Gross Domestic Happiness

Excuse the light posting these days; I’m in the process of selling my house and moving, and so lots of non-blogging-type things keep absorbing what I have for spare time.

At any rate, over the weekend I came across this interesting tidbit from the BBC:

Bhutan spreads happiness to UN

Bhutan has put the politics of happiness on the UN’s agenda.

This week the General Assembly adopted a non-binding resolution that aims to make happiness a “development indicator”. Bhutan’s ambassador Lhatu Wangchuk told the BBC the next step was to help UN members better understand the concept.

He admitted some were sceptical when Bhutan started lobbying for the resolution 10 months ago. But ultimately it won 66 co-sponsors, including the UK.

The idea is based on Bhutan’s model of GNH, or Gross National Happiness, which measures quality of life by trying to strike a balance between the material and the spiritual.

The resolution invites member states to draw up their own measures of happiness and contribute them to the UN’s development agenda.

“It’s basically an approach,” said Mr Wangchuk. “Our initial idea was to bring the concept of happiness to the consciousness of the UN membership… because we know that GDP indicators are inadequate to address human needs.”

People who are interested in the macroeconomy (including me) spend lots of time focused on GDP, also known as national output. (And which in theory should also equal national income.) In fact, GDP is typically considered to be the single best descriptor of a country’s economic conditions. And there’s good reason for that: if what you want to measure is the total amount of stuff (i.e. goods and services) produced by the millions of individual actors in an economy over a given period of time, then GDP is your indicator.

But remember that GDP only tells you about how much stuff the economy produced — not whether that stuff was useful, whether it actually made people better off, or how it was distributed. What if you don’t care so much about the amount of stuff produced by an economy, and instead care about the well-being of the individuals in that economy?

If you’re more interested in the well-being of individuals, then GDP is lacking when used by itself. It’s a helpful indicator, because it gives you an idea of the amount of resources available to be consumed by the individuals in the economy over a given people of time, and it’s reasonable to think that to some degree and in some situations, having more resources at your disposal allows you to possibly be better off. But if you believe that having more stuff available to consume is only one of many ingredients to happiness, then GDP shouldn’t be taken as the final word in the welfare of a country’s citizens.

For whatever historical reason (Eric Weiner, in his funny and well-written book The Geography of Bliss, argues that it has a lot to do with the deep influence of Bhuddism on the country’s culture), Bhutan’s government has long championed the use of more direct measurements of welfare. Its king has stated that his goal for his country is not to just increase his country’s GDP, but rather to improve Bhutan’s Gross Domestic Happiness, or GDH, which is an official indicator calculated by the government statistics office.

Note that while Bhutan is at the forefront of this movement, other countries are slowly taking interest, such as the UK. In fact, The Guardian is reporting today that the Office of National Statistics has just released its preliminary thinking about how it would develop a national happiness indicator. (Read the Guardian article if you’re curious to learn more about how such an indicator would be calculated.)

But it is little Bhutan that has finally been able to push this idea of the GDH statistic into the UN for discussion. And I think it’s an important discussion to have. Because if you start thinking about the economic indicators you’re using, what you’re really doing is thinking about what matters to you in life and what your goals are. If the best goal we can come up with is the maximization of the amount of stuff available for consumption, then I guess we should just stick with GDP as the best measure of how we’re doing. But doesn’t that feel like a pretty small goal for our society?

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About Kash Mansori 46 Articles

Who is this guy, anyway? And is Kash his real name?

Yes, Kash Mansori is my real name, and I've been writing online about economics since 2003, with a few breaks here and there. After receiving my PhD in economics in the late 1990s, I did a tour of duty as an economics professor at a small liberal arts college in northern New England. The charm of 6-month long winters eventually wore off, however, and I left the academic world in order to move south to warmer climes. I now live in North Carolina and make my living providing economic consulting services, primarily to US and European companies in the manufacturing, high-tech, and finance industries. I have a couple of kids, I enjoy cooking, and I have maps hanging all over the walls of my house.

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