The use of Gross Domestic Product (GDP) as the main target of economic policy has recently come under attack by welfare economists who postulate that GDP figures do not capture the adverse environmental effects of economic growth. Hence, various tools (both simple and complex) have been conceived by experts to estimate the level of economic welfare and analyse the inclusiveness of economic growth. One of such tools is the Misery Index which was created by a renowned economist, Arthur Okun. It is used to determine how the average citizen is doing economically, by taking into consideration levels of inflation and unemployment.
According to the Misery Index, Nigeria is among the top ten saddest countries in the world, no thanks to its high level of unemployment (Q3-2018: 23.1%) and stubbornly high inflation (April 2019: 11.37%).
In the sphere of economics, misery tends to flow from high inflation, high borrowing costs, and unemployment. The most effective way to mitigate that misery is economic growth.
Nigeria’s Misery Index: Extending the concept of the Misery Index to Nigeria’s geopolitical zones revealed that the inhabitants of the South-West are the happiest, led by Osun state with an index estimate of 10.33. Despite being the money belt of the nation due to its oil deposits, the South-South region comes in as the most miserable region (led by Akwa Ibom state) with an index estimate of 20.58. This is because the region has a considerably higher rate of unemployment (c.30.58%) relative to other regions. It also explains the persistent restiveness in the region in response to perceived marginalisation by the government.
The Cause: We note that joblessness is the main contributor to Nigeria’s high reading on the Misery index even though inflation remains high above the CBN’s 6%-9% benchmark. Although, we acknowledge that much of Nigeria’s population work in the informal economy which is also captured in the unemployment number, it is imperative for the government to speed up the implementation of policies that will accelerate growth in the real sectors of the economy as they have the potential to absorb labour at a large scale.
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Member of the Nigerian Stock Exchange,
First City Plaza, 44 Marina,
PO Box 9117,
Lagos State,
NIGERIA.
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