If you’re happy and you know it…?
The term "Gross National Happiness" was first coined in 1972 by Bhutan's former King Jigme Singye Wangchuck, who sought to measure quality of life or social and environmental progress in a more holistic way than gross domestic product (GDP). The country officially adopted the Gross National Happiness Index as a basis for national policy in 2008.
“Happiness indices” have received more attention in recent years as more and more economists and policy makers have considered how we could move away from an exclusively economic view of wealth towards a model that takes into account more subtle measures, such as sustainability and wellbeing. Towards the end of 2010, taking a lead from French President Nicolas Sarkozy, the UK Prime Minister David Cameron directed the Office of National Statistics to develop metrics to measure the UK’s “general well-being” (GWB). Speaking of Mr Sarkozy, I wonder if there’s a link between height and happiness?
Now, it seems a bit odd for the Prime Minister to be talking about happiness whilst at the same time his Chancellor has been informing us about how hard life is going to be over the next few years. Maybe it was a sneaky ploy to make us forget about money, given that many of us are likely to have less of it for the foreseeable future, especially in the north, which will feel the brunt of the public spending cuts. As John Aldridge waxed lyrical about the Liverpool 1987-88 title winning side, “They’ve [the south] got the jobs, yeah, but we’ve got the side”. So, were Merseysiders happier in 2008 than they were 20 years earlier, as the economy was in better shape, but the football teams not faring quite so well?
But, dwarfing this issue are the bigger questions. How should we define happiness and wellbeing, and how inter-related are they? How important is economic wealth to overall wellbeing or happiness? And how can a measure of wellbeing or happiness be used to inform policy? And why is all this talk of happiness bringing out the Victor Meldrew in me!?
Even the OECD have gone all groovy. Their first “Your better life index” covers 11 areas: housing, incomes, employment, social relationships, education, the environment, the administration of institutions, health, general satisfaction, security and the balance between work and family. Australia topped the list of 34 OECD countries for 2010, followed by Canada, Sweden, New Zealand, the US and Norway. Sun and snow anyone? The interactive index also allows users to set their own wellbeing preferences and re-ranks countries accordingly.
Whilst all this is very interesting, does it tell us anything new about economic development? One conclusion could be that we do not always act in the rational way that orthodox economic theory asserts, and so it would be wrong to believe that there is a direct relationship between wealth and happiness or wealth and wellbeing. Perhaps the relationships are more asymptotic? Following on from this, would western economies be better off adopting Buddhist economics principles, such as minimising suffering, simplifying needs/wants and generosity, rather than profit maximisation, introducing markets and (occasionally enlightened) self-interest?
Standard economic indicators may be blunt, but at least they measure something specific (eg output, prices, incomes etc) on which economic policy can be based. For example, its difficult to see how the Bank of England's Monetary Policy Committee really take into account broader wellbeing when it sets interest rates, but wider government policy must certainly take into account social and environmental factors and be based on clear objectives. In fact, the UK and other countries already collect data on a range of social indicators. The OECD measures 13 social indicators including jobless households, student performance, gender wage gaps, infant mortality, civic participation and suicide. All serious policy issues.
So, what can we conclude? Measures of wellbeing and happiness are a useful complement to GDP, and provide a more rounded analysis of a country’s “wealth” to inform policy development and individual decisions making. However, the subject nature of these concepts means that there is a long way to go before we could think about replacing GDP as the core macroeconomic measure of aggregate economic performance.
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