Iceland – OECD Better Life Index

Iceland

Did You Know?

Population
0.3
mil.
Visitors per year
1.1
mil.
Renewable energy
83.43
%

How’s Life?

Iceland performs very 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 person earns more than the OECD average of 22 387 USD a year.

In terms of employment, some 79% of people aged 15 to 64 in Iceland have a paid job, above the OECD employment average of 66%. Some 81% of men are in paid work, compared with 77% of women. People in Iceland work 1 697 hours a year, less than most people in the OECD who work 1 749 hours on average.

Having a good education is an important requisite for finding a job. In Iceland, 66% of adults aged 25-64 have earned the equivalent of a high-school degree, below the OECD average of 74%. There is little difference between men than women, as 67% of men have successfully completed high-school compared with 65% of women. Iceland performs well in terms of the quality of its educational system. The average student scored 501 in reading literacy, maths and science in the OECD’s Programme for International Student Assessment (PISA). This score is higher than the OECD average of 497. On average in Iceland, girls outperformed boys by 13 points, a wider gender gap than the OECD average of 9 points.

In terms of health, life expectancy at birth in Iceland is 81 years, one year higher than the OECD average of 80 years. Life expectancy for women is 83 years, compared with 79 for men. The level of atmospheric PM10 – tiny air pollutant particles small enough to enter and cause damage to the lungs –is 14 micrograms per cubic meter, considerably lower than the OECD average of 22 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 85%.

Concerning the public sphere, there is a strong sense of community and high levels of civic participation in Iceland, where 98% of people believe that they know someone they could rely on in time of need, higher than the OECD average of 91%. Voter turnout, a measure of public trust in government and of citizens’ participation in the political process, was 84% during recent elections; among the highest in the OECD where the average is 73%. There is little difference in voting levels across society; voter turnout for the top 20% of the population is 88% and for the bottom 20% it is 83%, narrower than the OECD average gap of 7% and suggesting there is broad social inclusion in Iceland’s democratic institutions.

In general, Icelanders are more satisfied with their lives than the OECD average, with 87% 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 80%, making Iceland one of the happiest countries in the OECD.

Topics

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Iceland in Detail

Housing

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Key Findings

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 (or loan repayments for those buying their own home), gas, electricity, water, furniture or repairs. In Iceland, the percentage of their net disposable income households spend on average on keeping a roof over their heads is about the same as the OECD average of 22%.

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 the development of children. 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, an estimated 99.6% of people in Iceland live in dwellings with private access to indoor flushing toilets, higher than the OECD average of 97.8%.

Indicators

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Income

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Key Findings

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, healthcare and housing.

Household net-adjusted disposable income is the amount of money that a household earns each year after tax. It represents the money available to a household for spending on goods or services. In Iceland, the average household net-adjusted disposable income is higher than the OECD average of 22 387USD.

Household financial wealth is the total value of a household’s financial worth. In Iceland, the average household wealth is higher than the OECD average of 36 238 USD. While the ideal measure of household wealth should include real assets (e.g. land and dwellings), such information is currently available for only a small number of OECD countries.

Despite a general increase in living standards across OECD countries over the past fifteen years, not all people have benefited from this to the same extent. In Iceland, the income of the top 20% of the population is 48 014 USD a year, whereas the bottom 20% live on 10 995 USD a year.

Indicators

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Jobs

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Key Findings

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, nearly 79% of the working-age population aged 15 to 64 has a paid job. This figure is much higher than the OECD employment average of 66% and is the highest rates in the OECD. Employment rates are generally higher for the better-off in society than the worst-off; in Iceland 90% of the top 20% of the population has a paid job, compared with 79% for the bottom 20%. This 11% difference is much lower than the OECD average 35% 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, 77% of women have jobs. This is much more than the OECD average of 59% and relatively close to the 81% employment rate of men in Iceland. The 4% gender difference is much lower than the OECD average of 13% 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 16.2% compared with the OECD average of 16.7%.

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 1.6%, lower than the OECD average of 3.0%. There is little difference on average between men and women in the OECD area when it comes to long-term unemployment. In Iceland, the long-term unemployment rate for men is slightly higher than for women, with respectively 2.3% and 1.3%.

The wages and other monetary benefits that come with employment are an important aspect of job quality. In Iceland, people earn 47 257 US dollars per year on average, higher than the OECD average 34 033 US dollars. Not everyone earns that amount however. Whereas the top 20% of the population earn 93 821 US dollars per year, the bottom 20% live on 21 505 per year.

Another essential factor of employment quality is job security. Employees working on temporary contracts are more vulnerable than workers with an open-ended contract. In Iceland, close to 13% of total employees have a contract of 6 months or less, slightly higher than the OECD-30 average of 10%. This figure suggests greater stabilisation of working contracts could be encouraged for employees from Iceland.

Indicators

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Community

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Key Findings

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.

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, 98% 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 91%. There is little difference between men and women, as 97% of men believe they have this kind of social support, compared with 98% of women. The level of social support is similar across society regardless of people’s education and income in Iceland, where around 96% of the bottom 20% report having someone to count on for help in times of need, compared to 98% for the top 20%.

A weak social network can result in limited economic opportunities, a lack of contact with others, and eventually, feelings of isolation. Nearly 6% reported ‘rarely’ or ‘never’ spending time with friends, colleagues or others in social settings; this figure is lower than in most OECD countries where the average is close to 7%.

Indicators

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Education

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Key Findings

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. Most concretely, having a good education greatly improves the likelihood of finding a job and earning enough money. Across OECD countries, men with university-level degrees are 18% more likely to find jobs, and women are 32% more likely. 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, 66% of adults aged 25-64 have earned the equivalent of a high-school degree, lower than the OECD average of 74%. This is slightly truer of men than women, as 67% of men have successfully completed high-school compared with 65% of women. This 2% difference is in line with the OECD average. Among younger people – a better indicator of Iceland’s future – 70% of 25-34 year-olds have earned the equivalent of a high-school degree, also lower than the OECD average of 81% but showing some progress.

Iceland can expect to go through 18 years of education between the ages of 5 and 39, more than the OECD average of 17 years of education. This high level of education expectancy could influence Iceland’s future performance in the educational attainment of its 25-34 year-old population.

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 2009, 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 501 in reading literacy, maths and sciences, higher than the OECD average of 497. On average in Iceland, girls outperformed boys by 13 points, higher than the average OECD gap of 9 points.

The best-performing school systems manage to provide high-quality education to all students . In Iceland, the average difference in results, between the top 20% and bottom 20%, is of 70 points, much lower than the OECD average of 99 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.

Indicators

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Environment

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Key Findings

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 14.5 micrograms per cubic meter, lower than the OECD average of 22 micrograms per cubic meter.

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 score is higher than the OECD average of 85% and suggests Iceland has been successful in providing good quality water to its inhabitants.

Indicators

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Civic Engagement

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Key Findings

A cohesive society is one where citizens have a high degree of confidence in their governmental institutions and public administration. In Iceland, 50% of people say they trust their political institutions, slightly less than the OECD average of 56%. 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 84% of those registered. This figure is much higher than the OECD average of 73%.

Even if the right to vote is universal in all OECD countries, not everyone exercises this right. 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 88%, whereas the participation rate of the bottom 20% is 83%. This 5% difference, however, is lower than the OECD average difference of 7%, which suggests there is broad social inclusion in Iceland’s democratic institutions.

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.

Indicators

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Health

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Key Findings

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. In 2010, life expectancy at birth in Iceland stood at 82 years, above the OECD average of 80 years. Life expectancy for women is 84 years, compared with 80 for men, compared with an OECD average of 83 years for women and 77 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 9.1% of GDP in Iceland in 2008, below the OECD average of 9.7%. Iceland spends more on health per person than many OECD countries, with spending of 3 359 USD in 2008, compared with an OECD average of 3 060 USD.

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 17.8% in 2008, below the OECD average of 23.3%. The obesity rate among adults is of 20.1%, higher than the OECD average of 17%. This was lower than for the United States (27.5% in 2008) but was the highest of the Nordic countries. The average for the 21 OECD countries with self-reported data was 14.9% in 2008. 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 70%. Despite the subjective nature of this question, the answers have been found to be a good predictor of people’s future health care use. Gender, age and social status may affect answer 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 80% 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. In 2010, about 81% of the top 20% of the adult population in Iceland rated their health as ‘good’ or ‘very good’, compared to about 74% for the bottom 20%.

Indicators

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Life Satisfaction

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Key Findings

Happiness 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 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 6.9 grade, higher than the OECD average of 6.7.

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 6.8 grade and women 7.0. Social status does, however, strongly influence subjective well-being. Whereas the bottom 20% of the Icelandic population have a life satisfaction level of 6.5, this score reaches 7.8 for the top 20% .

Happiness, or subjective well-being, is also defined as the presence of positive experiences and feelings, and/or the absence of negative experiences and feelings. In Iceland 87% 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 80% and makes Iceland one of the happiest countries in the OECD.

Indicators

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Safety

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Key Findings

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, lower than the OECD average of 4.0%. There is little difference between men and women in assault rates, at less than 1%.

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 negligible for both men and women, and the lowest rate in the OECD, where the average is 2.1.

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, 77% of people feel safe walking alone at night, higher than the OECD average of 67%. 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 .

Social status also has an impact on victimisation rates and perception of security. People with higher income and higher education usually report higher feelings of security and face lower risks of crime. This can be explained by the fact they can afford better security and are less exposed to criminal activity such as youth gangs or drug smuggling. In Iceland, the assault rate for the bottom 20% of the population is 5.5% higher than that for the top 20%.

Indicators

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Work-Life Balance

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Key Findings

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 1 697 hours a year, lower than the OECD average of 1 749 hours.

 

Indicators

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