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DeepDive: Just how bad is Canada’s defence spending problem? Downright disastrous—with little hope in sight

Deepdive

DeepDives is a bi-weekly essay series exploring key issues related to the economy. The goal of the series is to provide Hub readers with original analysis of the economic trends and ideas that are shaping this high stakes moment for Canadian productivity, prosperity, and economic wellbeing. The series features the writing of leading academics, area experts and policy practitioners. The DeepDives series is made possible thanks to the ongoing support of Centre for Civic Engagement.

The current state of Canada’s military and defence spending has been the subject of international criticism and a source of growing isolation from key allies. In a world of evolving geopolitical tensions and new and emerging threats, Canada’s underinvestment in national defence represents a major vulnerability. 

Canadian policymakers seem to increasingly understand this point. Last week, former Conservative defence minister Jason Kenney was critical of his past government for failing to boost defence spending. However, while the recent federal budget earmarked incremental spending—though it was back-end loaded—Canada will still fall short of the NATO target of 2 percent of GDP. 

One of the inherent challenges to policy thinking concerning Canadian defence policy and military spending is that, as previous auditor general reports have noted, it’s quite challenging to understand the state of defence spending due to various factors, including the Department of National Defence’s poor procurement record and the complexity of its accounting model. 

The purpose of this DeepDive is to situate recent trends with respect to defence spending in a historical context as well as to discuss the state of Canada’s military capabilities and present some of the challenges that the Canadian government will face as it seeks to increase defence spending in an increasingly turbulent world.

What is the 2-percent target?

Historically, Canada was a relatively large spender on national defence. After the end of the Korean War in the early 1950s, Canadian military expenditures peaked at over 7 percent of Gross Domestic Product (GDP) before steadily falling to roughly 2 percent in the 1980s. 

Things, however, began to change with two episodes of fiscal consolidation, first under the Chrétien government in the 1990s and then under the Harper government in the 2000s. As a result, defence expenditures fell from 2.11 percent in 1986 to roughly 1 percent of GDP by 2014. At the same time, the size of the Canadian Armed Forces (CAF) was cut by 30 percent from 90,000 active troops in 1990 to 62,000 in 2005. The force size has remained mostly unchanged ever since. 

It must be noted that 2014 wasn’t just an important year for being a low point in post-Second World War defence spending. It’s also the year when NATO implemented its much-discussed 2 percent of GDP defence spending target.

The origin of the 2-percent target actually dates back to 2006 when the notion of such a minimum national spending goal was first mentioned in a NATO document. Yet, a spending pledge would not be formalized until the 2014 NATO summit in Wales, which came on the heels of Russia’s invasion of Crimea in the same year. 

The HMCS Yellowknife, a Kingston-class coastal defence vessel during the Defence on the Dock at the Ogden Point Breakwater District in Victoria, Sunday, Sept. 17, 2023. Chad Hipolito/The Canadian Press.

While the focus is often on the overall defence spending target, two spending commitments were actually made in the NATO Wales Summit Declaration. Specifically, NATO members pledged to spend both 2 percent of the GDP on defence while also ensuring that 20 percent of their defence budgets are spent on major new equipment purchases, including expenditures related to research and development. The overall goal of the two commitments was to ensure that all NATO allies recognized the need to: 

reverse the trend of declining defence budgets, to make the most effective use of our funds and to further a more balanced sharing of costs and responsibilities. Our overall security and defence depend both on how much we spend and how we spend it. Increased investments should be directed towards meeting our capability priorities, and Allies also need to display the political will to provide required capabilities and deploy forces when they are needed. 

While the spirit of the NATO commitment was laudable and necessary, the notion of spending targets is not without criticism. The main criticism is that while the 2-percent target may be beneficial as a political rallying point, it’s merely an input metric that tells us nothing about defence outputs like operational readiness, capabilities, tactics, strategy, and overall competency. Instead, critics argue that the alliance and its members should focus more on ensuring that there is adequate force planning, readiness, and fighting capability among alliance members. 

A more recent criticism is that the 2-percent target itself is too low in an increasingly dangerous world. For example, Polish President Andrzej Duda has argued that NATO’s spending target should be upped to 3 percent of GDP, given growing concerns about Russian attacks on NATO members. Likewise, last week, U.K. Defence Secretary Grant Shapps stated that the U.K. government now believes that the NATO target should be 2.5 percent of GDP.

How much does Canada spend on defence?

Although the NATO spending pledges are not without controversy, they are, nevertheless, what alliance members agreed to and thus serve as a baseline for spending analysis. The question then is: how does Canada stack up?

Figure 1 displays Canadian defence spending from 2014 to 2023 using figures directly from NATO. Across this period, defence spending has risen from 1 percent of GDP in 2014 to 1.3 percent by 2023. In real dollar terms (2015 constant prices), Canadian defence spending rose from $19.9 billion CAD in 2014 to $29.9 billion in 2023.All figures are in CAD. Some of the increased spending, however, needs to be taken with caution. Early in this period, NATO revised its definition of defence spending, making it more flexible to include spending items that were not previously allowed, such as veterans’ pensions and benefits. These definitional changes partly explain the increase in Canada’s absolute spending. 

How does Canada compare to the rest of the NATO membership on defence spending relative to the size of their economies? As Figure 2 shows, quite poorly. Out of 30 NATO members for which there is data (Iceland and Sweden are not included in the NATO spending figures), Canada ranks the fourth lowest in terms of defence spending relative to the size of its economy, only ahead of Spain, Belgium, and Luxembourg.

Based on 2023 estimates, only 11 NATO members were meeting the 2-percent target. However, this is quickly changing, and it could mean that Canada will look even more like a laggard relative to alliance membership. In February 2024, NATO Secretary General Jens Stoltenberg reported that 18 alliance members, more than half, were on track to meet the 2-percent threshold by the end of the year, representing a six-fold increase since 2014.

Canada’s performance is even worse if one considers both the 2 percent spending target in conjunction with the 20 percent of defence expenditures going to new equipment target. As can be seen in Figure 3, Canada is in the unenviable position of being the only NATO member in 2023 to neither meet its 2 percent overall defence spending target nor the 20 percent equipment spending target. Ten members currently meet both.

Although NATO lacks a formal accountability mechanism to ensure that members meet the targets, states that fall below them can suffer reputational costs and even become the target of naming and shaming exercises by other alliance members. In February 2024, for example, NATO Secretary-General Jens Stoltenberg admonished Canada for not meeting the targets stating, “I expect Canada to deliver on the pledge to invest 2 percent of GDP on defence, because this is a promise we all made.”

The fact that Canada is the only member of the alliance to not meet either spending target represents therefore both a threat to its international reputation as well as its own defence and security. It prompts the obvious question: what would it have taken for Canada to at least meet the 2-percent target every year since 2014? 

Using Canada’s defence spending levels and estimates of Canadian real GDP, we estimate that the cumulative real value of Canada’s NATO spending gap from 2014 to 2022 is approximately $150 billion (in 2017 dollars). That is to say, real spending on defence would have needed to be $150 billion higher in total between 2014 and 2022 to meet Canada’s NATO spending pledges in each year, or approximately $16.7 billion each year on average. To put this into perspective, based on the Parliamentary Budget Office’s Ready Reckoner tool, which provides estimates of revenue impacts of tax changes, a 1.5-percentage point increase to the GST produces an additional $15 billion in incremental revenues each year, less than what would be required to fund the average annual increase in real defence spending.

From spending to operational issues

Canada’s defence spending woes are increasingly manifesting as operational issues. Consider first the total size of the CAF. According to estimates provided to NATO, Canada’s armed personnel stood just shy of 67,000 in 2023, making it the tenth largest force among NATO members. However, things look different if you consider force size relative to population. Figure 4 presents these estimates. Here we use 2022 military personnel figures to match with the most recent population data available for each member from the World Bank. When looking at military personnel as a share of the total population, Canada ranks second last.

Indeed, not only is the size of Canada’s armed forces small when scaled by population size compared to other NATO members, but internal documents from the Department of National Defence (DND) are also starting to raise concerns. For example, 2023 documents obtained by the CBC stated that the CAF were short 15,780 members when considering both regular and reserve forces relative to the government’s own targets. 

More troubling in those documents was the internal assessment of equipment readiness. Regarding the navy’s frigates, submarines, arctic and offshore patrol ships, and maritime coastal defence vessels, 54 percent were deemed not serviceable, meaning that they were in no state to deploy. For the airforce’s fighters, maritime aviation, search and rescue, tactical aviation, and transport aircraft, 55 percent were not serviceable. Finally, in the case of the army’s armoured fighting vehicles, artillery, combat support vehicles, logistics equipment, combat support vehicles, and logistics equipment, 46 percent were not serviceable. 

The report noted that the biggest challenge to having equipment serviced and ready to deploy is personnel, in addition to older equipment being more difficult to maintain. As The Hub’s defence expert Richard Shimooka has written: “[Recent funding announcements] are being layered onto a military that has haemorrhaged much of its key personnel. Many individuals, who are already overtasked, rightly wonder who will be there to integrate, operate, or sustain these new capabilities.”

To begin to address some of Canada’s defence spending and operational issues, the Trudeau government has pledged to increase defence spending through its 2024 budget and Canada’s recently released defence policy update titled Our North, Strong and Free, Canada’s first defence policy update since 2017’s Strong, Secure, Engaged

Beginning with the 2024 Budget, the government plans to increase spending directly for DND itself from $26.9 billion in 2022-23 to $49.5 billion in 2029-30 (see Figure 5). This increase includes commitments like $30 billion over 20 years for NORAD modernization and $11.5 billion over 20 years for Canada’s contribution to increasing NATO’s common budget and establishing a new regional office in Halifax for NATO’s Defence Innovation Accelerator for the North Atlantic. It should be noted that based on the nominal GDP projections in the budget, the 2028-29 spending of $46 billion is estimated to be about 1.3 percent of Canada’s projected GDP.

The government’s recently released defence policy similarly doesn’t include a plan to meet NATO targets. Indeed, the policy document anticipates spending 1.76 percent of GDP by 2029-30 while indicating that it will meet the 20 percent equipment spending target. 

More specifically, it commits to investing $8.1 billion over the next five years and $73 billion over the next 20 years to Canadian defence. While several of the initiatives in the defence policy update are laudable, including efforts to increase recruitment and retention, as well as crucial investments in new equipment, a few things stand out.

First, the 1.76 percent of GDP figure is difficult to verify based on what is in the defence policy and the 2024 budget. For example, while the government provides a fact sheet attempting to explain the 1.76 percent figure, roughly 15 percent of Canadian defence spending in 2029-30 is expected to come from other government departments. Yet it’s unclear which departments and programs are accounted for in the calculation.

Shimooka has even written for The Hub that if one accounts for planned or underway projects and personnel additions, which are inexplicably excluded from the defence policy, then the government is likely to exceed the 2-percent target. Either way, the government would do well to be clearer and more transparent about how Canada is planning to get there by the decade’s end.

Second, most of the planned spending is in the out years, despite Defence Minister Bill Blair stating in early March that Canada’s armed forces are in “a death spiral” when it comes to recruitment. Only $612 million in incremental spending is earmarked for the 2024-25 fiscal year, with an additional $1.1 billion coming in the following year. The majority of the incremental $8.1 billion announced in the defence policy update is not expected to be spent for several years. In addition, of the nearly $73 billion that is to be spent on defence over the next 20 years, only 11 percent is planned to be spent in the next five years. Given the severe concerns about the diminished size of the CAF and its operational readiness raised above, the investments in this plan appear inadequate to make a significant difference in the near term.

Furthermore, there are also reasons to question whether the projected increases in defence spending will occur as planned, particularly when focusing on major equipment purchases. It’s one thing to earmark spending increases in government spending documents, but it’s another to ensure that there is adequate state capacity to turn those investments into the personnel and equipment that Canada’s armed forces desperately need.

A lot has been written on the reasons behind Canada’s successive defence procurement fiascos and failures to meet budget targets. These include a lack of accountability, partisan politics that intervenes to ensure defence spending results in partisan “wins,” problems with institutional design in the procurement system, misalignment between project costs and defence policy objectives, an opaque combination of cash and accrual budgeting, and bureaucratic politics that sees different departments and armed forces branches pitted against each other, often with misaligned incentives. 

The situation has gotten so dire that a 2019 Senate report revealed that based on DNDs own analysis, procurement times had reached 16 and a half years by 2010-11, which was 66 percent greater than in 2004. Unfortunately, several recent reports from Canada’s auditor general give little reassurance that much has changed, finding that several recent initiatives were delayed, over budget, and not meeting timelines. With the state of the CAF and Canada’s international commitments in peril, long procurement times mean that the Canadian military will not have the personnel and equipment needed for the threats they face for decades to come. Despite Canada’s poor record in meeting its NATO commitments, the situation could get worse in the short term if planned investments are not realized in a timely manner.  

Key takeaways

One of the barriers to addressing the challenges of low defence spending and personnel and equipment issues within the CAF is that, in the past, Canadian voters placed little political value on seeing these issues solved. Successive governments have responded to the lack of political incentives for change with ambivalence towards defence policy. However, the politics of defence policy may be changing. According to polling from Angus Reid in March 2024, a majority of Canadians (53 percent) favour either increasing defence spending to meet our NATO commitments or going beyond them. This compares to only 43 percent holding those views in November 2019. Likewise, 29 percent of Canadians feel that focusing on military preparedness and presence on the world stage should be our top foreign affairs priority, compared to only 12 percent in 2015. 

As we highlighted above, it’s far from clear that Canada will meet its spending targets according to current plans, and the CAF is in dire need of new personnel and equipment. Despite new spending promises, the evidence suggests that Canada is still off track to meet its targets by the decade’s end, and in any case, there will also likely be several headwinds to actually delivering on its planned spending.

Given the shifting priorities among Canadian voters, it may be time for federal government to more seriously commit itself to meeting its international commitments and address the internal challenges that will stand in the way of realizing those goals.

This DeepDives essay was made possible thanks to the support of readers like you and the Centre for Civic Engagement.

DeepDive: How happy are you? Canadian satisfaction is deteriorating fast—particularly among youth

Deepdive

DeepDives is a bi-weekly essay series exploring key issues related to the economy. The goal of the series is to provide Hub readers with original analysis of the economic trends and ideas that are shaping this high stakes moment for Canadian productivity, prosperity and economic wellbeing. The series features the writing of leading academics, area experts and policy practitioners.

A key question pervading our politics is: how are Canadians doing? 

Different voices have drawn on different evidence and sources of data to try to answer it. The two of us have recently pointed to Canada’s declining GDP per capita as evidence that the country has effectively experienced “a lost decade.” University of Calgary economist Trevor Tombe has similarly cited stagnant growth in income and wages as a sign that a sustained period of slow productivity has led to the “Great Canadian Slump.” Well-known American economist Tyler Cowen by contrast has argued that Canada’s GDP per capita hasn’t fallen as much as some have claimed. Former Trudeau adviser Tyler Meredith has referred to income gains over the past eight years—even though government transfers have played a significant role in producing such gains. 

These different assessments of the country’s economic and social outcomes are further complicated by the sentiments of Canadians themselves. Polls indicate that about half of Canadians are living paycheque-to-paycheque and more than half are pessimistic about their long-run economic future, and yet about 44 percent still started 2024 with a sense of optimism relative to last year. 

The upshot is that an assessment of the material progress and well-being of Canadians is somewhat complicated. Although we believe that on balance the data and evidence clearly point to a story of stagnation, we acknowledge that one can conceive of alternative facts. There are also distributional dynamics across age, class, and geographic lines that must be accounted for. The median person doesn’t actually exist.

In light of these types of analytical limitations, the notion has increasingly been advanced by various economists and social scientists that conventional economic metrics—including GDP, employment, income, and so on—don’t necessarily convey a textured understanding of what’s sometimes referred to as “human flourishing.” The argument here is that material well-being is a necessary yet insufficient condition for assessing one’s circumstances or outlook. Some scholars and thinkers instead point to happiness as the proper measure for socio-economic progress and even public policy itself. 

This line of thinking has spawned a new body of research that one might describe as “happiness studies.” Although it itself is the subject of scholarly debate, the goal of the happiness scholarship is to draw on a diverse set of empirical metrics such as the Human Development Index, survey measures of subjective well-being, and human capabilities to evaluate and compare happiness between different societies and over time. 

One of the best-known and most widely-regarded sources of happiness data is the World Happiness Report, which is an annual report produced by a consortium including Gallup, the Oxford Wellbeing Research Centre, the UN Sustainable Development Solutions Network, and the WHR editorial board. The latest report was released in late March 2024. 

The purpose of this DeepDive is to analyse the strengths and weaknesses of happiness scholarship in general and Canada’s performance in the World Happiness Report in particular. The ultimate goal is to better understand the interrelationship between economic outcomes and happiness. Put differently: we aim to see if Canada’s “lost economic decade” has correlated with a decline in Canadians’ levels of self-reported happiness. 

From GDP to happiness

Measures of economic well-being like Gross Domestic Product (GDP) per capita are important for understanding how a jurisdiction’s economy is performing in absolute and relative terms. But they also have their limits. They can be a bit crude and simple. Although they can tell us about the overall economy or even the socio-economic circumstances of those in different income groups, jobs, or places, they’re mostly silent on issues that define the human experience such as love, belonging, or purpose. 

For instance, GDP may rise when there’s a lot of traffic congestion due to increased gasoline consumption, but if one asks drivers, more traffic jams invariably don’t improve their overall well-being. Similarly, certain types of economic activity such as online pornography may boost economic output but still have a deleterious effect on happiness, life satisfaction, and human flourishing.  

Alternatively, economists are increasingly turning to measures of happiness or subjective well-being to capture a broader picture of social progress. The goal here to knit together different data sources or even forms of data collection to better understand how people feel about their lives, their futures, and the societies in which they inhabit.

Perhaps the leading scholar in the field is University of British Columbia economist John Helliwell. His longstanding work on personal happiness has been rooted in a couple of key axioms: namely, (1) subjective well-being and self-assessments are “authentic measures that deserves to be taken very seriously by anyone trying to see how a community or society works” and (2) past a certain point, higher incomes don’t correlate with higher levels of happiness. 

Helliwell and his coauthors’ definition of happiness moves beyond measures of income rooted in GDP. Instead, they harken back to the logic of philosophers like Aristotle who argued that the ultimate goal of a human being was to achieve “eudaimonia,” which is a combination of well-being, flourishing, and virtue. Virtuous “pro-social” behaviours are an important part of developing a social and institutional environment that is conducive to widespread human happiness. 

Sandie Reid and her daughter-in-law Candace Reid ride a float during a Canada Day parade in the rural community of Cremona, Alta., Friday, July 1, 2022. Jeff McIntosh/The Canadian Press.

One of Helliwell’s various projects on the subject of personal happiness is the World Happiness Report, which tracks ratings of subjective well-being across 143 countries using self-reported polling data from Gallup. The report, which has been released virtually every year since 2012, is based on a representative sample of individuals within countries to evaluate how satisfied they are with their lives, with the best possible life for them as a 10 and the worst possible as a zero, in addition to an assessment of their positive and negative emotions. These results allow the report’s authors to assess how happy countries are at an aggregate level, in addition to assessing potential inequalities in life satisfaction between age and gender. 

These self-reporting methods to capture happiness are far from perfect. They have in some ways the inverted problem of more conventional economic metrics. If the latter are more precise yet crude, the former are more representative yet subjective. There can be challenges for instance that arise when social scientists aggregate individual measures through averaging. 

Another possible challenge that’s raised by cross-country surveys is whether culture and language influence self-reported results. For instance, “happiness” or “life satisfaction” don’t necessarily mean the same in different cultures and languages. There is, however, evidence to suggest that there’s a general human understanding of what it means to be happy. 

Notwithstanding these various challenges, survey-based measures of life satisfaction are now generally well-regarded. They can offer useful windows into social progress and individual happiness within and across jurisdictions.

Because the World Happiness Report has been released virtually every year since 2012, it also increasingly provides a comparison over time. The overall picture is somewhat complicated. While there has been a slight improvement in average worldwide happiness for the young and old between the periods of 2006-2010 and 2021-2023, variation varies greatly by region.

In the latest report relative to previous years, Central and Eastern Europe saw the largest increases in their life evaluation scores across all age groups. East Asia saw large increases in their happiness levels, particularly for older populations. However, happiness fell in South Asia in all age groups, especially those in middle age. Life evaluations fell significantly in the group that includes the United States, Canada, Australia, and New Zealand, with the decline being twice as old for the young as for the old. Happiness levels have also fallen from 2006-2010 to 2021-2023 in the Middle East and North Africa, with much larger declines in the middle age groups.

How does Canadian happiness rank?

The recently released 2024 edition of the World Happiness Report provides an important assessment of Canadian life satisfaction in absolute and relative terms. The data in the 2024 report is derived from surveys conducted between 2021 and 2023. The key finding is that, overall, Canadian life satisfaction is deteriorating—particularly for younger generations. 

Let’s start with Canada’s global comparison in this year’s overall rankings of life satisfaction. Canada received a score of 6.90, which ranks it as the fifteenth happiest country in the world.This measure is calculated on a 0-10 scale. Figure 1 shows Canada’s position relative to the top 10 countries in this year’s report as well as its G-7 peers. Although we’re outside the top 10 in overall terms, Canada is still the top among G-7 countries. 

Graphic credit: Janice Nelson.

What is notable however for Canada is that there has been a decline in overall life satisfaction scores in recent years (Figure 2). Canada’s self-reported score peaked in 2010 at 7.65.While the World Happiness Report was established in 2012, the Gallup World Poll was tracking life evaluations using the Cantril Ladder earlier, with data beginning in 2006. It has since dropped to 6.84 in 2023. 

Much of this steady decline began after 2017, with each subsequent year representing a further deterioration in the country’s life evaluation score. To put this decline in perspective, the World Happiness Report has assessed changes in average life evaluation scores over two separate periods—2006 to 2010 and 2021 to 2023. Serbia, which saw its score increase by 1.85 points, was the country with the largest improvement over this period. Canada’s change was negative 0.60 points, which gives it a rank of 121 out of 134 countries in terms of the change in its average life evaluation over this timeframe. The result is that Canada’s overall rank has experienced a marked decline from being as high as the top five in 2012 and 2015 to fifteenth in 2024. 

Graphic credit: Janice Nelson.

The report doesn’t offer a detailed picture of what’s driving changes in each country’s score. However, a considerable part of the decline in Canada’s overall score appears to be age-driven. Canadian youth now rank much more poorly in their life evaluations than older Canadians. This stands in contrast with the global norm where the young tend to be as happy or even happier than older respondents. 

If one just considers the life satisfaction scores of older Canadians (age 60+) in isolation relative to older populations in other countries (see Table 1), Canada’s life evaluation rank would be eighth overall. Yet, if one carried out the same comparison for younger Canadians (under age 30), Canada ranks number 58 out of 134 countries. The 50-spot gap between older and younger Canadians is one of the largest among any participating country. 

Graphic credit: Janice Nelson.

Figure 3 further highlights these generational developments. While there has been a slight deterioration in the life satisfaction scores of older Canadians over time, the decline for other age groups is much more precipitous. The finding that older Canadians have much higher levels of life satisfaction relative to younger Canadians shouldn’t be assumed as a given over time either. For instance, prior to 2015, there were years in which the scores across age groups were quite similar, and even at some points, the average life evaluations of young Canadians were actually higher than those of older Canadians. 

While the report doesn’t offer specific explanations for individual trends within countries, it does offer some general insights into what drives overall life satisfaction. Six variables—GDP per capita, healthy life expectancy, having someone to count on, freedom to make life choices, generosity, and freedom from corruption—are found to explain more than three-quarters of the variation in average national life evaluation scores across countries and over time, based on data from 2005 to 2023. Although a deeper evaluation of these metrics within Canada over time is beyond the scope of this analysis, recent declines in real GDP per capita, rising housing unaffordability, the lack of affordable childcare, and a deteriorating health-care system could plausibly explain the deterioration in Canada’s overall life satisfaction score and its performance on intergenerational inequality.

The World Happiness Report also offers some insight into generational differences with respect to social behaviour and values, with a particular focus on social interactions, support social, and loneliness. The findings are reported across regional categories and Canadian values are averaged with those of Australia, New Zealand, and the U.S. Across these jurisdictions, millennials generally have lower levels of social support and higher levels of loneliness than older cohorts. These findings may also offer some explanation for why younger Canadians express lower life evaluation scores. 

Key takeaways

The happiness research which was borne out of a dissatisfaction with conventional economic metrics is increasingly building awareness and audience among academic scholars and policymakers. Happiness scholarship doesn’t seek to supplant conventional economic metrics such as GDP, income, or employment. It aims to augment them with a combination of non-economic metrics and survey measures of subjective well-being. 

The evidence and data tell us that Canadians—particularly younger Canadians—have self-reported lower levels of happiness over the past decade or so. The overall level of self-reported happiness has fallen consistently since 2017. The most marked change is among younger Canadians who used to report higher levels of life satisfaction than older Canadians but today are now below them. Consider that although Canada’s global ranking is fifteenth in this year’s World Happiness Report, it falls to number 58 if limited to younger populations.

There are various factors behind these trends but, according to research produced by the World Happiness Report, GDP per capita is typically a major determinant of life satisfaction and of course, Canada has experienced a decline in its GDP per capita over the past several years. Moreover, Canadian policymakers should also pause to assess what the long-term effects of declining happiness are on our economy and society. While a strand of economic research finds that economic growth influences happiness, recent research suggests that happiness can also influence GDP per capita itself.

It brings us back to the question posed at the beginning: how are Canadians doing? The answer from the World Happiness Report is that we’re less happy than we were seven years ago. 

This DeepDives essay was made possible thanks to the support of readers like you and the Centre for Civic Engagement.