The Hanke’s Annual Misery Index is an alternative economic welfare measure that captures the total economic pain experienced by citizens of a country. Unlike GDP or simple inflation indices, it combines four critical dimensions of economic suffering into a single score.
The Formula
📊 Hanke Misery Index = Unemployment Rate + Lending Interest Rate + Inflation Rate − Per Capita GDP Growth
Higher score = Greater misery. Lower score = Greater prosperity.
Origins and Evolution
The Hanke Misery Index builds upon Arthur Okun's original Misery Index (unemployment + inflation), which was developed in the 1970s. Professor Hanke expanded Okun's framework by adding two additional components:
- Lending interest rate — captures the cost of credit, which determines whether businesses can invest and households can borrow
- Per capita GDP growth (subtracted) — adjusts for economic output, since a country with miserable inflation but strong growth is less miserable than one with the same inflation but a shrinking economy
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
"GDP may be growing, but if interest rates are crushing businesses, unemployment is high, and inflation is eating savings — people are miserable."
— Professor Steve H. Hanke
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
2024 Rankings: The Most Miserable Countries
🏆 2024 Hanke Annual Misery Index (HAMI) — Most Miserable Countries:
- Sudan — 58% unemployment + 204.7%/yr inflation + 26.8% lending rate − (−27% GDP/capita) = extreme misery
- Zimbabwe
- Venezuela
- Syria
- Lebanon
Source: @steve_hanke, Twitter/X, February–March 2025
https://www.independent.org/article/2025/02/28/hankes-2024-misery-index/
https://www.cato.org/commentary/hankes-2020-misery-index-whos-miserable-whos-happy
Historical Rankings
Year | Most Miserable Countries | Most Prosperous Countries |
2024 | Venezuela, Zimbabwe, Syria, Lebanon, Argentina, Turkey | Switzerland, Singapore, Japan |
2023 | Venezuela, Argentina, Zimbabwe | Switzerland, Singapore, Ireland |
2022 | Zimbabwe, Venezuela, Syria | Switzerland, Ireland, Singapore |
2021 | Venezuela, Sudan, Lebanon | Guyana, Panama, Malaysia |
2020 | Venezuela, Sudan, Zimbabwe | Guyana, Taiwan, Hungary |
Key Observations
🌍 Venezuela has topped the Misery Index for multiple consecutive years, reflecting the combined effect of hyperinflation, economic collapse, unemployment, and negative GDP growth. Professor Hanke has been among the earliest and most consistent voices documenting Venezuela's economic catastrophe.
📌 A note on measurement: The Misery Index is only as reliable as its inputs. In authoritarian or fragile states, official statistics are often falsified. Hanke adjusts for this by applying independent estimates for countries like Venezuela, Argentina, Iran, and Zimbabwe — using the same black-market PPP methodology that underpins the Hanke-Krus Hyperinflation Table.
Why Misery Indexes Matter for Policy
The Hanke Misery Index is not merely academic. It is used to:
- Evaluate monetary regimes — Countries with currency boards or dollarization consistently score lower on the index
- Assess central bank performance — Discretionary monetary policy is often associated with higher misery scores
- Track the consequences of hyperinflation — When a currency collapses, all four components of the index deteriorate simultaneously
- Make the case for reform — Countries at the top of the misery rankings are candidates for dollarization or currency board adoption
Publication History
- Published annually in Forbes and National Review
- Covers 157+ countries worldwide
- Data sourced from IMF World Economic Outlook supplemented by independent estimates
- Methodology traceable to Okun (1962) and expanded by Hanke (2011-present)
Recent Publications (2025–2026)
- Hanke's 2024 Misery Index — Op-ed, National Review