Trustee Exchange 2012
22 Feb 2012
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Is Gross National Happiness the new GDP?
Last year, long before the financial crisis prompted questions about policymakers' obsession with economic growth, President Sarkozy did something remarkable. I am not talking about his engagement to Carla Bruni but his intention to question our most fundamental economic measure, Gross Domestic Product. Charities have long recognised that the measure of success of a society is not solely defined by financial progress or economic growth, but should also take into account social and environmental factors.
It is this premise that prompted President Sarkozy to gather together an impressive commission of Nobel prize winning economists to address the question of measuring and comparing the performance of nations, taking into account more than just their output.
Last month the results of the study were revealed. The report, led by the American Nobel laureate and ex-World Bank chief economist, Joseph Stiglitz, argued that a new approach to economic statistics is both practical and meaningful. He also suggested that the world's current bias towards economic growth could have contributed to the recent crisis. 'Perhaps had there been more awareness of the limitations of standard metrics, like GDP, there would have been less euphoria over economic performance in the years prior to the crisis. Metrics which incorporated assessments of sustainability (e.g. increasing indebtedness) would have provided a more cautious view of economic performance.'
This is not new thinking. It all started back in 1972 when Jigme Singye Wangchuck was crowned King of the Himalayan nation of Bhutan and declared that he was more concerned with 'Gross National Happiness' (GNH) than with Gross Domestic Product. This signalled his commitment to building an economy that would serve Bhutan's culture based on Buddhist values. GNH attempts to quantify well-being and suggests that economic policy should take into account the fact that happiness does not come from wealth alone. This philosophy may have been ridiculed by the capitalist world at the time, but the ever pressing need to balance economic progress with, amongst others, the challenges of climate change has led us to reconsider our scepticism.
Earlier this year the new economics foundation (nef) published a report entitled The National Account of Wellbeing. Within this, nef have attempted to provide a framework for evaluating more subjective factors of well-being alongside traditional measures of economic performance. They point out that the 'obsession with growing the economy has meant that we have tended to ignore its negative impacts on our well-being such as longer working hours and rising levels of indebtedness' and that 'the model of unending economic growth is taking us beyond our environmental limits'. The report looks at well-being across Europe and their initial results make for interesting reading, giving a glimpse of how this sort of data could be useful for policy makers*.
Whether we have learnt our lessons from the crisis remains to be seen. However, it is unlikely that eternal economic growth is sustainable. Equally increased wealth through longer working hours and the depletion of our resources does not necessarily lead to a balanced and prosperous society over the long term. Could the inclusion of social and environmental factors in mainstream economic theory explain some of the 'irrationality' in consumer behaviour? Those of us who work in the charity sector already know that an individual's decisions are not made solely to maximise wealth as traditional economic theory would suggest.
In a study carried out by the University of Leicester in 2007 Bhutan ranked 8th out of 178 countries in subjective wellbeing, and was the only country in the top 20 'happiest' countries that has a very low GDP. Maybe King Wangchuck was on to something after all.
*See www.nationalaccountsofwellbeing.org for more information and to measure your own wellbeing against the European average.
