Wednesday, January 19, 2022

GDP becoming less important than GNH

The Gross Domestic Product (GDP) may have begun to lose its attractiveness as an economic indicator and may possibly be replaced by the Gross National Happiness (GNH).

“More and more countries are starting to measure their progress with reference to the happiness of their citizens…. Bhutan has gone the furthest but others, like the United Kingdom, are now systematically collecting data on happiness and life satisfaction. The Organisation for Economic Co-operation and Development is leading the way in developing clear standards so that cross-country comparisons can be made. There are also many private organisations like Gallup that collect well-being data across the world and have been doing so for many years,” says the World Happiness Report that was released last week.

Bhutan’s government has adopted the objective of maximising its Gross National Happiness (GNH) Index which is a very broad measure with 124 different components.

The Index acts as a measure of progress and by looking at those components that drag down overall GNH, it shows where policy changes are most needed. The Report says that under the country’s leadership, there is now a connected international network, supported by a series of international GNH conferences, to measure and build happiness in local organisations and communities in countries at all stages of economic development.

In Brazil, GNH, (Felicidade Interna Bruta (FIB) in Portuguese), has inspired a variety of surveys and activities designed to improve lives. In the UK, the Office for National Statistics is now regularly collecting data on wellbeing in terms of happiness, life satisfaction and anxiety.

The Gallup Organisation, which by its account, “spans more than 150 countries, territories, and areas, annually capturing what more than 98 percent of the world’s adult population is thinking on topics from basic needs to job creation” has stated that “economic data are becoming less and less valuable” because they tend to be outdated by the time they come out.

“More significantly, GDP is less valuable because leaders now need to know much more than what people are spending ÔÇö they need to know what they are thinking. GDP isn’t enough if you are watching for instability. GDP isn’t enough if you are trying to figure out levels of hunger, hopelessness, or suffering. Recent events bear this out. All institutes worldwide knew GDP was rising in Tunisia and Egypt. They knew what 11 million Tunisians and 80 million Egyptians were buying and selling ÔÇö but they didn’t know what they were thinking. As a result, revolutions in those countries came as a shock. The United Nations didn’t see those revolutions coming, neither did the World Economic Forum nor the World Bank,” Gallup’s CEO and chairman, Jim Clifton said recently.

Gallup typically surveys 1,000 adults in 148 countries at least once a year, using a standard set of core questions.

GDP is an indicator of the economic health of a country and also gauges a country’s standard of living. One other criticism that has been made against it is that it does not take into account the underground economy.

While Botswana may have a healthy GDP, its GNH is among the unhealthiest. The country is ranked 145 from a total of 156 nations that were surveyed by the United Nations for its latest World Happiness Report. Generally, the country’s happiness levels have been declining since 2010: more Batswana were happy in 2010-12 than in 2005-07. A low score means that a nation is not making adequate progress.
Six key variables are used to measure happiness: GDP per capita, years of healthy life expectancy, perceptions of corruption, prevalence of generosity and freedom to make life choices.

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