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Iceland performs well in many measures of well-being, as shown by the fact that it ranks among the top countries in several topics in the Better Life Index.
Money, while it cannot buy happiness, is an important means to achieving higher living standards. In Iceland, the average household net-adjusted disposable income per capita is lower than the OECD average of 23 938 USD a year.
In terms of employment, some 80% of people aged 15 to 64 in Iceland have a paid job, above the OECD employment average of 65%. Some 82% of men are in paid work, compared with 79% of women. People in Iceland work 1 706 hours a year, less than the OECD average of 1 765 hours.
Having a good education is an important requisite for finding a job. In Iceland, 71% of adults aged 25-64 have earned the equivalent of a high-school degree, below the OECD average of 75%. This is truer of men than women, as 73% of men have successfully completed high-school compared with 68% of women. In terms of the quality of its educational system, the average student scored 484 in reading literacy, maths and science in the OECD’s Programme for International Student Assessment (PISA). This score is lower than the OECD average of 497. On average in Iceland, girls outperformed boys by 20 points, a wider gender gap than the OECD average of 8 points.
In terms of health, life expectancy at birth in Iceland is 82 years, two years higher than the OECD average of 80 years. Life expectancy for women is 84 years, compared with 81 for men. The level of atmospheric PM10 – tiny air pollutant particles small enough to enter and cause damage to the lungs – is 17.6 micrograms per cubic meter, lower than the OECD average of 20.1 micrograms per cubic meter. Iceland also does well in terms of water quality, as 97% of people say they are satisfied with the quality of their water, considerably higher than the OECD average of 84%.
Concerning the public sphere, there is a strong sense of community and high levels of civic participation in Iceland, where 96% of people believe that they know someone they could rely on in time of need, higher than the OECD average of 89%. Voter turnout, a measure of public trust in government and of citizens’ participation in the political process, was 81% during recent elections; higher than the OECD average of 72%. Voter turnout for the top 20% of the population is an estimated 84% and for the bottom 20% it is an estimated 74%, slightly narrower than the OECD average gap of 11 percentage points.
In general, Icelanders are more satisfied with their lives than the OECD average, with 85% of people saying they have more positive experiences in an average day (feelings of rest, pride in accomplishment, enjoyment, etc.) than negative ones (pain, worry, sadness, boredom, etc.). This figure is higher than the OECD average of 76%.
OECD in Action
OECD Economic Surveys: Iceland 2013
OECD's 2013 Economic Survey of Iceland examines recent economic developments, policies and prospects. It includes a special feature on reinforcing the public debt reduction strategy.Read this report
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Iceland in Detail
Housing – Iceland expand
Living in satisfactory housing conditions is one of the most important aspects of people’s lives. Housing is essential to meet basic needs, such as shelter, but it is not just a question of four walls and a roof. Housing should offer a place to sleep and rest where people feel safe and have privacy and personal space; somewhere they can raise a family. All of these elements help make a house a home. And of course there is the question whether people can afford adequate housing.
Housing costs take up a large share of the household budget and represent the largest single expenditure for many individuals and families, by the time you add up elements such as rent, gas, electricity, water, furniture or repairs. But in addition to housing costs it is also important to examine living conditions, such as the average number of rooms shared per person and whether households have access to basic facilities. The number of rooms in a dwelling, divided by the number of persons living there, indicates whether residents are living in crowded conditions. Overcrowded housing may have a negative impact on physical and mental health, relations with others and children’s development. In addition, dense living conditions are often a sign of inadequate water and sewage supply. In Iceland, the average home contains 1.6 rooms per person, in line with the OECD average. In terms of basic facilities, 99.6% of people in Iceland live in dwellings with private access to an indoor flushing toilet, more than the OECD average of 97.9%.
More ResourcesHow's Life? at a Glance
Income – Iceland expand
While money may not buy happiness, it is an important means to achieving higher living standards and thus greater well-being. Higher economic wealth may also improve access to quality education, health care and housing.
Household net-adjusted disposable income is the amount of money that a household earns each year after taxes and transfers. It represents the money available to a household for spending on goods or services. In Iceland, the average household net-adjusted disposable income per capita is lower than the OECD average of 23 938 USD.
Household financial wealth is the total value of a household’s financial worth. In Iceland, the average household net financial wealth per capita is estimated at 43 045 USD, higher than the OECD average of 42 903 USD. While the ideal measure of household wealth should include non-financial assets (e.g. land and dwellings), such information is currently available for only a small number of OECD countries.
More ResourcesHow's Life? at a Glance
Jobs – Iceland expand
Having a job brings many important benefits, including: providing a source of income, improving social inclusion, fulfilling one’s own aspirations, building self-esteem and developing skills and competencies. In Iceland, 80% of the working-age population aged 15 to 64 has a paid job. This figure is much higher than the OECD employment average of 65% and the highest rate in the OECD. Employment rates are generally higher for individuals with a higher level of education; in Iceland an estimated 90% of individuals with at least a tertiary education have a paid job, compared with an estimated 70% for those without an upper secondary education. This 20 percentage point difference is much lower than the OECD average of 33 percentage points and suggests the job market in Iceland is relatively inclusive.
Women are still less likely than men to participate in the labour market. In Iceland, 79%of women have jobs. This is much more than the OECD average of 57% and relatively close to the 82% employment rate of men in Iceland. The 3 percentage point gender difference is much lower than the OECD average of 16 percentage points and suggests Iceland has been successful in addressing the constraints and barriers women face accessing work.
Young people aged 15-24 in Iceland face an unemployment rate of 13.6% compared with the OECD average of 16.3%.
Unemployed persons are defined as those who are not currently working but are willing to do so and actively searching for work. Long-term unemployment can have a large negative effect on feelings of well-being and self-worth and result in a loss of skills, further reducing employability. In Iceland, the percentage of the labour force that has been unemployed for a year or longer is currently at nearly 1.7%, lower than the OECD average of 2.7%. There is little difference on average between men and women in the OECD area when it comes to long-term unemployment. This is true in Iceland, where the long-term unemployment rate for men and women is nearly the same at respectively 1.7% and 1.6%.
The wages and other monetary benefits that come with employment are an important aspect of job quality. In Iceland, people earn 39 433 US dollars per year on average, less than the OECD average of 41 010 USD. Not everyone earns that amount however. Whereas the top 20% of the population earn an estimated 49 099 USD per year, the bottom 20% live on an estimated 24 831 USD per year.
Another essential factor of employment quality is job security. Workers facing a high risk of job loss are more vulnerable, especially in countries with smaller social safety nets. In Iceland, workers face a 4.3% chance of losing their job, lower than the OECD average of 5.3%.
More ResourcesWell‑being in the workplace: Measuring job quality
Community – Iceland expand
Humans are social creatures. The frequency of our contact with others and the quality of our personal relationships are thus crucial determinants of our well-being. Helping others can also make you happier. In Iceland, around 52% of people reported having helped a stranger in the last month, more than the OECD average of 49%.
A strong social network, or community, can provide emotional support during both good and bad times as well as provide access to jobs, services and other material opportunities. In Iceland, 96% of people believe that they know someone they could rely on in a time of need, the highest figure in the OECD, where the average is 89%. There is little difference between men and women, as 95% of men believe they have this kind of social support, compared with 96% of women. While on average in the OECD there is a clear relationship between the availability of social support on the one hand, and people’s education level on the other, in Iceland the level of social support is similar across society. Around 97% of people who have completed primary education report having someone to count on for help in times of need, compared to 96% for people who attained tertiary education. Iceland is one of four countries where the less educated report more social connections than the more educated.
A weak social network can result in limited economic opportunities, a lack of contact with others, and eventually, feelings of isolation. Socially isolated individuals face difficulties integrating into society as a contributing member and fulfilling personal aspirations.
More ResourcesHow's Life? at a Glance OECD Insights: Human Capital
Education – Iceland expand
A well-educated and well-trained population is essential for a country’s social and economic well-being. Education plays a key role in providing individuals with the knowledge, skills and competences needed to participate effectively in society and in the economy. Having a good education greatly improves the likelihood of finding a job and earning enough money. Across OECD countries, 83% of people with university-level degrees have a job, compared with 55% for those with only a secondary school diploma. Lifetime earnings also increase with each level of education.
Following a decline in manual labour over previous decades, employers now favour a more educated labour force. High-school graduation rates therefore provide a good indication of whether a country is preparing its students to meet the minimum requirements of the job market. In Iceland, 71% of adults aged 25-64 have earned the equivalent of a high-school degree, lower than the OECD average of 75%. This is truer of men than women, as 73% of men have successfully completed high-school compared with 68% of women. This 5 percentage point difference is higher than the OECD average of 1 percentage point. Among younger people – a better indicator of Iceland’s future – 75% of 25-34 year-olds have earned the equivalent of a high-school degree, lower than the OECD average of 82% but showing some progress.
People in Iceland can expect to go through 19.5 years of education between the ages of 5 and 39, much more than the OECD average of 17.7 years. This high level of education expectancy could influence Iceland’s future performance in educational attainment.
But graduation rates, while important, speak little to the quality of education received. The OECD’s Programme for International Student Assessment (PISA) reviews the extent to which students have acquired some of the knowledge and skills that are essential for full participation in modern societies. In 2012, PISA focused on examining students’ reading ability, skills in maths and level in sciences, as research shows that these skills are more reliable predictors of economic and social well-being than the number of years spent in school.
The average student in Iceland scored 484 in reading literacy, maths and sciences, lower than the OECD average of 497. On average in Iceland, girls outperformed boys by 20 points, much more than the average OECD gap of 8 points.
The best-performing school systems manage to provide high-quality education to all students. In Iceland, the average difference in results, between the students with the highest socio-economic background and the students with the lowest socio-economic background is 65 points, much lower than the OECD average of 96 points and one of the smallest gaps amongst OECD countries. This suggests the school system in Iceland provides relatively equal access to high-quality education.
More ResourcesHow's Life? at a Glance
Environment – Iceland expand
The quality of our local environment has a direct impact on our health. Outdoor air pollution is one important environmental issue that directly affects the quality of peoples’ lives. Despite national and international interventions and decreases in major pollutant emissions, the health impacts of urban air pollution continue to worsen, with air pollution set to become the top environmental cause of premature mortality globally by 2050. Air pollution in urban centres, often caused by transport and the use of small-scale burning of wood or coal, is linked to a range of health problems, from minor eye irritation to upper respiratory symptoms in the short-term and chronic respiratory diseases such as asthma, cardiovascular diseases and lung cancer in the long-term. Children and the elderly may be particularly vulnerable.
PM10 – tiny particulate matter small enough to be inhaled into the deepest part of the lung – is monitored in OECD countries because it can harm human health and reduce life expectancy. In Iceland, PM10 levels are 17.6 micrograms per cubic meter, lower than the OECD average of 20.1 micrograms per cubic meter and the annual guideline limit of 20 micrograms per cubic meter set by the World Health Organization.
Access to clean water is fundamental to human well-being. Despite significant progress in OECD countries in reducing water pollution, improvements in freshwater quality are not always easy to discern. In Iceland, 97% of people say they are satisfied with water quality. This figure is the highest in the OECD where the average satisfaction level is 84%.
More ResourcesOECD Environmental Outlook to 2030 How's Life?: Work and Life Balance
Governance – Iceland expand
Trust in government is essential for social cohesion and well-being. In Iceland, 46% of people say they trust their national government, more than the OECD average of 39%. High voter turnout is another measure of public trust in government and of citizens’ participation in the political process. In the most recent elections for which data is available, voter turnout in Iceland was 81% of those registered. This figure is much higher than the OECD average of 72%.
Even if the right to vote is universal in all OECD countries, not everyone exercises this right. There is little difference in the voting rates of men and women in most OECD countries. This is the case in Iceland, where the voter turnout of men and women is similar, at an estimated 81% and 82%. While on average there are few differences between men and women concerning participation in elections, income can have a strong influence on voter turnout. In Iceland, voter turnout for the top 20% of the population is an estimated 84%, whereas the participation rate of the bottom 20% is an estimated 74%. This 10 percentage point difference is slightly lower than the OECD average difference of 11 percentage points.
Ensuring that government decision making is not compromised by conflicts of interest is key to maintaining trust in government. Transparency is therefore essential to hold government to account and to maintain confidence in public institutions.
Freedom of information laws (FOI) allow the possibility for individuals to access undisclosed information. For such policies to be successful, the public should have a clear understanding of their rights under the law, should be able to file requests with ease and should be protected against any possible retaliation. People in Iceland can file a request for information either in writing, online, by telephone or in person – thus greatly facilitating the FOI process. However, there are no provisions for anonymity or protection from retaliation.
Better Policies for Better Lives
Consultation and consensus to rebuild public trust
The Icelandic government has made it clear that openness and transparency are key factors in rebuilding trust in government following the economic collapse in 2008. The preparation of legislation, for example, is being made more transparent. Ministries increasingly invite the public to comment on draft bills before they are introduced to parliament.
A strong example of public consultation is the economic and social development strategy “Moving Iceland Forward 2020”, developed by the government in co-operation with social partners after broad citizen mobilisation. National meetings were held in eight regions. During these one-day meetings politicians and members of civil society engaged in discussions with the general public about the competitiveness of each region. At the same time expert groups were formed to discuss the topic.
This consultation process has resulted in a proposed strategy which should form the basis for coordinating government policies and civil service reforms in the coming years.
More ResourcesHow's Life? at a Glance
Health – Iceland expand
Most OECD countries have enjoyed large gains in life expectancy over the past decades, thanks to improvements in living conditions, public health interventions and progress in medical care. Life expectancy at birth in Iceland stands at 82 years, two years above the OECD average of 80 years. Life expectancy for women is 84 years, compared with 81 for men, a smaller difference than the average OECD gender gap of six years with a life expectancy of 83 years for women and 77 years for men.
Higher life expectancy is generally associated with higher healthcare spending per person, although many other factors have an impact on life expectancy (such as living standards, lifestyles, education and environmental factors). Total health spending accounts for 9.0% of GDP in Iceland, slightly below the OECD average of 9.4%. At 3 305 USD, health spending per person in Iceland is also close to the OECD average of 3 322 USD. Between 2000 and 2011, total health spending in Iceland increased in real terms by 1.8% per year on average, a slower growth rate than the OECD average of 4.0%, and decreased by 7.5% in 2010 and was 0% in 2011.
Throughout the OECD, tobacco consumption and excessive weight gain remain two important risk factors for many chronic diseases. In Iceland, the proportion of smokers among adults has been reduced from 33.0% in 1987 to 14.3% today, below the OECD average of 20.9% and one of the lowest rates among OECD countries. In many OECD countries, large proportions of the population are overweight or obese. In Iceland, the obesity rate among adults based on self-reported height and weight – is 21.0%, higher than the OECD average of 17.2%. Obesity’s growing prevalence foreshadows increases in the occurrence of health problems (such as diabetes, cardiovascular diseases and asthma), and higher health care costs in the future.
When asked, “How is your health in general?”78% of people in Iceland reported to be in good health, much higher than the OECD average of 69%. Despite the subjective nature of this question, answers have been found to be a good predictor of people’s future health care use. Gender, age and social status may affect answers to this question. On average in OECD countries, men are more likely to report good health than women, with an average of 72% for men and 67% for women. In Iceland, the average is 79% for men and 76% women. Not surprisingly, older people report poorer health, as do those who are unemployed, or who have less education or income. About 85% of adults with a disposable income in the top 20% in Iceland rated their health as ‘good’ or ‘very good’, compared to about 74% for those with a disposable income in the bottom 20%.
More ResourcesHow's Life? at a Glance
Life Satisfaction – Iceland expand
Happiness or subjective well-being can be measured in terms of life satisfaction, the presence of positive experiences and feelings, and the absence of negative experiences and feelings. Such measures, while subjective, are a useful complement to objective data to compare the quality of life across countries.
Life satisfaction measures how people evaluate their life as a whole rather than their current feelings. It captures a reflective assessment of which life circumstances and conditions are important for subjective well-being. When asked to rate their general satisfaction with life on a scale from 0 to 10, Icelanders gave it a 7.5 grade, higher than the OECD average of 6.6.
There is little difference in life satisfaction levels between men and women across OECD countries. This is true in Iceland, where men gave their life a 7.4 grade and women 7.6. Education levels, however, influence subjective well-being. Whereas people who have only completed primary education in Iceland have a life satisfaction level of 7.4, this score reaches 7.8 for people with tertiary education.
Happiness, or subjective well-being, is also measured by the presence of positive experiences and feelings, and/or the absence of negative experiences and feelings. In Iceland 85% of people reported having more positive experiences in an average day (feelings of rest, pride in accomplishment, enjoyment, etc.) than negative ones (pain, worry, sadness, boredom, etc.). This figure is much higher than the OECD average of 76% and makes Iceland one of the happiest countries in the OECD.
More ResourcesHow's Life? at a Glance
Safety – Iceland expand
Personal security is a core element for the well-being of individuals, and largely reflects the risks of people being physically assaulted or falling victim to other types of crime. Across the OECD, assault rates have generally declined in the past five years. In Iceland, 2.7% of people reported falling victim to assault over the previous 12 months, less than the OECD average of 3.9%. There is little difference between men and women in assault rates, at respectively 3.0% and 2.3%.
The homicide rate (the number of murders per 100,000 inhabitants) is a more reliable measure of a country’s safety level because, unlike other crimes, murders are usually always reported to the police. According to the latest OECD data, Iceland’s homicide rate is 1.3 lower than the OECD average of 4.1. In Iceland, the homicide rate for men is 0.8 compared with 1.9 for women, the only OECD country where the rate is higher for women than for men.
Fear of crime is another important indicator as it can constrain behaviour, restrict freedom and threaten the foundation of communities. Despite a general reduction in assault rates in the past five years, in many OECD countries feelings of security have declined. In Iceland, 78% of people feel safe walking alone at night, higher than the OECD average of 69%. While men are at a greater risk of being victims of assaults and violent crimes, women report lower feelings of security than men. This has been explained by a greater fear of sexual attacks, the feeling they must also protect their children and their concern that they may be seen as partially responsible.
More ResourcesHow's Life? at a Glance
Work-Life Balance – Iceland expand
Finding a suitable balance between work and life is a challenge for all workers, especially working parents. Some couples would like to have (more) children, but do not see how they could afford to stop working. Other parents are happy with the number of children in their family, but would like to work more. This is a challenge to governments because if parents cannot achieve their desired work/life balance, not only is their welfare lowered but so is development in the country.
An important aspect of work-life balance is the amount of time a person spends at work. Evidence suggests that long work hours may impair personal health, jeopardize safety and increase stress. People in Iceland work 1 706 hours a year, less than the OECD average of 1 765 hours.