Ethiopia: It’s Time to Move From GDP to GNH – allAfrica.com

The Ethiopian Herald (Addis Ababa)
By Arun Korath

The Great Depression forced many economists to find new and better ways to keep an eye on national economies. One of the most notable of all of the Depression-era advances in economic theory was the refinement of what we call the gross domestic product (GDP).

This economic indicator had been around in some form before the Depression, but it functioned as little more than a guesstimate of the value of a nation’s economy.

Economist Simon Kuznets improved it dramatically by applying real data to measure the total value of all of the goods and services produced in a nation within a given year. Since then, GDP has become a valuable tool for evaluating how well or poorly an economy’s doing at a certain point in time.

As the global financial meltdown took hold in 2008, the GDPs of the world reflected this reality. All of the increases in unemployment, slowdowns in the production and sale of goods and other decisions that individuals made that cumulatively affected the vitality of an economy could be expressed in bar graphs and pie charts.

Indeed, GDP is a reliable indicator of economic health. As reliable as it is, however, GDP really only measures one thing — money.

More to the point, GDP measures the money being made by the interaction of production and consumption in an economy. For some people, this indicator tells them everything they need to know; others believe that money is one of many factors that determines an economy’s health. Simply put, there are more important things to consider — like happiness, for example.

With many of the world’s countries about as unhappy as they can get because of their sagging GDP figures, the tiny nation of Bhutan is going in the opposite direction. Officials there have come up with a different indicator, called gross national happiness (GNH).

At first blush, GNH seems a bit like the Five Day Weekend – a tongue-in-cheek commentary on the pursuit of wealth common among developed nations. However, the Bhutanese are quite earnest about implementing GNH as their key economic indicator. The country’s beloved former king, Jigme Singye Wangchuck, has been espousing the concept of gross national happiness since 1972, and the country adopted it as a formal economic indicator in 2008.

The Kingdom of Bhutan (as it’s formally called) is well known for its guarded lifestyle. Its population is generally cut off from the rest of the outside world. Television was first introduced to the nation – located high in the Himalayas between India and China — in 1999, and the Internet arrived there a couple of years later.

Bhutanese leaders worked hard to keep the rest of the world from encroaching upon and supplanting the idyllic and pious Buddhist lifestyle that the Bhutanese maintain. In other words, the Bhutanese like the way they live, but they’re also aware that globalization is an unstoppable force in the 21st century.

Rather than submit to the conspicuous consumption that characterizes much of the developed world, Bhutanese leaders chose to join the global economy on their own terms by measuring how the facets of its economy affect the positive outlook of its residents. Beginning in November 2008, all the economic factors used to measure gross domestic product are analysed for their impact on Bhutan’s residents’ happiness.

The factors of production are still there – unemployment, agriculture, retail sales — but GNH represents a paradigm shift in what’s most valued by Bhutanese society compared to the rest of the world. In short, happiness matters, not money. The ultimate goal is economic support for the four pillars of Bhutanese society: economic self-reliance, preservation and promotion of Bhutanese culture, good governance and a pristine environment.

To calculate the effect a certain economic sector has on GNH, Bhutan’s economic activity is measured by distinct criteria, or dimensions. GNH is built around four pillars of national wellness, consisting of good governance, sustainable socio-economic development, cultural preservation and environmental preservation. Within these four pillars exist nine domains of well-being, which include psychological well-being, health, education, time use, cultural diversity and resilience, good governance, ecological diversity and resilience, community vitality, and standards of living.

These dimensions include concepts like time use, environmental diversity and psychological well-being. Time use, for example, takes into account the amount of time a particular sector’s workers are able to spend with their families or in leisure activities.

Psychological well-being includes the prevalence of both positive and negative emotions. These criteria can change the value of certain goods. For example, a tract of forest that would have more value as timber for sale in a consumption-based economy would have more value left intact under Bhutan’s use of GNH.

By employing gross national happiness as its leading economic indicator, Bhutan’s public policy will inevitably follow suit. A sector filled with unhappy and stressed employees who cut down trees for a living could receive less government funding than a sector that promotes adequate time off for daily prayers and is engaged in preservation.

If decades of scientific research are to be believed, the Bhutanese may be onto something.

Is gross national happiness more important than gross domestic product? That’s a tough question, but the usefulness of GNH has a leg up for two reasons. Money has a dichotomous nature; it can bring happiness and sadness, security and insecurity — usually depending on how much or how little cash you have.

Happiness has a more singular nature: It brings only, well, happiness. In addition, studies consistently show that happy workers are more productive than depressed or stressed ones. After all, Bhutan’s economic activity must still generate enough revenue to pay for services like health care, education and infrastructure and its population must still buy food and clothing.

Even beyond the benefits that a focus on happiness can provide an economy, strong evidence suggests that happiness is simply more important than money.

For years, surveys investigating life satisfaction of individuals based on their income showed mixed results. Some show people with more money do tend to be happier; others show there isn’t much difference.

In fact, one 2006 Princeton study measured actual life experiences against satisfaction over one’s life as a whole. The study showed that wealthier individuals showed almost the same amount of happiness during certain life experiences as the poorer ones, though they still reported higher life satisfaction.

Sudden and large influxes of cash don’t appear to have much impact either. Harvard psychologist Daniel Gilbert found that after about three years, amputees and lottery winners have about the same level of happiness, having returned to their natural state of happiness after their respective gains or losses.

The World Values Survey points out that while income has sky-rocketed in developed nations compared to their pre-World War II levels, the levels of happiness found in those countries have remained nearly static. The survey, conducted annually in nations around the world, found that materialism appears to be “a happiness suppressant”.

It would appear that the victor in this happiness-or-money battle depends largely on an individual’s mindset. What makes us happy is subjective; the Bhutanese acknowledge this. “Happiness is an individual pursuit,” the Bhutanese secretary of communications told the New York Times [source: Mydans]. For an entire society to agree to buck the global trend and collectively pursue happiness over money, then, is all the more remarkable.

Can this idea be implemented in this country is a point for discussion among the countrymen.
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The writer of this piece is an Associate Professor, Department of Management Studies College of Business and Economics, Dilla University

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