Written by: Tori Johnson
Gross National Happiness
Economists are constantly striving for accurate measurements of economic size and growth. The most common method of calculating this is through Gross Domestic Product, known as GDP. By combining the total value of consumer spending, investment spending, government purchases and net exports, we are left with a number that labels a country being comparatively developed or undeveloped in terms of economic transactions. However, this is known to be an imperfect way of economic measurement. Real GDP accounts for inflation that occurs naturally in an economy, and even better, GDP per capita accounts for the size of the country’s population. Even so, versions of Gross Domestic Product have flaws and imperfections in the system, all in which exclude quality of life of the people that make the economy function.
Gross National Happiness is thought to be a solution to this problem. The country of Bhutan, located in the eastern Himalayas of Asia, adopted this concept of measuring success within the economy. With this ideology, it is assumed that well-balanced time, security, health and a steady income are individual necessities for happiness, ensuring a healthy economy in the long-run. See “GNH” image below for all of the factors that contribute to happiness within an economic setting. Clink link for more information on the history of GNH.
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This fits with the Circular Flow Model of macroeconomics as well. If happiness is added to the process, households will provide better and more productive resources for the resource market. From there, the firms will provide better services to the product market. The cause of the enhanced circular process is the individual strive for personal satisfaction--it’s the drive to be successful, which in turn, results in happiness. Overall, happiness is a factor that could naturally boost the economy, along with a healthy life for those living within.
The GNH solution to the flawed GDP method is logical, and makes sense in a hypothetical setting. However, the problem is the measuring of happiness and being able to record an accurate representation of the emotion. The Centre for Bhutan Studies explain that their measurements consist of “normative as well as statistical grounds,” however, how accurate are the normative responses? If citizens are not truthful in their responses to the survey, then results will be skewed. With the concept of GDP, the calculations are all mathematical, meaning there is no room for false pretences, as long as inflation is accounted for.
Therefore, in the case of the United States, there should be a combination of the two indexes. An integration of both GDP and GNH would measure the prices and outputs of goods and services produced, but also measure the lifestyle of the economy. The combination would ensure a measurement of economic success or failure in two ways, instead of just one method, where happiness should be included as a factor of economic success.
Works Cited
“Gross National Happiness Index Explained in Detail.” Centre for Bhutan Studies. Centre for Bhutan Studies, N.d. Web. 1 Feb. 2016.
“The Story of GNH.” GNH Centre for Bhutan. GNH Centre for Bhutan, 2016. Web. 30 Jan. 2016.
Happiness would account for a lot in the nations GDP if it was included. It would definitely be higher than it is now there is no doubt about that. And even when the Bureau calls people to seek data weather or not they are employed are not, they probably don't want be on the phone telling someone random what their current employment situation is. Whereas, if happiness were included in the nations GDP people will be more willing to take surveys and inform others about their current situation.
ReplyDeleteI was actually already familiar with Bhutan and their calculations of gross national happiness, but was not aware of exactly how it worked. The process and explanation of GNH seem logical, but as you mentioned there are serious flaws. Besides the possibility of skewed results, it is very difficult to compare Bhutan's gross national happiness the other country's gross national product. If I were the leader of the United States I would be skeptical to do business or make deals with a country measuring GNH rather than GDP. We know the flaws in GDP and are able to compensate for them, however there is no real way to compensate for the flaws of GNH.
ReplyDeleteI agree that it would be potentially hard to get good, honest feedback about how people are feeling. However, what if we only took into consideration factors that did not rely on emotion and could be measured numerically? I know that’s kind of what GDP does, but these are the factors that would contribute to happiness as stated in your post. Also, if adopted by the world and applied to more countries, it might be easier for people in first world countries to be happier about their economic situation, or perhaps the opposite if things aren’t getting better but are instead leveling out.
ReplyDeleteWhile we’ve become accustomed to determining things such as economic growth through statistics, Gross National Happiness seems like a unique way to track how people’s feelings affect their income and spending. Instead of just a number on a page showing how well the economy’s doing, we could now compare this with the lifestyles and well-being of citizens. While I agree that it might not be the most effective way of determining the country’s overall well-being since people might lie about their state of happiness or simply not know how they feel knowing when people are unhappy could be a great way to know how the economy fluctuates with our overall happiness.
ReplyDeleteI agree with the statement that the more happiness a person has the more they are willing to work and strive towards things, it is similar to the Distribution of income debate where I believe if you give poor people money from the rich they will not work for the money anymore. I think It would be hard to get an accurate reading on the GNH but it would be helpful for countries to see in general how they are doing not just on a financial scale but overall consumer satisfaction.
ReplyDeleteThat was a very well-written blog post. You really managed to point out the flaws in the current systems of calculating economic growth. However, considering calculating GNH would be much more difficult than calculating GDP, your method doesn’t address how to collect this information effectively. How many people nationwide would respond to surveys about their personal life? Even if this system was made mandatory, it would be costly, possibly invasive, and inefficient. Why is it that we need a measurement of GNH in the first place? If it is simply to create better trends, that’s not necessarily a good argument in and of itself. I think your argument has its strengths, but the fact of the matter is that it would be hard to implement, especially for a poorer country with less resources to allocate to less important things such as comparing statistical data.
ReplyDelete- Martin Mueller