In April this year, Bhutan, the small, mountainous kingdom at the eastern end of the Himalayas in South Asia, which has a population of just 700,000, played host to a gathering that may change for ever the way governments around the world measure their performance, and are themselves judged. Increasingly aware that measuring gross domestic product (GDP) fails to take into account the social and environmental costs of progress, economists are calling for a new paradigm to better illustrate and evaluate the development of nations. And at the inaugural United Nations conference on happiness, the publication of the first-ever World Happiness Report introduced this idea to a global audience.
“We’re studying non-material benefits that represent what people actually care about,” explains Lord Richard Layard, Emeritus Professor at the London School of Economics and co-author of the UN report. “People care about the quality of their life and life experiences, rather than GDP. Unfortunately, there has been too much attention paid to GDP and too many sacrifices made for the sake of increasing GDP, which have been damaging in many cases to family life, friendship, kindliness and so on.”
A leading expert in the fast-emerging field of ‘happiness economics’, Lord Layard admits there is “no very clear link” between economic growth and increases in happiness. In some countries, economic growth has gone along with increased happiness, and in others it hasn’t, most notably in the US, where records go back more than 60 years. But Lord Layard believes that with further collating of information, happiness economics can be used to achieve a deeper and fuller understanding of the health of nations. “The work of the Organisation for Economic Co-operation and Development (OECD) has reopened the question ‘What is progress?’” he says. “Studies of happiness show that if you look at happiness, you get a different idea over whether we’re progressing than you do if you look at GDP.”
Bhutan has long acted as an unlikely pioneer in the evaluation of happiness economics. In the 1970s, King Jigme Singye Wangchuck identified four pillars of gross national happiness (GNH): good governance, sustainable socio-economic development, cultural preservation and environmental conservation. The GNH values have since been further classified into nine domains: psychological wellbeing, cultural diversity and resilience, ecological diversity and resilience, health, education, time use, good governance, community vitality and living standards. The domains are said to represent each of the components of wellbeing of the Bhutanese people and are measured annually, ‘wellbeing’ referring to the fulfilling of the conditions of a ‘good life’ as per the values and principles laid down by the concept of GNH.
It is an approach that has inspired others to follow suit: in November, the world’s third-largest economy, Japan, announced that it will publish its own annual happiness index quantifying levels of wellbeing within the country. The news came shortly after a visit by the present king and queen of Bhutan to Tokyo. Japan’s findings, as well as Bhutan’s, will be judged against those of alternative happiness assessments in use across various countries, including the Gallup World Poll, the World Values Survey and the European Social Survey. The question is whether or not these measures can provide valid information about quality of life that can be used to guide policy-making. Can governments and global thinkers really move beyond GDP to a more holistic measure of national success?
Lord Layard believes so. “We are at that point, but at the very beginning of it because obviously we need a more detailed understanding, in a quantitative sense, of what’s more important and what’s less important, before we can use that to fine-tune our analysis,” he says. “But we can get indications from the knowledge we have, and it has already influenced British government policy,” he adds. “The government has increased the availability of psychological therapy in the National Health Service enormously on the basis of evidence that mental health is so important for happiness.”
Perhaps the most high-profile European attempt to determine a nation’s health through non-material indicators is the Commission on the Measurement of Economic Performance and Social Progress, established in France in early 2008 and headed by the Nobel prize-winning economists Amartya Sen and Joseph Stiglitz. Nicknamed the ‘Sarkozy Commission’ after its instigator, then-president Nicolas Sarkozy, its aim was to identify the limits of GDP as an indicator of economic performance and social progress, and to consider additional information required for the production of a more comprehensive picture. The commission found GDP to be an inadequate measure of real-world value that failed to reflect the wellbeing of individuals and families, and that chasing GDP growth results in lower living standards.
“We have to continue collecting evidence, and the UN and OECD will be hoping to introduce some sort of international standard as with the measurement of GDP,” suggests Lord Layard, who launched the mass movement Action for Happiness last year and has written Happiness: Lessons from a New Science. “There is a long road ahead, but this is a movement which has been growing rapidly; people have become dissatisfied with the rather superficial interpretations that we are used to with regards to what’s important.