Happiness: the new measurement of economic success

In Australia, as with most western cultures, we often use Gross Domestic Product (GDP) to measure our success, however, there is another measurement which is gaining traction for more accurately depicting a country’s worth. It’s called the Gross National Happiness Index (GNH) and it implies that development should take a holistic approach to the notion of progress and give equal importance to the non-economic aspects of society.

Looking at economic output alone to determine a nation’s success only gives a crude indication of what is really happening. Economic output also accounts for negative transactions, like sales of weapons, as much as positive things, like education spending.

The Gross National Happiness Index was first proposed in 1972 by the King of Bhutan, a small country in South East Asia, on the eastern end of the Himalayas. Bhutan has always considered happiness and spiritual wellbeing as an important goal for its country and it seems, as modernisation starts to take its toll on those in the west, other countries are beginning to understand this importance too.

GNH takes into account the spiritual, physical, social and wellbeing of people, as well as the environment. Far from being considered some wacky, existential concept, in recent years the United Nations has used GNH in combination with GDP to more accurately measure a nation’s social and economic progress.

In 1999, the Center for Bhutan Studies was officially established and, since then, the concept has spread internationally.

The Center has developed a survey to more accurately quantify happiness, which they base on a number index derived from ranking 33 indicators that are part of nine different domains in a society. These nine domains include:

Psychological well-being
This is how people evaluate their life, taking into account their level of satisfaction, both in momentary moods and long term states of their mental wellbeing.

Standard of living
This refers to the material basis of well-being, which is reflected in a person’s consumption level. Often, real income is used to measure this, as well as non-cash income which includes a stock of consumer durables, goods and services received as gifts, assistance, health, recreation and things that can affect a person’s quality of life.

Good governance
The World Bank identifies three aspects of governance: the type of political regime; the process by which a country’s economic and social resources are managed; and the capacity of government to formulate and implement policies and discharge functions. A good governance regime is considered one that is efficient, transparent and accountable.

Health
As the saying goes, you don’t have anything if you don’t have your health. Bhutanese and the World Health Organisation have a similar idea of health, ‘a state of complete physical, mental and social well-being and not merely the absence of disease or infirmity’.

Education
Education is considered to have a positive impact on quality of life. Those with lower literacy skills were much more likely to be living in poverty than individuals with higher literacy skills. Quality of life relates to happiness.

Community vitality
Community vitality relies on a social group, ie people in it having common activities and experiences, and the group occupying a defined area. A higher income will raise the happiness of people on low incomes, but the benefits of higher income cease at a certain level and, in fact, an excessive focus on material development has led to a diminished sense of community in some countries.

Cultural diversity and resilience
This is the culture’s capacity to maintain and develop cultural identity, knowledge and practices, and be able to overcome challenges and difficulties from other norms and ideals.

Time use
The GNP Index looks at how people spend their time, how it is divided up between household work, care work and unpaid work. The survey draws correlations between how people spend their time and how much they enjoy their life.

Ecological diversity
This domain refers to a connectivity with the natural environment, the state of our environment with regards to pollution, and our access to green space.

Of the current ‘Happiest Countries in the World’, Denmark* has taken out the top spot, with Australia ranked number 10. The other countries in the top 10 are also some of the wealthiest in the world and include:

2. Norway
3. Switzerland
4. Netherlands
5. Sweden
6. Canada
7. Finland
8. Austria
9. Iceland
10. Australia

In stark contrast to the picture postcard European countries that dominate the happiest top 10, the top 10 ‘Unhappiest Countries in the World’ include some of the world’s poorest and most over-populated; Rwanda, Malawi, Senegal, Cambodia and Sri Lanka.

Looking at this top 10 list of ‘happy countries’, it seems clear that while money can’t technically buy you happiness, it will certainly improve your chances of finding it.

*https://edition.cnn.com/2014/03/20/travel/happiest-countries-to-visit/

This article was first seen on Cromwell Property Group, https://www.cromwellinsight.com.au