A year ago, when the Legatum Institute released its 2014 prosperity index and Russia was dropping like a stone in the rankings, I wrote the following:

Digging into the rankings, one finds that the biggest reason Russia fell so much was its economic performance over the past year. This should be a giant red klaxon light, because most of Legatum’s data is coming from 2013 or earlier. Since Russia’s economy has taken an even sharper turn for the worse in 2014, my hunch is that Russia will do even worse in the 2015 rankings.

Well, it’s now 2015, Legatum has released its 2015 rankings (full disclosure: I’ve sat on Legatum’s advisory board for quite a few years), and I have no choice but to admit that I was flat-out wrong. In my defense, however, I’m wrong for interesting reasons.

The 2015 rankings have Russia coming in as the 58th most prosperous country — an improvement of 10 spots in the rankings. This is not because prosperity in the rest of the world plummeted. Nor is it because Russia’s economic prosperity improved. In fact, the opposite of that happened. According to Legatum, inflation in the Russian Federation is now over 15 percent, and GDP shrank by 4.6 percent over the past year. Traditionally, these are not signs of a prosperous nation.

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So why did Russia do so much better in the rankings? Because Legatum incorporates subjective as well as objective criteria into its rankings — i.e., polling of citizens about how they feel their country is doing. And on that front, Russians are feeling much better than they did a year ago:

The country’s strong performance has been driven by big improvements in the areas of Social Capital, Governance, and Personal Freedom. However, these improvements have been caused predominantly by dramatic increases in the subjective data — put simply, despite living in a country in decline, the Russian people are responding to surveys more positively than they did a year ago.

Indeed, since the annexation of Crimea, polling of government approval has shot up by 27 percent, confidence in elections has increased by 21 percent and confidence in the military has improved by 13 percent. As Legatum senior fellow Peter Pomerantsev writes in the report: “Despite the objective reality, satisfaction with living standards is up 13% while confidence in financial institutions is up 6%.” He concludes:

The television, it appears, is more powerful than the fridge. Or to choose a different metaphor: Putin is a toreador using propaganda as his cape to avoid the bull of reality. So far very successfully — though it begs the question of what new patriotic and military flourishes he will need to dangle to keep the bull at bay.

It is to President Vladimir Putin’s political credit that he has sustained a massive rally-round-the-flag effect for close to 18 months despite one bogged-down military intervention and another one that’s about to bog down. Of course, it’s worth remembering that one month after George W. Bush’s second military intervention, he was polling at about 70 percent. So we’ll have to wait and see how things look for Russia for the 2016 Prosperity Index and beyond.

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Meanwhile, as Russian perceptions of prosperity have caused its ranking to improve, American perceptions have had the opposite effect. The United States comes in as the 11th most prosperous nation, down one spot from last year. And why is that? Declining perceptions of security and safety.

Some of this is grounded in changing facts on the ground. Civil unrest in places like Ferguson and Baltimore and mass shooting events certainly affect public attitudes. But as Foreign Policy’s Siobhan O’Grady notes, Americans are also overreacting:

According to Legatum’s research, both the world at large and the United States in particular have indeed become more dangerous, with the United States ranking 33rd for safety and security, compared to 31st last year. But Americans fear more for their safety each day than people living in Egypt, Bangladesh, and Sudan — countries that suffer from regular terrorist attacks, civil unrest, and war.
Just what exactly Americans have to be so scared about isn’t exactly clear. According to the Legatum data, more than 73 percent of Americans said they feel safe walking alone at night, compared to the global average of 61.9 percent. And while 17 percent had property stolen in 2014, that was still below the global average of 17.5 percent.

So to sum up: Objectively, Russia is less prosperous, and the United States is not. Subjectively, however, the United States and Russia feel like they are going in opposite directions. And in measuring prosperity — and in measuring politicians — sometimes it’s better to feel good than to actually be good.

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