The Happiness Index- I first came across this idea of the “Happiness Index” at an economics talk at the University of Warwick’s open day back in 2019, and this somewhat relatively “new” economic concept, immediately caught not only my interest, but my mums also. Having dragged my mum around several University economics department’s open day talks, to have her come out interested in an economics concept was quite literally a miracle….
One of my reasonings for studying Economics at University was to understand economic concepts and communicate these to a wide range of people, whether that be to my mum, my sister, high school students, or being able to eloquently communicate ideas across to senior business partners.
But most importantly, I have always sought to empower women to want to educate themselves and have the confidence to understand the complex world of economics. Essentially, make economics accessible to all.
Thus, in this article, I aim to shed light on what hopefully you will find to be an interesting topic.
Gross national product (GNP) can be defined as the total value of all the goods and services produced by the residents and businesses of a country, regardless of the location of production. As such GNP, considers the investments made by businesses and residents of the country, living both inside and outside the country.
Up until the mid-1970s, this economic concept was one of the leading indicators of measuring economic health and comparing cross-country data, until Bhutan’s King Jigme Singye Wangchuck first introduced this new concept of “Gross National Happiness”. It was established as an alternative to GDP and GNP, and was developed to capture the quality of socio-economic growth more holistically and guide sustainable development through material and spiritual well-being. GNH is a more citizen-centric measure compared to GDP, which focuses solely on economic performance.
The Gross National Happiness Index is a multidimensional framework built around 33 indicators categorised under nine domains used to measure and guide the achievement of meaningful societal progress through a harmonised approach. GNH domains of well-being include:
- Psychological wellbeing
- Health
- Time use
- Education
- Cultural diversity and resilience
- Good governance
- Community vitality
- Ecological diversity and resilience
- Living standards
GDP was never intended to capture the well-being of society. Initially, it was created to assess wartime production capabilities. It also does not differentiate between sustainable and unsustainable growth; it fails to consider the negative effects caused to the environment and human health by the production or consumption of the nation’s output.
The GNH is what aims to now consider the well-being of society, with the omnipresence of social media, the growing societal pressures, and a modern 21st century struggling through and navigating mental health, the need to have an economic measure that considers the general happiness of a society, is seemingly more applicable to a modern-day economy.
GNH, for example, aims to consider measures that are quintessential for happiness, such as close relationships, safety, and personal freedom.
Economist Kate Raworth, who bases her research around the unique social and ecological challenges of the 21st century, coined a new modern concept “Doughnut Economics”, in 2011.
In her book “Doughnut Economics: Seven Ways to Think Like a 21st Century Economist”, she details, “the essence of the Doughnut: a social foundation of well-being that no one should fall below, and an ecological ceiling of planetary pressure that we should not go beyond. Between the two lies a safe and just space for all”.
The Doughnut model induces that human thriving depends upon planetary thriving, and without this new dynamic balance, that it invokes as a model, it enables and thus resonates with decades of thinking about sustainable development. Raworth argues that “the most effective way to stabilise the size of the human population is to ensure that every person can lead a life free of deprivation, above the social foundation”. From what can essentially be inferred as a supporting ideal to the Gross National Happiness.
Is this the way forward to a modern economic society?
2022 marked the 10th anniversary of the World Happiness Report, which uses the global survey data to report how people evaluate their own lives in more than 150 countries worldwide. The report ranks Happiness based on a three-year average (i.e., 2022 is based on data from 2019-2021), with the average life evaluations explained by six factors (GDP per capita, social support, healthy life expectancy, freedom, generosity, and corruption). With the best possible life for them ranking as a 10 and the worst possible as a 0, the top 5 countries rank as followed:
- Finland – 7.821
- Denmark – 7.636
- Iceland – 7.557
- Switzerland – 7.512
- Netherlands – 7.415
- …..
- UK – 6.943 (17th place)
An interesting insight into this ideal is that smiling or laughing a lot during the previous day is the most common of all the components of either positive or negative effect and has been on a slightly rising trend over the past 15 years, but slipped slightly during the pandemic years 2020 and 2021.
Overall, it can be seen that the Happiness Index is an index measure that is currently undergoing dealing with measuring the unmeasurable- i.e., how do we really measure happiness? But this is a topic that, alongside Kate Raworth’s “Doughnut Economics” model, has the opportunity to hopefully propel a post-pandemic society through to a more economically viable way of measuring a country’s economic health’, under an ecological and psychological well-being mindset.