Happy now?

happyI happened to leaf through the Financial Times today and came across this very interesting piece of news. Apparently there has been a bunch of people working, led by Nobel laureates Joseph Stiglitz and Armatya Sen, trying to figure out a more meaningful way to measure and assess economic progress than this reflected by the all-important GDP growth. Of course, in many ways the flaw is an obvious and glaring one, and has been pointed at many times already. Gross Domestic Product that GDP stands for is a general and aggregate metric that simply reflects the monetary value of goods produced and services rendered within the borders of a nation. And while in general it is certainly true that there exists a positive correlation between high GDP value and high standard of living, the relationship is not a trivial nor a direct one. For one thing, GDP measure completely neglects the dimension of distribution of wealth and value created in the society, and while it may be tempting to claim that “rising tide lifts all the boats”, in practice it is a fact of life that some boats get lifted more than others. Another well known fact is that in terms our personal happiness, the absolute amount of money (or goods, or whatever) we happen to possess is quite a bit less important than the relative wealth compared to that of our immediate social circle, or society in general. And so, what Sarkozy was suggesting is that measuring the success or failure of economic policies based on GDP growth leads us astray – and therefore that measure should be dropped and replaced with a more meaningful one(s), that would take into account things like availability and quality of health care, or time available for leisure, etc.

This all reminded me immediately of my trip to Bhutan last year. Bhutan has long been famous for pursuing GNH instead of GDP. GNH, a shorthand for Gross National Happiness, is a complex metric that is meticulously traced and aims to reflect a wide range of different aspects of society and thus provide an overall view of human happiness instead of narrowly focusing on the creation of financial wealth – which from the Buddhist point of view is, if anything, detrimental to the project of being happy. Bhutanese holistic approach to being happy consists of 72 different components and includes things that would probably seem rather esoteric for most westerners, such as “Frequency of prayer recitation”, “Ability to understand lozey”, “Zorig chusum skills”, “Knowledge of mask and other dances performed in tshechus” and “Purchase of second hand clothes”. But in general, this all further underlines the point that being happy is something that is inevitably grounded in local circumstances and is difficult to directly convert into dollars or ngultrums – although it clearly seems to be the case that while being rich is no guarantee towards being happy,  it is easier not to be unhappy if you have more money rather than less.

It remains to be seen what comes out of this – and whether it is simply another knee-jerk reaction to the anniversary of the financial crisis (though it seems that Stiglitz’s workgroup got started already 18 months ago, therefore predating the onset of meltdown by about half a year). I for one remain skeptical to the demise of GDP as a measure of economic performance – we have had things like Human Development Index and so on for many years and while there is no serious doubt to their usefulness, they haven’t came to replace the hard and easy applicability of GDP. But I guess we’ll see, and I would be rather glad to be wrong on this account.

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2 thoughts on “Happy now?

  1. huvitav kas linna ÕI ehk õnneindeksi saaks ka koostada, mis oleks selle komponendid.

  2. No omal moel Bhutan ju nimelt seda ongi üritanud teha – GNH püüab olla holistlik vaade sellele kui õnnelikud riigi kodanikud on, selle asemel, et keskenduda majanduskasvule.

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