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Canada Household Debt Reaches Record High, But Don't Worry, We're Happy

businessman in black costume...
businessman in black costume...

Recent data revisions from Statistics Canada showed that Canadians are even more in debt than previously estimated. The average household debt in Canada has reached more than 163 per cent of average income, an astronomical ratio that is higher than that seen in the U.S. and the U.K. before their housing markets crashed.

This has led to all sorts of hand-wringing among analysts, who worry Canadians have become very vulnerable to shifts in the economic climate because of their high debt levels. But BMO economist Doug Porter sees something to be happy about — maybe — in the numbers: An apparent link between levels of consumer debt and happiness.

According to this chart from Porter, there is a correlation between the levels of debt in a country, and how happy its citizens claim to be.

There are at least six OECD countries that have higher household debt ratios than Canada,” Porter noted in an email to clients last week. “And, notably, the world champ on this front — Denmark — also happens to be the happiest country in the world, according to the 2012 UN World Happiness Report.”

He added: “In fact, all six countries that are more indebted than Canada rank in the top 10 of most happy countries.”

Canada ranked fifth in that study of happiness. (See slideshow below.)

Of course, this doesn’t mean taking on more debt will make you happier — but it does suggest that indebtedness doesn’t necessarily lead to misery.


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