We’re only just over the first quarter of 2025 and it is already clear this is going to be a disturbing year. The shifting preferences of the second Trump Administration, and the chaos in which it seems so keen to indulge, have already had a disruptive effect on financial markets and geopolitics. But 2025 is no exception. The last two decades have been fairly chaotic, and the last five years more intensively so, resulting in the rise of extremist political parties keen on reshaping the rules of our societies and challenging democracies as we know them.
Given the recent increase in market volatility that can be attributed to the Trump administration, populism is not just bad politics. It is bad business. But where does this shift come from? Is it just chaos? This year’s edition of the World Happiness Survey offers a fascinating read, pointing to unhappiness and public distrust as the culprits behind the rise of populism and offering a number of data-supported suggestions on how to fight these plights.
Where Does Populism come from?
There are clear suspects for the recent rise in populism. One hypothesis suggests that rising inequality leads to political instability, extremism and a negative investment environment. This certainly appears to be in line with the recent US experience. However, while there is merit to this hypothesis, there is no clear or convincing consensus threshold beyond which we can say for sure that political instability will start undermining the system. Some argue for a Gini coefficient of 0.4, while others focus instead on levels above 0.5. Moreover, it is difficult to know which variable best captures rising inequality. The Gini coefficient is an established standard but other variables might also be useful, such as median income, income per capita and the share of wealth held by the top 0.1%.
There is also a range of less traditional ideas (by economic standards, at least) that one can bring to bear on this issue. As Daniel Kahneman and Amos Tversky’s prospect theory argues, negativity bias means we tend to focus on bad news. On this front, all media, not least traditional news coverage, must bear a share of the responsibility (which might help explain my hopefulness this week). Moreover, exposure to conspiracy theories tends to feed paranoia and exacerbate public distrust, which is damaging to social stability. Arguably, social media has played a crucial role in bringing all these forces to bear on society and guiding more people to extremism than might have otherwise been the case.
I’m not arguing for blind and naive trust in governments or in the infinite crystallisation of social and political structures. For all the merits of our system, the last twenty years have born witnessed to the financial crisis, the great recession of 2007-2009, the Euro-zone sovereign debt crisis, a number of misguided US incursions into the Middle East and the COVID-19 pandemic. Last but not least, very little has been achieved to contain climate change and the ravages it will continue to impose on the planet and its people. One needn’t look very far to find reasons to distrust our leaders.
While it is likely that there is a healthy balance between trust and suspicion that might have recently been thrown out of whack, there’s no need to throw the baby with the bathwater, I would argue.
Populism Festers in Unhappiness and Distrust
It was with some degree of happiness and hopefulness that I read the findings of the latest World Happiness Report, published by the University of Oxford’s Wellbeing Research Centre in partnership with Gallup, the UN Sustainable Development Solutions Network, and a dedicated Editorial Board. The report argues that unhappiness and social distrust explain populism but it also offers some suggestions on how to fight them.
Chapter 7 of the report looks into exactly these issues and argues that we should look for explanations for the rise of populism in psychology, and that the world is not actually all that bad. “In the context of post-industrial societies that have become increasingly individualistic, subjective attitudes play a much greater role in shaping values and voting behaviour than traditional ideologies or class struggle. In line with previous findings, we show that (low) life satisfaction is highly related to distrust in institutions and voting preferences for anti-system candidates, both in the United States (US) and in Europe, using various international databases,” the report argues.
The chapter’s contribution seems to be focused on the importance of (the lack of) social trust in reinforcing life (dis)satisfaction and channelling these anti-system forces towards the populist right. “For the populist right, this low trust is not limited to strangers, but also extends to others in general, from homosexuals to their own neighbours. The xenophobic inclination of the populist right, well-documented worldwide, seems to be a particular case of a broader distrust towards the rest of society,” the report argues.
In and of itself, this perspective might not be particularly encouraging, but the rest of the report comes to the rescue: if we can fight unhappiness and (legitimately) increase public trust, we should be on our way to address the plague that is populism. The question is how?
How to Fight Populism
For starters, we need to be less suspicious of others. Based on the Lloyd’s Register Foundation World Risk Poll, of the likelihood of the return of a lost wallet if found by a neighbour, a stranger, or a police officer. it appears that we grossly underestimate the kindness and benevolence of others. According to an experiment conducted by the report, “when wallets were dropped in the street by researchers, the proportion of returned wallets was far higher than people expected.”
This matters because it means that people can be better than we expect them to be. As Chapter 5 of the report argues, our wellbeing depends on our perceptions of others’ benevolence, as well as their actual benevolence. Since we underestimate the kindness of others, our wellbeing can be improved by receiving information about their true benevolence.
Meanwhile, Chapter 2 also argues that when society is more benevolent, the people who benefit most are those who are least happy. As a result, happiness is more equally distributed in countries with higher levels of expected benevolence – that is in countries where people expect to be able to trust others to behave decently. Kindness brings benefits to those doing the caring and sharing, not just those who receive it. This works best if the motivation is to help others (rather than to feel good yourself), if the act is voluntary, and if it has an obvious positive impact on the beneficiary.
In a sense, this is down to the fact that we need to socialise more. Chapter 3 shows that dining alone is not good for our wellbeing, while Chapter 4 argues that happiness rises with household size up to four people, but above that happiness declines. Notably, people living alone are much less happy than people who live with others.
The suggestion seems to be that the rest of the world should be more like the Nordics. The annual happiness ranking is, once again, led by Nordic countries, with Finland still first among them. Moreover, the Nordic countries also rank among the top places for expected and actual return of lost wallets and are well known for their trust in public institutions.
The report is not exhaustive. Clearly, exercising and good health are also important contributors to welfare and happiness. So is wealth as well as a responsible, efficient effective and accountable government. But combating loneliness, practicing acts of kindness, contributing to our communities and raising awareness about the fact that the kindness of others will often surprise us is a good place to start fighting distrust, unhappiness and the toxic policies of populism at the grassroots level. It might require some leaps of faith and overcoming some disappointments, but the alternative is clearly a threat to our way of life.
