GDP vs. GNH (gross national happiness)

By Jim Jubak

Would we all be happier if economists measured happiness?

I spent a lot of time thinking about that on a camping trip last weekend. (Hey, it was really cold, and I had trouble sleeping.)

My friend Pamela had set my thoughts down this track by saying, "You know, I don't need all the stuff I have," as we watched the sun sink behind the Pennsylvania mountains.

It's the kind of thing you routinely say standing around the campfire on your first day out of the city. After a few days, in my experience, the remark is likely to be met by protest: "What about hot showers? What about coffee without bugs in it?"

But this time, on this camping trip during the Great Recession, the sentence hung there, gathering meaning (but, unfortunately, not giving off any heat) in the cold October air. Many of us have thought long and hard, probably in the deep of the night, about what we could do without -- if we had to. I know I have.

Consuming because that's what we do

And we've thought about the flip side of that: What of what we own, of what we spend money on, is worthwhile and makes us happy? More than occasionally these days I feel that some of the consuming I do is just habit. I can count on the fingers of one hand the things I own that, in and of themselves, give me pleasure. The best of the rest gets some important job done. Much of the rest is, well, sometimes just clutter.

From a purely economic point of view, my dissatisfaction with what I own and my occasional dismay at how much I consume are relevant only if they lead me to shop less. Then my lack of satisfaction can lead to a slowing economy and, at worst, to a falling gross domestic product.

What GDP means for you and me

GDP famously doesn't care about how happy we are with the results of our economic activity.

Hurricanes, a frequent bringer of misery, provide a boost to GDP as the devastated survivors buy things to replace all that they've lost. Spending to treat preventable disease adds to GDP, while preventing disease in the first place with simple lifestyle changes doesn't.

When we hang on the most recent quarterly report on the nation's GDP, we feel better if the government announces, "GDP climbed at an annual rate of 2% in the last quarter." Our sense of well-being is connected to these reports on the economy.

And, perhaps more importantly, in our politics and economics, we treat increasing GDP as an important goal. Indeed, we often treat increasing GDP as if it were the only goal.

There's an assumption here, deeply embedded in classical economics, that increasing GDP is the same as increasing the quality of our lives. Mainstream economics doesn't exactly ignore happiness, but it treats it as if it meant the same as "utility." What's utility? Here's a pretty standard economic definition: the ability of a good or service to satisfy one or more needs or wants of a consumer.

Utility is subjective

That definition isn't very satisfactory in our contemporary consumer society, where a significant number of our wants as consumers are generated by advertising and marketing, which are designed to constantly make us feel dissatisfied with the goods and services we have.

Once upon a time, way back in the 18th and 19th centuries, the idea of utility was a way to escape subjective judgments. Giving more food to a man without adequate food was a clear case of increasing utility. Giving a London slum dweller a house with light and air and a modicum of sanitation increased utility.

And, of course, they'd be satisfied by those goods and services.

In that day and time, it made sense to see the goal of an economy as maximizing utility for the greatest number of people.

Today, in a world starkly divided between people -- including me and many of my friends -- who have all their real needs and wants satisfied, and people who are struggling to survive, the concept of utility is riddled with subjectivity.

Measuring happiness on a national scale

In today's world, what exactly is satisfaction?

In 1972, Jigme Singye Wangchuck, then the king of Bhutan, decided his tiny Himalayan country needed something more than GDP. His goal was to build an economy for the people of Bhutan that would increase their material well-being and preserve the traditional values that to him made the country a special place.

The total result would be to increase the happiness of Bhutan. And to measure that process he introduced something he called -- and, as far as I can figure out, the king coined the term -- gross national happiness.

From the get-go you can see that GNH has truckloads of subjective assumptions in it. More than enough to fill in every mountain valley in Bhutan. The king decided what would make his people happy. He decided that traditional values were worth keeping because they would make people happy. So, for example, traditional Bhutanese robes are required dress in all government buildings. At least 60% of the country is to remain forested. Public smoking is banned.

Continued: Getting serious about happiness

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