What Is Quality of Life?
Many people think of quality of life as a very subjective assessment. But it is also an essential component of many financial decisions such as the job you take and the place you live. The factors that play a role in measuring a person's quality of life vary according to personal preferences but often include financial security as well as job satisfaction, family life, social connections, health, and safety.
Financial decisions often involve a tradeoff in which the present quality of life is decreased to save money or earn more money for the future.
Key Takeaways
- Quality of life is a subjective term that can vary depending on many different factors and is different for each individual.
- Quality of life factors include the cost of living, housing affordability, commute time, quality of healthcare, and purchasing power.
- The countries with the best quality of life include Luxembourg, the Netherlands, Denmark, and Oman.
- Governments can improve a country's quality of life by providing more safety, better infrastructure, controlling costs, and improving the healthcare system.
Understanding Quality of Life
Quality of life is strongly associated with financial factors beyond the basic necessities of food and shelter. More money often means access to greater comfort, freedom from many anxieties, and an optimistic outlook for the future.
Inevitably, job satisfaction is a key component of quality of life. For many of us, it determines our degree of satisfaction with half of our waking hours. Add in the importance of a paycheck and it affects many other aspects of our lives.
If a job provides time to enjoy life but leaves the worker too tired, injured, stressed out, or otherwise unable to enjoy their earnings, it subtracts from quality of life. Today, it is common to weigh both salary and quality of life when considering how good or bad a job is.
Quality of life is also an issue when developing a personal savings plan. In this case, the tradeoff involves sacrificing current quality of life to improve future quality of life. This may include postponing luxuries and leisure activities that improve our overall sense of well-being.
Quality of Life Factors
Quality of life can be measured in many different ways. Numbeo's Quality of Life index focuses on the following eight factors.
Purchasing Power
Purchasing power determines how much goods and services a population can buy with a given unit of currency. Ideally, the more goods and services that can be bought, the better.
Safety
Safety is measured in a variety of ways, such as crime levels, the ability to walk alone at night, and digital, infrastructure, and personal safety. It can include crime statistics, well-being indicators, safe spaces, and community power.
Healthcare
Healthcare evaluates the quality of a nation's healthcare system. It considers factors such as healthcare professionals, equipment, staff, doctors, costs, infrastructure, services, and accessibility.
Cost of Living
Cost of living evaluates how much it costs to live in a specific place. It assesses the relative prices of consumer goods, such as groceries, housing (rent or mortgage), entertainment, transportation, utilities, and restaurants.
Property Price to Income
This metric seeks to determine the affordability of housing. It evaluates the property prices of an area to the income of the population. If property prices are too high compared to income, it makes housing less affordable, reducing the quality of life.
Traffic Commute Time
A short commute to work is a good quality of life. It is often possible to save money on housing by living farther away from work but the trade-off is less time to spend with family or hobbies and more time sitting in traffic or waiting for a train. A healthy, short commute to work improves one's quality of life.
Pollution
Pollution indexes evaluate the overall pollution levels in a certain place. Factors taken into consideration include air and water pollution, garbage disposal, cleanliness, noise and light pollution, green spaces, and comfort in relation to pollution.
Climate
A good climate with moderate temperatures and low humidity is seen as improving the quality of life. An absence of dangerous weather events, such as hurricanes, earthquakes, and tornadoes is also considered in climate metrics when evaluating quality of life.
Quality of life depends on the individual, but access to good healthcare, clean and safe housing, healthy food, and a living wage are near-universal factors.
Countries With the Best Quality of Life
These are the top seven countries with the best quality of life as ranked by Numbeo's Quality of Life Index as of mid-2024.
#1. Luxembourg
Luxembourg is a small country in Western Europe with a population of 671,254. It is an important financial center with a strong banking sector, making it an extremely wealthy nation, with a GDP per capita of $128,259 in 2023; one of the highest in the world.
The country ranks highly in purchasing power, ranked no. 1 globally. It had a real GDP of $88.5 billion in 2023 with the services sector making up approximately 87% of GDP.
#2. Netherlands
The Netherlands is located in Western Europe and has a population of 17.8 million. It has a varied economy, primarily focused on trade with strong services, logistics, and high tech sectors. The country had a GDP per capita of $62,536 in 2023.
The country ranks highly in healthcare, placing it fourth in the healthcare index. It had a real GDP of $1.24 trillion in 2023 with the services sector making up 70% of GDP.
#3. Denmark
Denmark is located in Northern Europe and has a population of 6 million. It is a high-income, EU member that is trade-oriented. The country's economic growth is primarily due to pharmaceuticals, energy, and services, with a large percentage of the population in the public sector. The country has a GDP per capita of $67,967.
The country ranks highly in healthcare, cost of living, and purchasing power. The country's real GDP in 2023 was $428.4 billion, with services making up 76% of GDP.
#4. Oman
Oman is the only non-European country on this list. The country is located in the Middle East with a population of 3.9 million. Its economy is derived from oil, yet it has a relatively small GDP per capita of $23,295. It does have a large welfare system, however.
The country ranks highly in purchasing power and safety. Its real GDP in 2023 was $186 billion, with services making up 52% of GDP.
#5. Switzerland
Switzerland is located in Central Europe and has a population of 8.9 million. The country's economy is focused on banking and other financial services, making it a high-income nation. Its GDP per capita is $99,994.
The country ranks highly in purchasing power. Its real GDP in 2023 was $733.8 billion, with services making up 74% of GDP.
#6. Finland
Finland is located in Northern Europe and has a population of 5.6 million. The country is a large export-based economy, with large timber, metals, engineering, telecom, and electronics industries. Its GDP per capita is $53,755.
The country ranks highly in healthcare, cost of living, and low pollution. Its real GDP in 2023 was $321.1 billion, with services making up 69% of GDP.
#7. Iceland
Iceland is located in Northern Europe and has a small population of 365,036. The country's economy is focused on tourism, fishing, and aluminum. It has a GDP per capita of $78,811.
The country ranks highly in cost of living, low traffic commute time, and low pollution. It had a real GDP of $26.2 billion in 2023, with services making up 75% of GDP.
How to Improve Quality of Life
If you feel your quality of life is lacking, considering how you define a good quality of life is an excellent first step towards improvement. While everyone's idea of a high-quality life varies, there are some universal markers.
These markers may include access to good healthcare, loving relationships, meaningful work or volunteerism, leisure time for hobbies you enjoy, good rest, healthy food, and the ability to perform an enjoyable form of exercise.
Studies have found that practicing gratitude and meditation can improve your quality of life. Experts recommend adequate sleep (at least seven hours per night) to improve the quality of life and better control mood and energy levels.
How Governments Can Improve Quality of Life
Governments can look to data collected from happiness economic studies and indices to find places to improve the population's quality of life. One such index is the Gross National Happiness(GNH) index.
The latest version of the index, based on a survey of 5,000 Americans, concludes that Delaware residents have the highest life satisfaction, while Oregon residents are in last place.
There are many ways that a government can improve the quality of its citizens' lives. Actions include funding good public schools, offering affordable access to healthcare, and supporting family-friendly policies like paid leave to take care of sick family members or newborn or adopted children. These policy movements help families thrive.
Many of the governments in countries listed as having a high quality of life provide services and programs to their citizens to help them improve their lives. These include access to living-wage jobs, affordable or free higher education, better gun control laws, and access to high-quality and affordable healthcare.
The quality of life in the U.S. is lower than in many developed nations due to declines in personal safety, high healthcare costs, and uneven access to high-quality public education.
What Are the Primary Indicators of Quality of Life?
Some primary indicators of quality of life include sufficient income, job satisfaction, decent housing, access to high-quality education, a reasonable life-work balance, rewarding personal relationships, and access to cultural and leisure activities.
How Can We Improve Quality of Life?
Work on improving your work-life balance, relationships, home, and health.
Governments can improve the quality of life in their countries by offering affordable and accessible healthcare, investing in education, providing affordable housing, offering family-friendly policies, and putting laws into place for workers to earn living wages.
How Is Quality of Life Calculated?
Quality of life can be calculated in many ways. One is from the World Health Organization: "WHO defines Quality of Life as an individual's perception of their position in life in the context of the culture and value systems in which they live and in relation to their goals, expectations, standards, and concerns."
What Are the 4 Types of Quality of Life?
The United Nations University World Institute for Development Economics Research (UNU WIDER) provides four qualities of life:
- Livability of the environment
- Life-ability of the individual
- External utility of Life
- Inner appreciation of life
The Bottom Line
Quality of life is, above all, an individual calculation. Most of us, however, include good health, good friends, loving relationships, and some degree of creature comforts in the factors they assess. It may sound distasteful, but the money we have and the ways we get it have a big role in many of the factors that make up quality of life.
