Iceland has overtaken Norway as the world's most desirable country in which to live, according to the latest U.N. index on human development. Rich, free-market countries dominate the top places, with Iceland, Norway, Australia, Canada and Ireland the first five. The United States slips to 12th place from eighth last year in the U.N. Human Development Index, with the U.K. taking 16th place behind Austria at 15th. The index ranks 175 U.N. member countries, plus Hong Kong and the Palestinian territories.

Norway had held the top spot for six years, but was edged into second place by Iceland this year because of new life expectancy estimates and updated figures for gross domestic product.

Iceland, with a population of only 300,000, has developed rapidly. Its location as a desirable place to live is due, in part, to how it has harnessed its vast reserves of geo-thermal energy, invested heavily in technology and has a remarkably even distribution of income.