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International Happiness Day : Happiness vs GDP

happiness-gdp-marketexpress-inDuring the sixty-sixth session of the UN General Assembly, the then UN Secretary-General Ban Ki-Moon said – We need a new economic paradigm that recognizes the parity between the three pillars of sustainable development. Social, economic and environmental well-being is indivisible. Together they define gross global happiness.

The term ‘happiness or well being’ could be defined as- state of being (happy, healthy, comfortable and many more aspects of the human being) and state of the lives of people (how they feel, where do they stay, what do they do, the natural environment they live and many more)

In the era of dominance of market forces and enormous capital flows, focus on happiness and well-being in public policy can be viewed as a transformational initiative. The last two decades of the 21st century have witnessed the outcome of political and intellectual battles in the form of the voluminous literature on the different aspects of happiness and well-being through all kinds of academic and experiential research.

The common research problems for the majority of research so far lie in addressing whether happiness can be equated with income (GDP) or not? Can income be used as an indicator for measuring happiness or well being? Is it necessary that in big economies the level of happiness is also high? Through such questions, alternative approaches to GDP to measure progress and development are being studied and developed so that the next generations can view societies from new perspectives and parameters.

Why Questions are Being Raised on GDP as an Indicator for Measuring Happiness?

India has approximately USD 10 trillion (PPP) and $2.92 trillion (Nominal) economy, which enables it to become the third and fifth largest (respectively) in the world. Despite having this chest thumping statistical data, the condition of ‘state of being and state of lives’ of people of India is as follows:

The per capita income at the current dollar is around $2,000 which is less than the world average of $10,722. It stands at 129th place in HDI ranking, 140th in Happiness Index, 147th in World Inequality Index, 141st in Global Peace Index, 140th in World Press Freedom Index, 78th in Corruption Perception Index, 115th in Human Capital index, 102nd in global hunger index, 110th in Human Freedom Index, 177th in Environmental Performance Index, 145th in Health Care Access and Quality Index, 112th in WEF’s Global Gender Gap Report & 149th place on providing economic participation and opportunity to women and 62nd in Inclusive Development Index. The present doctor-patient ratio is around 1:10000 as compared to the WHO prescribed limit of 1:1000. India has 7 beds per 10,000 people while the global median is 27 per 10,000 people.

The similar pathetic position is there in the case of the education sector and income disparity; 75 percent of grade three students and 50 percent of grade five students could not solve two digits simple subtraction which is unexpectedly lower than most of the African countries (WDR, 2018), and share of top one percent income earners has now reached to the highest level (22%) in the national income (Piketty, 2017). During 1980-2014, the top 0.1 percent of earners captured a higher share of total growth than the bottom 50 percent (12 percent vs 11 percent). Oxfam (2018), too echoes the similar finding and reported that 73% of the total wealth created in the year 2017, went to the top 1% affluent population, whereas the lower half of the population saw the rise in their wealth by just 1%.

Seeing the status of ‘state of being and state of lives‘ through these proxy indicators, it would not be wrong to conclude that it is not as good as it should be concerning the rest of the world. But the status of other proxy indicators like the size of the economy and GDP growth rate is fantastic and one of the best in the world.

The Global Perspectivehappiness-gdp-marketexpress-in 

Isn’t it conveying some contrasting opinion about GDP vs other aspects of human life and happiness? Can’t we equate people’s happiness with income?

The possible answer lies in nature and original intent of the world’s most valued statistical indicators (GDP), which is an outcome of political and intellectual battles among Clark, Stone, Meade, Keynes, Kuznets and Gilbert and two global events; great depression of 1930 and World War II (1939-1945).

GDP was developed to measure depression, led to economic progress and guiding the democratic led the Roosevelt government’s policies more effectively and efficiently. It is a great invention that enables thinkers, politicians, and policymakers to answer certain key questions like- Whether a country is the fastest growing economy or not? Has the Chinese economy overtaken the US economy? Will India surpass the Chinese economy in the coming years? Is Ghana a poor country or not? But it does not answer; whether we are progressing in any meaningful sense? What is the status of overall human life and happiness? Answers to these questions are being addressed incorrectly through the prism of income.

Simon Kuznets, one of its main originators and earlier recipient of economic science Nobel prize once said: “the welfare of a nation can scarcely be inferred from a measure of national income.” But the wartime politics overruled the welfare notion, whose miscellaneous adverse result is quite evident before all of us.

How did it happen that thinkers started looking at everything with the prism of GDP and it became the dominated gospel indicator in public policy? The power of the system of metrics is the most plausible answer. Stiglitz, Sen, and Fitoussi in their book, “Mis-Measuring Our Lives Why GDP Doesn’t Add Up” have written that “the theories we construct, the hypotheses we test and the beliefs we have, are all shaped by our system of metrics.” What if the system of metrics has many flaws? What if, the system of metrics has been developed to serve some specific purpose and now is being used for some things it never developed to measure?

This is the exact case with GDP which increase; when there are earthquakes, a fire, environmental disaster, human disaster, and higher accident, higher medical cost, higher repair cost caused by poor transport and infrastructure, and goes down when a rickshaw puller takes the afternoon off to spend time with his lady love.

“It counts the labor used and wood produced when a tree cut down, but does not deduct the shade and beauty that are lost.” This is how Banerjee and Duflo- the year 2019 economic science Nobel laureate categorically abridged the anti-mankind nature of GDP in their latest book Good Economics for Hard Times (p.153). Other economic science Nobel laureates like Kuznets, Hicks, Arrow, Nordhaus, Tobin, Kahneman, Deaton, Samuelson, Solow, Stiglitz, to raise their concern for considering GDP as an indicator for the care of human life and happiness

Are we really passionate about this kind of system of metrics, where it increases in anti-mankind circumstances and promoting a civilization where the value of family does not count much?

In such a backdrop, it was July 19, 2011, when 68 nations joined Bhutan (the pioneer of Gross National Happiness) and supported its resolution on ‘Happiness: Towards a holistic approach to development’ for its adoption by the United Nations.

The UN General Assembly adopted this resolution, which recognized happiness as a fundamental human goal and emphasized a more inclusive, equitable and balanced approach to economic growth that promotes happiness and well-being of all. This resolution mandated member nations to take steps towards putting efforts and realizing the vision of a development paradigm integrating economic, social and environmental objectives going beyond GDP based development.

Taking the lead from this resolution, the UN hosted its first high-level meeting on 2nd April 2012 on the theme of ‘Happiness and Well-being – defining a new economic paradigm’. Mr. Jigme Y Thinley, the Prime Minister of Bhutan, was the main force behind inviting all concerned stakeholders for discussion in this meeting. This historical meeting was attended by select heads of state, ministers, Nobel laureates, eminent economists, scholars, spiritual and civil society leaders from developing and developed nations.

On June 28, 2012, all the 193 member states of the UN General Assembly unanimously adopted UN resolution 66/281 and decided to observe 20th March as International Day of Happiness or International Happiness Day.

Despite many fulminations, it does not mean that GDP is a wrong and redundant indicator. As for, the measure of economic progress is a concern, it is the ever-best invention that happened in the history of economics. It’s an important means (not an end) to achieve a good ‘state of being and state of lives.’ Even empirical pieces of evidence of thinkers like Easterlin, MaxNeef, Helliwell and many more advocates for the same. Since the mid-twentieth century, many attempts have been being made across the world to gauge the happiness of people through different indicators, but none of the indicators have ever developed to perfectly replace GDP. Hence, despite many flaws, it cannot be ignored at all.

We need to change our perspective of looking at everything immensely with the prism of Gross Domestic Product. Our former President Abdul Kalam and Pranab Mukherjee too raised their concern for the actual and bottom line impact of high GDP growth rate. Mukherjee explicitly advocated for Gross Domestic Happiness besides Gross Domestic Product. Hence, the Government of India too likes the UK, France, Australia, OECD Nations, Bhutan, and few more countries, take the initiative to look beyond GDP.

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