Denmark is consistently among the countries with the happiest and most satisfied populations, and it regularly places at the very top with the rest of the Nordic countries in international surveys. Why do the Nordic countries as a whole constitute the happiest region in the world?

Many experts attribute the region's high levels of happiness to factors such as greater relative national wealth and well-functioning institutions. Yet, a number of other countries in Europe and parts of Asia share those qualities and rank far lower in life satisfaction. Others credit the region's high levels of happiness to its welfare state model, but these have changed considerably over time--and Iceland does not share this feature.

Instead, economist Christian Bjørnskov argues that the most important factor to come out of international comparisons is the importance of social trust--the ability to trust other people one does not know personally. The populations in three of the five countries are also characterized by a very strong sense of personal freedom. These two key factors contribute to a fuller and richer life. Bjørnskov ends by discussing to what extent these factors can be exported to other parts of the world.

Christian Bjørnskov is a professor of economics at Aarhus University and an affiliated researcher with the Research Institute of Industrial Economics in Stockholm. He is a member of the editorial boards of Public Choice and the European Journal of Political Economy.