The “misery index” provides a measure of these pressures by adding the unemployment rate to the inflation rate, with a higher number indicating higher levels of “misery”.
The index moves up and down over time – and had significant rises in many places in recent years. The misery index is closely related to measures of happiness, a growing area of study.
Misery and the global financial crisis
Global financial upset since 2007 saw the misery index skyrocket in the United Kingdom, the Eurozone, United States and other developed countries, with 2012 forecast figures putting each above 10. In contrast, the emerging economies of Russia, China and Brazil saw their misery index fall between 2007 and 2012 but from a higher starting point. Emerging economies are widely considered to have recovered more quickly from – or have been harmed less by – the global financial crisis.
Despite its reflection of the day-to-day environment, only about a quarter of respondents to an eZonomics poll knew what it was.
Different types of misery
The misery index is not typically calculated by government sources but official figures can be used, such as, for the United States, the unemployment rate and consumer price index from the Bureau of Labour Statistics.
Sky News in the United Kingdom went a step further and published the “real” misery index, adjusting for the rate at which wages had been rising. In 2011, The Economist wrote that the economic environment meant the misery index once again had some significance as inflation has become a more prominent concern for many people. It charted “misery” scores and results of a happiness survey for OECD countries and found “people living with high economic misery are generally less happy”.
Even without adding high unemployment, results of the ING International Survey on Savings show inflation itself has materialised as a major worry. As an eZonomics analysis of the results showed, 56% of respondents in France cited prices rising faster than income as a reason their financial position weakened in the current economic climate, with response rates of more than 50% in Italy and Slovakia as well.
Our video on How to protect savings from inflation, Five tips on beating inflation and blogpost on the topic suggest ways to tackle rapidly rising prices.