Atanu Dey On India's Development

Gross National Happiness is Grossly Silly

A New York Times article (hat tip: Suhit) of Oct 4th, starts off with

What is happiness? In the United States and in many other industrialized countries, it is often equated with money.

Economists measure consumer confidence on the assumption that the resulting figure says something about progress and public welfare. The gross domestic product, or G.D.P., is routinely used as shorthand for the well-being of a nation.

But the small Himalayan kingdom of Bhutan has been trying out a different idea.

In 1972, concerned about the problems afflicting other developing countries that focused only on economic growth, Bhutan’s newly crowned leader, King Jigme Singye Wangchuck, decided to make his nation’s priority not its G.D.P. but its G.N.H., or gross national happiness.

When thinking about GDP and GNH, one has to be very careful about what one is aggregating. GDP is an accurate measure of what it measures: aggregate annual production of final goods and services in an economy denominated in monetary terms.

GDP does not aggregate cows, or beauty or whatever one may mistakenly think it does. Thus saying that the GDP does not accurately tell me anything about how many cows are in the economy, or complaining that GDP does not tell me anything about “the total amount of beauty is in an economy,” is as silly as saying that GDP does not tell me whether the people in the country are happy or not.

So those who make that complain are complaining that the tape measure is flawed because it does not help in figuring out the temperature of a liquid. It is not meant to do so in the first place.

Now there is something called happiness or satisfaction. A person can be said to be happy or satisfied. That is a feeling, a subjective experience. I can say that “I am happy” just like I can say “I am rich.” Those two look similar but the statements are qualitatively different. There is an objective validity to the statement “I am rich” because my wealth can be measured and verified externally. But happiness is subjective and does not allow interpersonal comparisons, while richness does. We can definitely say how A’s wealth compares to B’s wealth but cannot say how A’s happiness compares to B’s happiness.

If even interpersonal comparisons of happiness is mostly meaningless, attempting to define a measure which aggregates the “happiness” of millions of people clearly leaps over the bounds of the silly and lands somewhere in idiotic stupidity land.

I have never considered the GDP to be the end-all and be-all of an economy, any more than I consider the monthly income of a person to be the only relevant characteristic of a person. Perhaps some do, but then people believe in all sorts of silly stuff. Some economists do mess around with GDP growth rates and that is important, just like your tax accountant messes around with your income statements and your investments. Just because your income does not fully define you does not mean that your tax accountant is a myopic narrowminded individual or that the job of preparing your financial statement is meaningless.

I think that those who complain that GDP is not all that matters are making a valid but rather trivial complaint. I have yet to meet a single intelligent mature person–and most economists I have met fit that bill–who believes that GDP is anything more than a measure of economic activity and that too narrowly defined economic activity.

What I don’t understand is the attempt by the detractors of a measure at aping a measure which they have perhaps misunderstood. They are in effect saying, “GDP does not measure happiness. So we must come up with an alternate aggregate measure we will call Gross National Happiness which will be more appropriate.”

That is Gross National Silliness.

  • http://lifeandsomething.blogspot.com gaurav

    ” I have yet to meet a single ………economic activity.
    “.

    While economist may or may not attach too much significance to GDP, non economist do,
    (considering that GDP is the most-quoted-figure in most of the write-ups related to economy).
    Considering that non economist are in majority and from all indication going to be in near future, that creates a problem cosidering in a democratic country majority is the force behind economic decisions.

    Their are ways out of it.
    One to make “common “people knowledgable (as opposed to just informed), the probability of this happening is questionable.
    Another to make journalists and editor more knowledgable “AND” honest, which to me is ever more improbable.

    Regards

  • http://fortboise.org/blog/ Tom von Alten

    There are plenty of meager metrics that get more credit than they are worth. The problem with GDP is not that some wrongly take it as “the” measure of the state of an economy, but that it combines the good with the bad. Tell us more about what is and isn’t include in the GNH stat (and how it’s measured) before we can agree with you that it’s just silly.

    Right or wrong, what we talk about and measure is what we pay attention to. Economists as a group don’t have great standing in the domain of anti-silliness, do they? Taking oneself seriously doesn’t necessarily make one serious.

    Atanu’s response: Tom, good point about distinguishing between being serious and taking oneself seriously. To me, the most important role of economics is to expose silliness in the marketplace. And those who are good at the use of economics are what I would call economists. Therefore by definition alone (admittedly my definition), economists are in the business of anti-silliness and those who are silly cannot be called economists :)

    Now about GNH. I don’t care what it includes or excludes. The very notion of measuring happiness of individuals and then aggregating them is silly. Suppose the Bhutanese government were to declare that all this standard heat-driven engines are a waste of precious resources and lead to all sorts of pollution and global warming and so they have figured out and designed a “Perpetual Motion Machine”, I would not ask them to send me their detailed blueprint for this amazing machine. I would just call them silly. So also, if they say that they have figured out a new metric which purports to measure an incommensurable, I would reject it as gross silliness.

  • Praveen

    Atanu,

    what is your take on the Right to Information act?

    I somehow feel it is funny and will yield nothing more than a few controversies,scandals , wasted time&money before it is scrapped.

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  • http://constructal.blogspot.com Sameer

    Happiness is not measurable but the economics concept of “utility” is also not measurable. I guess we can safely assume that all decisions/activities which increase an individual’s utility will also increase his/her happiness. Can we then also assume that societies where each person has equal opportunity to maximize his/her utility (however he/she perceives it) are also societies which will be the most happy?

    I don’t think that a general scale can be created to measure these things (happiness, utility) EVER. However we can generally perceive a subjective level of happiness (i.e we can say I am happier than I was yesterday, or I am happier than person next to me). There is something like relative happiness (similar to the relative wealth study mentioned in the article). If I am happy and I FEEL that person next to me is happier, I guess I will feel a little less happy than I was before. It is probably because I ignore the fact that my idea of happiness is different than the other guy’s idea of happiness. So in general , higher level of happiness can only be achieved for a majority, if majority of the society has same or similar idea of happiness.

    This I think can be tested. In countries which have more homogenous populations in terms of religion/culture, majority of people will most probably have similar idea of happiness. I think such countries will rank higher than any scale of happiness one creates. Countries where the population is culturally diverse but people of similar culture/religion live closer together, (like in India) may rank a little below. The lowest will be countries which are culturally diverse and population is greatly mixed because in such a country the probability that the guy next to me has a different concept of happiness is greater hence the probability of the guy next to me being more(less) happy is also greater. (e.g US?).

    Does this make sense? Atanu, sorry for posting such a long comment.

    Atanu’s reponse: Sameer, yes, both happiness and utility are non-commensurable. That is why utility is not summed up to get a sort of “Gross Utility Whatever.” Utility and happiness are related tautologically: anything that increases satisfaction or happiness has utility. And I agree that if each of us had equal opportunity to seek our happiness, then the outcome may be a happy society.

    In my utility function (or “happiness function”) there are variables that relate to others. For instance, I have higher utility when I find that others around me are happy and not suffering. Of course, if I am someone who is particularly envious, then my happiness has a negative relationship to happiness of others. But in general, happy people are good people and good people don’t harm other people. So I am happy if everyone around me is happy. Happy people don’t become suicide bombers.

  • http://ssrdatta.blogspot.com Saheli

    Your pun reminds me of a mistake in a sign outside of “Crack Alley”—the food court on Durant in Berkeley.

    Hot Gross Jelly Drink.

    :-D

  • http://driveindia.blogspot.com Pranay Manocha

    There is reason to be sceptical when a subjective matter is measured objectively. Even more so when the results are used comparatively – as Bhutan obviously wants to acheive. Some of the funnier surveys in the recent past have dwelled on defining which parts of the world are happier than others. Indians, it seems, are the fourth happiest on the planet. Great. But I dont think there is any way to validate those results.

    A GDP can be checked with all the corresponding figures and thus validated. GNH, well, is quite the opposite. I am not sure of Bhutan’s reasons for adopting such a measure, perhaps it is just assertation that the Buddhist way of life leads to greater happiness, I don’t know.

    On the other hand (and I’m just an aspiring economist by your definition Atanu) I think GDP is just a macroeconomic perspective which is really not of much use to businesses or to individuals. GDP per capita is just factored GDP so it is also irrelevant to most of us. A $500 per capita tells me nothing of the income disparity or how many people earn more than $5000 so they can afford the products my business makes. There should be income segments, in real and also in PPP terms – especially for a country like India. Something like,

    In 2004, 10 million people earned > $5000, the average being $5625
    In 2005, 11 million people earned > $5000
    the average being $5500

    These figures along with the geographic distribution, something like this would help a business a long long way.

    ‘GDP’ could be calculated by population segments to say the GDP of the ‘High net worth individuals’ or the GDP of the ‘bottom of the pyramid’ populace.

    While I’m at it, PPP seems to be an extremely random application of something that is supposed to be a scientific representation. PPP for people under poverty line is bound to be much different that the PPP for individuals at the top end (as the products they buy vary substantially). So once GDP is calculated segment-wise, PP must be applied individually to all segments to have a mroe relevant GDP.

    Whatsay?

    Atanu’s response: Those surveys you mention are not entirely worthless. Some information can be gained about self-appraisal of subjective happiness. A well-conducted survey can reveal surprising things such as the understanding that those with the most gadgets are not necessarily the most contended. In any event, please do read Tibor Skitovsky’s “The Joyless Economy” sometime.

    GDP in itself is only a partial metric, which needs the support of other parameters to give a more complete picture. So just the mean of a distibution is not sufficient; you need to know the spread or variance as well. Per capita GDP coupled with Gini coefficients help to some degree in conveying whether the economy is on the average rich or poor, and whether the distribution is egalitarian or not.

  • http://fortboise.org/blog/ Tom von Alten

    This question is at the heart of the purpose of Economics. Saying “oh we can’t really measure what’s most important, so it would be silly to try” is admitting irrelevance. Or worse, it’s the drunk looking for his car keys under the streetlight when he lost them somewhere else, but the light is better here.

    Is Economics the science of studying what’s easy to measure?

    The particular term “happiness” has some problems, I’ll admit. Its meaning varies from the momentary emotional state of positive well-being to what the 13 United States of America understood it as worth pursuing: the sense of fulfillment from a life well-lived.

    Nevertheless, we can separate economic Goods from economic Bads, and I believe the effort would be worthwhile. How many people in your state/nation/whatever have clean water available in life sustaining quantity? Nutritious food? Adequate housing? If 10% of the population have housing that averages 0.1 of adequate, and 1% have housing 100 times what’s adequate, shall we aggregate those statistics and say our people have 9 times as much housing as they need?

    Atanu’s response: Please see my post “Reasoning Economically” which has some bearing on the question you pose about what economics is.

    The other point you make: people do take care to note not just totals but also the distribution of economic goods and bads.

  • Srini

    Are you sure a tape cannot be used to measure temperature? After all, that’s what the good old mercury thermometers used to do – they measured the expansion! ;-)

    Atanu’s response: Of course, a tape measure can be used to measure temperature, provided you have knowledge of other variables such as densities and volumes. So also a stopwatch can be used to measure distance, if you know the speed of light or the temperature and the speed of sound through the medium and suchlike.

    The GDP can also measure happiness if you know all sorts of other things. :)

  • James Elliott

    I find GNH creepy too.

    We’ve been having a discussion about this on a Buddhist site. Apparently some think GNH is the cat’s meow. Maybe so, but where’s the damn cat?

    As you have pointed out, GDP is not a measure of how well of people are, but rather how robust a certain sector of the economy is. It was invented, as I understand it, right after the depression in order to give early warning signals in the event that the same started happening again.

    That GDP is used by politicians to say how well off we are, I attribute to it’s slowness, i.e. you can say something about it and it’ll still be true several months or so down the line. Other economic indicators are either more obtuse or more frenetic and unreliable… for politiking.

    But it’s not a tool that was ever meant to indicate how well off one country is compared to another. There are other indicators for that. It’s just a basic indicator of a certain aspect of economic health.

    There are at least two things that disturb me about the attempts to usurp GDP with GNH (other than the buddhist community I’m involved in seems to think it’s a good idea).

    One, is that happiness is relative. There have been sociological and economic studies done that make it pretty clear that human beings decide whether or not they are happy based on how well off they are compared to others. Perhaps one of the best kept secrets of the fashion industry. There is always a loser in that.

    This is perhaps what Buddhism excels at working with. From one point of view only, Buddhism helps to transcend the efforts to compare ourselves with others in order to determine whether or not ‘I’ am happy.

    (I’m mentioning this, because Bhutan’s state religion is Buddhism.)

    As such, when happiness is defined, measured and, quantified in the ways indicated by GNH it is very likely a guarantee for unhappiness, because it intensifies the dynamic of relative comparisons of happiness in a very big way, by bringing it onto the national level, and by using the very same kinds of statistical measures and comparisons it is claimed has caused so much trouble. It’s using different statistics, one’s that may well need to be measured for some other reason, but we are talking about happiness here.

    The only way it could maybe hypothetically succeed in creating happiness, if it’s not about undermining the ‘I’m better off than so and so’ mentality is by achieving total equality in all things, including income, PPP, opportunity, etc.. Not going to happen. So their efforts, while superficially heartwarming, are not likely to succeed, but rather intensify the unhappiness of those who are not… happy.

    It has to be said here, that Bhutan is also having problems within their borders which some international human rights groups consider to be ethnic cleansing. A good chunk of their population it would seem, that has been contributing to the GDP for decades, apparently wasn’t contributing to the GNH, so they are being deported. “Cultural cleansing” is what the Bhutanese have called it. They do seem to have a way with words, the Bhutanese. So I can’t discount entirely that GNH is a bit of a ruse. Sort of like dropping the unemployed from the roster in order to come closer to full employment.

    The second thing that makes little sense, is that I have never felt that my values around happiness, contentment, or well being, ever revolved around any notion of GDP. I don’t know anyone who would say it did.

    But one of the basic premises of GNH, is that if the government measures those things deemed to create happiness instead of GDP which clearly doesn’t, then I, and all the other citizens will in some way be happier. It’s taking a statistic I may not fully understand and which has very little if any direct relationship to my attitude about life, and trying to replace it with a statistical construct that takes in so many things it no longer has any relationship to me the individual.

    I don’t believe people work like this. I think people are both dumber and smarter than that. The only thing I can imagine such statistics are good for then, is to say, “Not only are we better off, but we are so better off, we measure things that other countries don’t even think are important.” or something like that.

    And actually, as far as I’ve been able to tell, all the things contained within GNH, are already measured in devloped countries anyway. They just aren’t being used to crow about it, they are used to improve services when possible.

    So, where’s that cat?

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  • http://www.businessmodeldesign.com Alex

    The dominance and reign of GDP is silly: The problem I have with this whole topic is that GDP and GDP growth are largely used to “measure” the success of a country (some may call it wealth). The dominant opinion forces laggard countries to adopt the models of high-GDP and high GDP-growth countries… For example, the US is seen as one of the most successful countries based on GDP measures. Well, then try thinking of income distribution, health care, basic education, distribution of small arms, structural discrimination, job insecurity, working hours, % of population in prison, working poor, number of homicides, news quality etc. That makes the myth of success fall apart…

    So – I really don’t have a problem with GDP or GDP growth, but I have a problem with the way “we” measure wealth today. GDH might be silly, but measuring the success of a country (or wealth) based on GDP is just as silly… And when we are “pressured” to follow so-called successful countries it simply makes me sad…

  • http://www.zenunbound.com Tom

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