Friday, October 9, 2009

Gross National Happiness

Since the 1970s, the king of Bhutan has been advocating the concept of
"Gross National Happiness" (GNH) as measure of societal well-being. He
has often contrasted this idea with the widely used measure of
economic development, the "Gross Domestic Product" (GDP).

Computation of a country's GNH uses a "methodology of multidimensional
poverty" developed by Alkire and Foster. It uses 72 indicators of
well-being, including both numerical and categorical variables.
Examples of numerical variables include number of years of schooling
or annual income. Examples of categorical variables would be answers
to questions such as, "In general, how would you describe the state of
your health? (Excellent, Good, or Poor)" And "To what extent do you
trust the media? (Trust, Trust Somewhat, or Distrust)"

Quoting below from an article in Business Bhutan, Sept 26, 2009, Vol 1, Issue 1:


Last month, the Prime Minister [of Bhutan], Lyonchen Jigme Y. Thinley,
delivered a speech on Gross National Happiness (GNH) in Japan where he
said the world now has to review its pursuit of economic progress.

Three weeks later, on September 14, the same message echoed from
France but with a new found optimism. The French President, Nicolas
Sarcozy, declared that France "plans to include happiness and
well-being in its measurement of economic progress."

The president made his assertion after embracing a study he
commissioned last year was published. The study was led by two Nobel
laureates, Joseph Stiglitz and Amartya Sen, with 23 other experts
including four other Nobel laureates who studied the limitation of
having Gross Domestic Product (GDP) as a measure of economic

Summing up the study, Joseph Stiglitz said, "The main message is to
get away from GDP fetishism and to understand the limits to it."

Addressing President Sarkozy's new found reason for hope for the
future, Lyonchen Jigme Y. Thinley told Business Bhutan, "the world is
acknowledging Bhutan's intellectual leadership" in "human society's
search for an alternative development paradigm, an alternative
framework for the growth and continued progress of human society."


GNH was advocated by the fourth [king of Bhutan] Druk Gyalpo igme
Singye Wangchuck since the 1970s who declared collective happiness as
the national goal.


Joseph Stiglitz describes GDP as a "false choice" for measuring
national progress. The GDP measures market economic activity and not
societal well-being. He added, "What we measure affects what we do. If
we have wrong metrics, we will strive for wrong things."

Advocates of happiness as an index stress that an increase in GDP can
also occur in a society where the majority of the citizens have become
worse off. GDP does not take into account unemployment, cultural
disintegration, resource depletion or environmental degradation.

Tshoki Zangmo of the Center for Bhutan Studies said, "In GDP,
externalities, i.e. Outside events over which we have no control --
such as war, natural disasters and disease -- and which lead to
increased spending would be considered to be unambiguously positive
inasmuch as they increase economic activity."


The economic affairs minister, Lyonpo Khandu Wangchuk said pursuance
of GNH does not mean undermining economic growth.

He said that Bhutan is looking to contribute to GNH through economic
development. Only through sound economic development can a country
have peace, security and prosperity.

"For Bhutan, the transition to a successful democracy can only be
possible with economic development" he said "because only then can we
meet the aspirations of the people."

While the French President publicly made a bidding of his new claim,
Bhutan was not mentioned even once. Neither the 291-page report nor
its five-page references used for the study, mentions Bhutan. But the
findings of the report bear stark similarities with the works of the
Center of Bhutan Studies which has been trying to quantify GNH for
about five years now.

Makes some good sense to me!

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