Happiness: The New Face of Economics?

Bhutan Travel PhotosThe Buddhist kingdom of Bhutan has a strange claim to fame in the world of what Thomas Carlyle termed that “dismal science,” economics: the appealingly named “gross national happiness” (GNH) index.

Concerned that standard measures of national wealth, specifically gross domestic product (GDP), fail to reflect elements of well-being, cultural richness, and environmental sustainability, Bhutan’s former king Jigme Singye Wangchuck coined the term and it has been a central part of the kingdom’s economic planning since the 1970s. GNH takes into account not just the flow of money but access to healthcare, free time with family, conservation of natural resources, and other non-economic factors.

Now a similar critique of traditional econometrics has acquired a powerful new backer in France’s President Nicholas Sarkozy. On Monday he endorsed a report from a commission of economists led by Nobel prizewinner Prof. Joseph Stiglitz, although it rejects the notion that everything can be captured in one GDH-like index. It proposes adjustments to the way GDP is calculated; new measures of well-being and happiness; and new metrics for environmental and financial sustainability and wealth distribution. “It is what I call GDP fetishism to think that success in that part [GDP] is success for the economy and society,” Prof Stiglitz argued.

Mr Sarkozy, who promised to raise the issue at international fora, said national accounting systems no longer reflected popular aspirations or experiences, creating a distrust of governments. “The world over, citizens think we are lying to them, that the figures are wrong, that they are manipulated,” he said. He also used the occasion to take a swipe at unbridled capitalism: “Behind the cult of figures, behind all these statistical and accounting representation, there is also the cult of the market that is always right.” The global crisis, he argued “doesn’t only make us free to imagine other models, another future, another world. It obliges us to do so”.

In truth GDP, growth of which has become an end instead of a means of policy, is only the roughest of yardsticks—it is completely inadequate, for example, as a measure of relative well-being in comparing two countries which have differing property markets and welfare systems. But economists, jealous of their status as “scientists”, will find difficult the idea of quantifying and then, crucially, giving relative weights to what they see as subjective, value-laden measures of happiness. Time perhaps to reinvent economics itself.

This article originally appeared in the Irish Times.

About the Author

9 Responses to Happiness: The New Face of Economics?

  1. The problem not only lies in how we quantify these measures but also in what the definition of happiness is.

    • I agree Syama Gopala; on the positive side though at least some of the world leaders are beginning to recognize that GDP is a woefully inadequate measure of a society’s overall well being and are proposing different metrics. It’s a step in the right direction.

  2. The word “economy” can be traced back to the Greek word oikos, “house” or specifically, “one who manages a household”.

    However, economy has become everything else but that, or managing the household. Household originally means a place where family lives and thrives. Is economy today run like a family concern, that supports all its members equally and the whole of the household, including fields and gardens, livestock, water, trees, birds and animals that live around so they can all prosper?

    Of course not. Major motivator in today’s economy, and in centuries ago, is profit. From it everything else is calculated and derived. If they don’t create profit, businesses are closed. To achieve profit, something needs to be sacrificed or devalued, and to something value must be added and that “law” must be universally accepted between different families in order to work. And that’s becoming of a marketplace.

    Instead of balance inside the household, where economy really takes place, marketplace now advocates a balance of a different kind — it claims demand and supply create a balance. However, that claim is a mere illusion: there’s no such balance between demand and supply, because the true market motivator is profit. In other words, not real demand or real supply, but artificial one, always created to achieve some profit — one that constantly creates imbalance.

    To achieve profit, natural balance of the household needs to be disturbed, the original idea of the household usurped, because profit is just that: the difference between total revenue and its opportunity costs. If everything is in balance, there’s no difference, and no profit.

    Thus the word economy — the managing of a household — makes no real sense because the idea of profit denies it. Profitonomy, exploitation or over-consumption is a much better word for economy as we know it.

    GDP, of course, is a measure that describes how successfully one big household — a nation — creates profit in the global marketplace, under a common denominator, or US dollar. Thus so far happiness of nations could be estimated by measuring how much their happiness relates to happiness of the US economy and its people.

    Let’s examine figures from 2003/04; say, a citizen from Luxembourg is some 1.45 times happier than a US citizen, but one US citizen is as happy as a basketball team from Iran! Or, it takes a combined happiness of a whole soccer team from Syria to match the happiness of one goalkeeper from the US. Many people today would agree it’s true.

    Bhutan’s proposal to go after GNH is indeed interesting, but nothing new, indeed. Problem is simple: what should be used to describe, to measure happiness? For many, happiness is still money. Even revered prof. Stiglitz has stiff lips when trying to dismiss it altogether.

    • Very insightful comments, Zvonimir-ji.

      I believe that there are two basic ways of living, and thus two fundamental types of society based upon these two ways. There is the material way of living, with individuals striving for, or pursuing, “happiness”, material comfort and wealth. Then there is the way of excellence, of idealism (or nobility) with individuals striving for an idealistic goal.

      The idealistic goals should be to continue the work of God and Nature by creating better, more advanced, individuals and by creating a better, more advanced, more civilized society for these individuals to live and flourish in. Better individuals and better society can only be created through the pursuit of noble values, not through a pursuit of materialistic gains.

      • Very interesting Kula-pavana, and a knotty problem. I agree with your basic division of society (material/noble)–the problem comes when we must define what “civilized” is. Most people will agree that noble values and not materialism is better but they don’t actually put that into practice. Many probably think that modern society is the pinnacle of civilized life. Organizing a society according to noble values is a tall order indeed.

        • The leadership of human society has to provide and promote ideals which will actually make people happy while in pursuit of such values. They must combine the spiritual and the material (sattvic) aspects of life. That was the core of the Aryan civilization.

      • In his book The American Soul: Rediscovering the Wisdom of the Founders, philosopher Jacob Needleman examines the inner beliefs and spiritual sensibilities of the founders of the United States. Discussing Thomas Jefferson’s idea in the Declaration of Independence that it seems self evident that humans are “endowed by their creator with certain unalienable rights,” including “life, liberty, and the pursuit of happiness,” he points out that the happiness Jefferson asserts as inherent is not the right to unlimited consumer goods. Needleman says that the happiness Jefferson spoke of is a matter of the human spirit, our harmony with nature in both our external environment and our inner lives, including the well being of our bodies, minds and souls. “As with spiritual philosophies and traditions of all ages,” Needleman writes, “for Jefferson happiness is not to be equated with the mere satisfaction of desires.” If we assume that by the pursuit of happiness Jefferson meant nothing more than material acquisition, we almost necessarily misunderstand the ideas underlying the founding of the United States. “Men and women did not die,” he says, “for the right to unbounded consumer goods.”

        So a measure of national happiness means not that everyone has easy access to as many iPods and Escalades as they want. Rather, it takes into account the material, intellectual, and spiritual well being of everyone in that nation. It is a tall order, indeed, and a revolutionary idea, even as it was in Jefferson’s time. But, I think, it’s worth pursuing.

  3. America is run by Goldman Sachs. They control the politicians and ultimately determine the values of society through this control of the political and financial system. When will this change if ever? I have no idea. I guess we can all hope and pray that someday Goldman Sachs becomes more progressive in their thinking or something who knows for sure?

  4. In all fairness however when you think about it the Earth is essentially 6 to 7 billion people on an ego trip. That is a wild beast to tame.

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to Top ↑