Many countries look at their Gross Domestic Product (GDP) as a measure of how strong their economy is and whether it’s expanding or contracting, but also to give an idea as to the standard of living in the country:
GDP is defined as the total value of final goods and services produced within a territory during a specified period (or, if not specified, annually, so that “the UK GDP” is the UK’s annual product). GDP differs from gross national product (GNP) in excluding inter-country income transfers, in effect attributing to a territory the product generated within it rather than the incomes received in it…The most common approach to measuring and understanding GDP is the expenditure method:
GDP = consumption + investment + exports – imports… [Link]
Blah Bla Bla Blah Blah. I’m not freakin’ Alan Greenspan and I’ve never taken an economics course in my life. What else you got? The New York Times reports on Bhutan’s economic indicator of choice. It is a measure that in my opinion is ready for export. The GNH, or Gross National Happiness:
What is happiness? In the United States and in many other industrialized countries, it is often equated with money.Economists measure consumer confidence on the assumption that the resulting figure says something about progress and public welfare. The gross domestic product, or G.D.P., is routinely used as shorthand for the well-being of a nation.
But the small Himalayan kingdom of Bhutan has been trying out a different idea.
In 1972, concerned about the problems afflicting other developing countries that focused only on economic growth, Bhutan’s newly crowned leader, King Jigme Singye Wangchuck, decided to make his nation’s priority not its G.D.P. but its G.N.H., or gross national happiness.
Bhutan, the king said, needed to ensure that prosperity was shared across society and that it was balanced against preserving cultural traditions, protecting the environment and maintaining a responsive government. The king, now 49, has been instituting policies aimed at accomplishing these goals.
Their economic theory isn’t that far out is it? I am not naive enough to think that they’ll get the prize later this week and am not ready to declare that I am moving to Bhutan, but why not consider the merits of this idea? Every economic statistic thrown at you about a given country might tell you that the population as a whole is becoming wealthier. That doesn’t mean that the lives of individuals are any better in terms of quality or happiness does it?
“We have to think of human well-being in broader terms,” said Lyonpo Jigmi Thinley, Bhutan’s home minister and ex-prime minister. “Material well-being is only one component. That doesn’t ensure that you’re at peace with your environment and in harmony with each other.”
It is a concept grounded in Buddhist doctrine, and even a decade ago it might have been dismissed by most economists and international policy experts as naïve idealism.
The article informed me that an American wrote about a very similar idea way back in 1973 in a book titled, Small Is Beautiful: Economics as if People Mattered. Such ideas in the long run may be destined to fail though. Numerous studies have shown the following to be true about humans:
Even more striking, beyond a certain threshold of wealth people appear to redefine happiness, studies suggest, focusing on their relative position in society instead of their material status.Nothing defines this shift better than a 1998 survey of 257 students, faculty and staff members at the Harvard School of Public Health.
In the study, the researchers, Sara J. Solnick and David Hemenway, gave the subjects a choice of earning $50,000 a year in a world where the average salary was $25,000 or $100,000 a year where the average was $200,000.
About 50 percent of the participants, the researchers found, chose the first option, preferring to be half as prosperous but richer than their neighbors.
Read the rest of the article. It contains many insights on the intersection of wealth and happiness. Keep in mind though that even in a “happy” country, not everyone is smiling.
…indicative, perhaps, of a National Gross Happiness Deficit.
Western economics is enmeshed in the constraints of Smithian thinking. About 40 years ago it finally made the HUGE leap into considering the concept of “Social marginal cost” in considering pollution and other externalities. Before that it was all about the individual, all about the income. In their zeal to “hold all other factors constant”, economists lose sight of the other visages of happiness. In short, go Bhutan!
Even the legal system is built on this foundation. How do you redress pain and suffering of, say, losing a family member to a negligently manufactured product/medicine/car? You get paid. Yipee.
The conclusion, at least based on this experiment, is unconvincing unless one makes the assumption that the two worlds are identical, including the cost of goods (which happens to be an impractical assumption).
we commented on a similar thread a while back –
As you can imagine, a good capitalist like myself looks pretty skeptically at Bhutan…
[Bhutan’s policy of promoting GNH is] far far far more reaching than simple slow-growth / zoning initiatives (which I have issues with as well…). For ex – a national dress code –
Diff levels of citizenship based on adherence –
A level 6?!?!?! How, uh, bureaucratically efficient.
ethnic cleansing of the non buddhist ascetics –
Permits required for cars, internet access, etc.
The point is that when you make an inherently ambiguous measure like “happiness” a national priority, it’s impossible to not interpret that in arbitrary ways that impose one person’s (the national elite’s) ideas of what that means upon everyone else…. How much you wanna bet, for ex., that crown prince has more than a few Western suits, magazines, and DVD’s squirreled away? It’s just too hard to keep this from devolving into Animal Farm.
Strangely enough, I agree. Trying to quantify a “GNH” is exactly what western (sorry, for lack of a better way to describe standard economic thinking) economics describes as an ‘Util’ – a concept derived from microeconomics and game theory more or less meaning ‘satisfaction,’ as gained by an individual.
The field of Welfare Economics tries to apply this notion to groups and societies. But I don’t see it taking off anytime soon. (The incredibly stupid name might have something to do with it).
Economic Anthropology takes a broader view, trying to analyze a societies economic structure within its cultural framework. Interesting field that’s still in its nascency…Wiki link.
Anyway, IMO a small country trying to stem the flow of capitalism can’t succeed without becoming Orwellian. At least until we reach another age of Enlightenment wherein social darwinists are shouted down permanently.
Ha! I agree too. I just wanted people to consider it. 🙂
The key is human nature. We suck. A happiness index would eventually crumble.
what do you see?
This is nothing but PR relation story from bhutan especialy after the major F’up over kicking out ethnic nepalis out. India was a guilty party here too. It allowed for transit …India probably reached a secret agreement with bhutan over these issues.
Ok nevermind, don’t go Bhutan.
🙂
I pretty much agree, but the ol’ Malthus vs. Godwin debate rages on.
If only humans were inherently, consistently virtuous, what wonderful economic systems we could live in!
GDP is important because it (GDP per capita) correlates extremely well with things we normally associate with prosperity.
Example:longer life expectancies, lower fertility rates*, better education …
This is also why most economists don’t think highly of things like GPI and GNH etc.
Iran has a higher GDP than india, yet its women’s rightsrecord is dismal.
This sort of stuff is – as with many things in life – a statistical distribution rather than a hard rule.
And, as with many things in life, the Arab Middle East (as opposed to the Jewish/Israeli one) is so often the exception to the rule.
Nearly everywhere else, a good Rights record correlates positively w/ GNP. Why, cuz you need to respect and accommodate people to some level in order to harness their creative output… when your wealth bubbles up from underground, you don’t really need to respect your citizens quite as much…
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“Gross National Happiness” … Interesting concept but to totally replace GDP(already tried,tested and proven useful) I am not so sure about it! But as a complementary approach to GDP I’d go for it, after all what is Economics analysis all about – welfare of the society!
its good that we are experiencing GNH.(Gross National Happiness).And we are really happy of it.and im really happy to born in bhutan,its like heaven to me..