Hanke’s Annual Misery Index

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The Hanke’s Annual Misery Index measures “Misery” by using the following metrics:

\begin{gathered}\boxed{\text{HAMI} = 2U + I + L - G}\\[12pt]\text{Where:}\\[6pt]U = \text{Year-end unemployment rate (\%)}\\[6pt]I = \text{Annual inflation rate (\%)}\\[6pt]L = \text{Bank-lending interest rate (\%)}\\[6pt]G = \text{Annual percentage change in real GDP per capita (\%)}\end{gathered}

Origins and Evolution

The Hanke Annual Misery Index (HAMI) builds on the misery index created by Arthur Okun, a Yale economist who chaired the President’s Council of Economic Advisers from 1968 to 1969 under President Lyndon B. Johnson. Johnson wanted an easy way to take the economy’s temperature. Okun’s index, the sum of the inflation and unemployment rates, gave him one.

In 1999, Harvard professor Robert Barro modified Okun’s index. He added the 30-year government-bond yield and the difference between the long-term trend rate of real GDP growth and the actual rate.

In 2009, Professor Hanke amended Barro’s version with two changes:

Lending interest rate replaces the 30-year government-bond yield. It captures the cost of credit, which determines whether businesses can invest and households can borrow.
Per capita GDP growth (subtracted) replaces Barro’s growth-gap measure. It adjusts for economic output: a country with miserable inflation but strong growth is less miserable than one with the same inflation and a shrinking economy.

In 2022, following a suggestion from Andrew Oswald of the University of Warwick, Professor Hanke doubled the weight on the unemployment rate. An additional percentage point of unemployment hits people much harder than an additional percentage point of inflation.

The result is a more complete picture of economic welfare than any single indicator.

Why It Matters

💼 Unemployment measures labor market pain — the share of workers unable to find jobs

🏦 Lending Rate captures credit costs — high rates crush small businesses and mortgages

💸 Inflation erodes savings — particularly devastating for the poor and middle class

📈 GDP Growth offsets misery — a growing economy provides jobs and opportunity

2026 Rankings: The Most Miserable Countries

Data Sources and Methodology

Primary source: IMF World Economic Outlook database
For countries with suppressed or unreliable statistics: Hanke's own estimates using PPP and black-market exchange rate methodology (same approach as Hanke-Krus Hyperinflation Table)
Updated annually; published in National Review and Forbes
Countries with incomplete data may be excluded or estimated