The World's Happiest Countries -- That Are Affordable

By Markets Fool.com

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Can you find contentment in the world's happiest countries? Source: Sandy Chase via Wikimedia Commons.

The United Nations recently released its World Happiness Report, which ranks the happiest countries in the world based on measures of income, social support, health, sense of freedom, generosity, and perceived corruption. Here are the top 10:

Ranking

Country

Happiness Score (out of 10)

Region

1

Switzerland

7.59

W. Europe

2

Iceland

7.56

W. Europe

3

Denmark

7.53

W. Europe

4

Norway

7.52

W. Europe

5

Canada

7.43

N. America

6

Finland

7.41

W. Europe

7

Netherlands

7.38

W. Europe

8

Sweden

7.36

W. Europe

9

New Zealand

7.29

Oceana

10

Australia

7.28

Oceana

Source: World Happiness Report.

Western Europe, and Scandinavia in particular, made a strong showing. However, there's one major drawback for those who want to live in the happiest countries in the world: Many of them have a very high cost of living. Seven of the 10 countries on the list above have a higher cost of living than the United States -- in Switzerland's case, 70% higher.

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The solution: happy and affordable countries
If you think this means that only the wealthy can afford to visit and live in happy countries, fear not. I went through the World Happiness Report and ranked countries based on their overall score and their affordability.

In order to qualify, a country needed to have a happiness score of at least 6.5 (on a 10-point scale) and have a cost-of-living index (including rent) that was at least 10% cheaper than that of the U.S.

Rank

Country

Happiness Score

Cost of Living vs. U.S.

1

Mexico

7.19

(53%)

2

Costa Rica

7.23

(28%)

3

Brazil

6.98

(42%)

4

Oman

6.85

(25%)

5

Panama

6.79

(21%)

6

Germany

6.75

(16%)

7

Chile

6.67

(34%)

8

Argentina

6.57

(21%)

9

Colombia

6.48

(53%)

10

Thailand

6.46

(47%)

Source: World Happiness Report, Numbeo.com.

It's no coincidence that Latin American countries represent 70% of this list. Back in 1984, the WorldBank estimates that one-third of all people in Latin American countries lived in poverty. By 2011, however, that number had plummeted down to 13.3%. From an affordability standpoint, these countries are developed enough that people's basic needs are met, but not so developed that prices are sky-high--as we see in Switzerland's case.

But improving economies alone don't account for the prevalence of Latin American countries. Family and communal bonds are of the utmost importance in these countries, and study after study emphasizes that social connections are perhaps the largest predictor of happiness, once a set level of material needs are met.

And although Mexico has recently been associated with drug cartels and crime, it appears that it has little effect on the average Mexican's happiness. Indeed, the Pew Research Center released survey results late last year confirming that Mexicans were some of the happiest people in the world.The World Happiness Report itself admits that it has a tough time nailing down what makes Mexicans so happy--as it had the largest set of data that could be explained by common factors.

In the end, the country got the top spot in my list for a very simple reason: it was tied for the cheapest of all countries included, and it had the highest level of happiness.

Jasper Bergink is a financial services executive operating in Europe who, as a side project, studies individual and collective happiness. He captured the disconnect between what we hear about Mexico and what it's actually like:

I experienced Mexico as a country full of contrasts.When reading about Mexico, I mainly read about violence, migration and drugs. Whilst social inequality, and protests about disappeared students were not far away, as a touristI mainly experienced the warmth of the people, the beauty of their country, and also some pride about their enjoyable things.

If traveling to -- or, even better, retiring in -- a happy country is a goal of yours, it's worth investigating this list. And if you're worried that a lack of retirement savings could stop you from seeing the world, see our special report on how to get even more from Social Security.

The article The World's Happiest Countries -- That Are Affordable originally appeared on Fool.com.

Foolish contributor Brian Stoffel spends half of his year in Costa Rica, and can attest to the country's draw. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.