun, a member of President Johnson’s Council of Economic Advisers, to provide an affordable measure of the economy. This allowed the economic situation of the average person to be determined and concerned only the sum of the annual rate of inflation and the rate of unemployment in the United States; In practical terms, the cost of living, opportunity and access to the labor market were measured.
From this, the economist Robert Barro from Harvard University contributed what he called the Barro Misery Index (BMI) in 1999. In his scheme, he added two factors to the sum of the inflation and unemployment rates: the variation in interest rates and the growth rate of gross domestic product (GDP) in the US According to Steve Hanke, de Barros’ fundamental contribution was the inclusion of a variable that was in the original model missing: economic growth.
The HAMI, although a revision of the Okun and Barro schemes, unlike them can be applied around the world, and its creator publishes an annual table of misery index scores for various countries, beyond North America.
More generally, Ricardo Matamoros, director of the Institute for Economic and Social Research (IIES) at the National Autonomous University of Honduras (UNAH), has emphasized that the HAMI “does not measure extreme poverty, but rather wellbeing, in which case macroeconomic variables are increased Conditions that allow the population to feel significant levels of dissatisfaction.
It is noted that the model ignores general factors that may be important to an individual’s happiness or misery, such as: B. the growth of real wages or consumer confidence.
WE ALSO RECOMMEND:
