The current global economic crisis is prompting many of us to rethink our consumption-driven lifestyles, what we value most, what we really need, and what we can do without and still live meaningful and happy lives. The emergence of new measures proposed to complement quantitative national income accounts – Gross National/Domestic Product and per capita income, which only reflect an economy’s health but not its people’s – is therefore timely.

While it is true that getting our needs met and our wants satisfied bring us happiness, the Easterlin paradox suggests that in the long term, as income further increases and needs are sufficiently met, more money fails to buy us more happiness. It’s the theory of diminishing marginal utility at work: as one consumes more of a good, one derives less satisfaction from each additional unit consumed. Though some researchers challenge the paradox, indeed the most prosperous nations on earth are not necessarily the happiest, as borne by a recently published OECD report. Among the G-7 (7 most industrialized nations) only Canada landed in the top ten, with the Danes being the happiest. On the other hand, poor people can be happy, too, like these Bangladeshis who find happiness in tightly-knit family, community relationships, lower expectations, and simple lifestyles.

One novel idea is Bhutan’s Gross National Happiness index introduced by King Wangchuck in the late 1980s. It uses the following variables to measure their people’s happiness: psychological well-being, education, time use, ecology, culture, community vitality, living standards and good governance. The GNH rests on four pillars: sustainable and socio-economic development or economic self-reliance, preservation and promotion of cultural heritage, preservation and sustainable use of the environment, and good governance. Though its name may sound fanciful (can we actually measure happiness?), its wisdom-filled rationale says: “It is self-analysis and critical thinking in the definition of the nation’s future rather than simple acceptance of guidance from abroad.” If only for this, Bhutan, one of the least developed countries in the world, is one step ahead of many more economically advanced nations, as it is probably the only nation thus far to be using this kind of measure to guide policy-making. In 2006, according to the world map of happiness produced by the University of Leicester, Bhutan was the 8th happiest place on earth, several notches happier than any of the G-7.

The UK-based New Economics Foundation (NEF) has proposed the National Accounts of Well-Being as “a new way of assessing societal progress,” “a more informative approach to policy-making,” and a “better engagement between national governments and the public.” It uses as primary indicators personal well-being and social well-being, each with a set of parameters, and as ”satellite indicator,” well-being at work. Though different in the focus variables, the National Accounts of Well-Being and Bhutan’s Gross National Happiness are more or less along the same frequency.

Can happiness be standardized into a common yardstick applicable to everyone in the planet? That would be impossible because we differ in circumstances, values, priorities, and aspirations. Surveys showing differing results in the happiness scale (e.g. OECD report vs. World Values Survey, though the latter is a time series covering 1995-2007) reflect the relative nature of happiness. I don’t think there can ever be a single benchmark by which we can judge one group of people to be happier than another. Nevertheless, the evolution of measures such as the Gross National Happiness and the National Accounts of Well-being indicates that we are progressing past equating happiness and wellbeing with material satisfaction. And happiness being relative, these innovative concepts do go beyond income measures to include subjective parameters – how people see themselves, not how governments picture them to be, which is seldom the real situation anyway because governments don’t want to appear inefficient by broadcasting about the misery of their people. More important, these measures rightly minimize the premium that we have accorded to material prosperity, which, I think is one of the main reasons – if not THE reason – for the many ills in the world today, especially in human and planetary health.

Filed under: Economics, May 2009 | You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.