Gross National Happiness is Grossly Silly
A New York Times article (hat tip: Suhit) of Oct 4th, starts off with
What is happiness? In the United States and in many other industrialized countries, it is often equated with money.Economists measure consumer confidence on the assumption that the resulting figure says something about progress and public welfare. The gross domestic product, or G.D.P., is routinely used as shorthand for the well-being of a nation.
But the small Himalayan kingdom of Bhutan has been trying out a different idea.
In 1972, concerned about the problems afflicting other developing countries that focused only on economic growth, Bhutan’s newly crowned leader, King Jigme Singye Wangchuck, decided to make his nation’s priority not its G.D.P. but its G.N.H., or gross national happiness.
When thinking about GDP and GNH, one has to be very careful about what one is aggregating. GDP is an accurate measure of what it measures: aggregate annual production of final goods and services in an economy denominated in monetary terms.
GDP does not aggregate cows, or beauty or whatever one may mistakenly think it does. Thus saying that the GDP does not accurately tell me anything about how many cows are in the economy, or complaining that GDP does not tell me anything about “the total amount of beauty is in an economy,” is as silly as saying that GDP does not tell me whether the people in the country are happy or not.
So those who make that complain are complaining that the tape measure is flawed because it does not help in figuring out the temperature of a liquid. It is not meant to do so in the first place.
Now there is something called happiness or satisfaction. A person can be said to be happy or satisfied. That is a feeling, a subjective experience. I can say that “I am happy” just like I can say “I am rich.” Those two look similar but the statements are qualitatively different. There is an objective validity to the statement “I am rich” because my wealth can be measured and verified externally. But happiness is subjective and does not allow interpersonal comparisons, while richness does. We can definitely say how A’s wealth compares to B’s wealth but cannot say how A’s happiness compares to B’s happiness.
If even interpersonal comparisons of happiness is mostly meaningless, attempting to define a measure which aggregates the “happiness” of millions of people clearly leaps over the bounds of the silly and lands somewhere in idiotic stupidity land.
I have never considered the GDP to be the end-all and be-all of an economy, any more than I consider the monthly income of a person to be the only relevant characteristic of a person. Perhaps some do, but then people believe in all sorts of silly stuff. Some economists do mess around with GDP growth rates and that is important, just like your tax accountant messes around with your income statements and your investments. Just because your income does not fully define you does not mean that your tax accountant is a myopic narrowminded individual or that the job of preparing your financial statement is meaningless.
I think that those who complain that GDP is not all that matters are making a valid but rather trivial complaint. I have yet to meet a single intelligent mature person–and most economists I have met fit that bill–who believes that GDP is anything more than a measure of economic activity and that too narrowly defined economic activity.
What I don’t understand is the attempt by the detractors of GDP aping a metric which they have perhaps misunderstood. They are in effect saying, “GDP does not measure happiness. So we must come up with an alternate aggregate measure we will call Gross National Happiness which will be more appropriate.”
That is Gross National Silliness.
I think the concern arises when the media and politicians act and speak as if GDP is the only thing that matters. Trying to measure more subjective aspects of the economy is sensible, though terribly difficult, but you need to look at all the measures.
To take an obvious trivial example Ireland has a very high GDP for it’s population, which is artificially inflated by the profits of foreign companies that are immediately repatriated and don’t bring any benefit to Ireland. Every time the OECD issues a new report the headlines scream “Irish 2nd richest” and so on and the politicians pat themselves on the back.
GDP is a useful measure of some things but becomes a proxy for the success of the economy, which it isn’t.
Comment by Colman — October 20, 2005 @ 5:17 am
Colman, I agree with you. At best GDP is an imperfect proxy for the success of an economy, and that too over a limited range of per capita incomes. For instance, clearly an economy with $400 annual per capita GDP must be unsuccessful in many ways compared to one with $14,000 annual per capita GDP.
A reasonable (appropriately defined) per capita annual GDP is a definite necessary condition for human welfare but is not sufficient.
I highly recommend Tibor Skitovsky’s The joyless economy: An inquiry into human satisfaction and consumer dissatisfaction. (Oxford Univiversity Press, 1976) for a wonderful treatment of the topic. I admire Skitovsky very much.
Comment by Atanu Dey — October 20, 2005 @ 5:50 am
I’ve found that looking at GDP numbers when trying to compare wealth (not happiness!) of nations is at least a bit more meaningfull when one looks at it denominated in PPP (Purchasing Power Parity). And then to go one step further it’s better to look at GNP than GDP, as if I recall it takes balance of payments (what was mentioned about Ireland above!) into account, too. I’d have to look it up to be sure, but GNP in $PPP per capita, combined with median (NOT average!) income in $PPP tells you a lot.
Comment by David Mercer — October 20, 2005 @ 6:00 am
David, GDP or even PPP if you prefer, does not measure wealth; it measures incomes, which is a flow, and not wealth, which is a stock.
Regarding GDP/GNP: both are approximately the same in most large economies. For very very small economies, it may differ somewhat, but not materially.
Comment by Atanu Dey — October 20, 2005 @ 6:26 am
As it happens, psychologists have started studying happiness more seriously in recent years. Here is an excellent article thats quite accessible: http://www.timesonline.co.uk/article/0,,2099-1793873_1,00.html
Comment by Rangachari Anand — October 20, 2005 @ 10:30 am
Happiness, it can be argued, is the be all and end all of human activity. Very important stuff, as they say. And if they manage to start to measure it in a way that is consistent and repeatable, I’d say, we’d have made progress.
However, replacing GDP with GNH is flawed since both a measures of different things. I really liked your analogy about the tape measure and temprature of liquids.
As to why people tend to use GDP is the sole economic measure, I think the answer is to be found in the drive for simplicity. It seems that it is innate in all of us - to simplify things… and GDP, at a gross level, is a simple explanation of how well the economy is doing.
Comment by AA — October 20, 2005 @ 12:42 pm
Rangachari, the psychological study of happiness has a very long tradition, dating back to at least Gautama, the Buddha, 2500 years ago. It is only lately that Western scientists have started taking it seriously. The Buddha investigated the causes of suffering to figure out the factors that lead to happiness. I don’t think his analysis of the problem of suffering is going to be surpassed in any time soon.
AA, indeed happiness is the ultimate desideratum of human existence. But I believe that is not commensurable unlike objective quantities natural quantities such as mass, temperature, distance and time, or artificial quantities such as money and the stock index.
Is it really simplicity the reason that GDP is measured and not happiness? It may be that measuring GDP is tractable of course. But as I briefly indicated, I think measuring “happiness” is not meaningful, leave alone whether it is tractable.
Comment by Atanu Dey — October 20, 2005 @ 1:04 pm
This particular article in the New York Times is written by Andrew C.Revkin,who is a science writer and has written a book on global warming.I think the author wants to examine the idea of the King of Bhutan in the light of economic developement of Tibet,where the government of China is spending billions of dollars on the developement of infrastructure and tourism.However i do agree with you.
Comment by ak — October 20, 2005 @ 10:08 pm
I wonder at what rate the gross national happiness increases once it passes basic health and nutrition?
Dowd raises a simple yet profound point regarding the power of market forces to create an absurd allocation of resources. For example, what if the $8 billion spent annually in the United States on cosmetics were cut in half? The United Nations Human Development Report calculates that “depriving” U.S. consumers of one-half of this amount could fund basic health and nutrition for the poor throughout the world.
(Douglas Dowd, Capitalism and its Economies: A Critical History)
http://www.findarticles.com/p/articles/mi_m1132/is_9_53/ai_82609811
Comment by Mani Pulimood — October 21, 2005 @ 10:22 am
The story is a result of a PR campaign launched by bhutanese government.
Kicking the ethnic nepalis out (all the while with a nod from India) surely increased the bhutanese gross national happiness.
Comment by Guru Gulab Khatri — October 27, 2005 @ 7:08 pm
like all Americans the writer prefers something that he knows about ,i.e. wealth and prosperity to the unknown i.e. happiness.
What is GNS in the Americans thinking that they are superior to the rest of the world.
Comment by Chandra — November 4, 2008 @ 8:01 am