Best measure of a nation’s welfare

Gross National Happiness and Human Development Index will provide a much better result than GDP

By Author D Samarender Reddy   |   Published: 24th Jul 2020   12:05 am Updated: 23rd Jul 2020   10:01 pm

What is the first thing that comes to your mind when you think about how well India is doing? GDP or GNP (gross domestic product and gross national product), and, associated statistics like the growth rate of GDP, right? We self-congratulate ourselves when the growth rate touches 7 and above, a far cry from the so-called Hindu rate of growth. But, is GDP or GNP the correct way to measure the welfare of a nation?

Let us take a look at some of the drawbacks of relying on GDP or GNP to estimate the welfare of a nation.

• It does not tell us how the wealth of a country is distributed among the population. We cannot say a nation’s welfare is high when the wealth is concentrated in, say, the Top 1%.

• It does not tell us about the mix of goods and services. You could be producing mainly luxury items and have shortage of essential goods for which you may be depending on imports.

• It does not capture the negative externalities – those which do not get factored into the pricing mechanisms by the markets, such as, pollution.

• It leaves out certain important non-market welfare activities, such as unpaid labour by housewives.

• It does not reflect some socio-political factors, which could be bad, such as high crime rate, high corruption, political instability and frequent communal clashes.

Happy Bhutan

Perhaps it was considerations such as the above which led the then king of Bhutan, Jigme Singye Wangchuck, to remark to a British journalist during an interview at Bombay airport in 1979 that “Gross National Happiness is more important than Gross National Product”. Though the term was newly coined by the king then and there, its concept was being worked out during the 1970s. And, the rest they say is history.

Gross National Happiness (GNH) has now become a buzzword or buzz term. The GNH philosophy now guides the government of Bhutan. It includes an index, which is used to measure the collective happiness and well-being of a population. The GNH was instituted as the goal of the government of Bhutan in the Constitution of Bhutan, enacted on July 18, 2008.

Moreover, the term or concept has so caught the fancy of most that in 2011, the UN General Assembly passed the Resolution on “Happiness: Towards a Holistic Approach to Development” urging member nations to follow the example of Bhutan and measure happiness and well-being, and calling happiness a “fundamental human goal.” But, what exactly does GNH encompass or seek to capture and what are its constituents, if any?

Goal of Governance

The GNH values collective happiness as the goal of governance. In doing so, it emphasises harmony with nature and traditional values as expressed in the nine domains of happiness and four pillars of GNH. The four pillars of GNH are: Sustainable and equitable socio-economic development; Environmental conservation; Preservation and promotion of culture; and Good governance.

The nine domains of GNH are: Psychological well-being; Health; Time use; Education; Cultural diversity and resilience; Good governance; Community vitality; Ecological diversity and resilience; and Living standards. Each domain is composed of subjective (survey-based) and objective indicators. The domains weigh equally but the indicators within each domain differ by weight.

To see how these domains work, it is instructive to consider this example. Let us say there are two people, one of whom has a good job but one that leaves lesser time for spending with family and friends, while the other has a slightly lower-paying job but one that leaves him with enough time to spend with family and friends and enjoy his life. Seen purely through the economic lens, one would say the first person is better off, but the GNH lens has us pause and makes us see why the second person might be the one better off if one considers overall welfare in terms of happiness. Clearly, according to the GDP logic, it is the first person who makes the welfare of a nation go up more than the second person, whereas it is the reverse from the perspective of GNH philosophy.

 nation's welfare
Photo by Guru G

Aristotle Explains

Let us then ask ourselves the question as to why happiness should be prioritised above other things as being a better measure of welfare.

Surprisingly, the quest for the answer takes you as far as ancient Greece when Aristotle clearly explained the rationale for such a viewpoint in his book, Nicomachean Ethics. He pointed out that while we desire every other thing for being instrumental and serving some other end, happiness is the only thing that is desired in and of itself for itself, and all the other things aim at happiness as their final end. Hence, if we are happy then there is nothing else left to be desired. This points out why measuring happiness is one of the best ways of measuring a nation’s welfare.

There is also the Human Development Index (HDI), developed by the economists Amartya Sen and Mahbub ul Haq. It is a statistic composite index of Life Expectancy, Education (Literacy Rate, Gross Enrollment Ratio at different levels and Net Attendance Ratio), and Per Capita Income indicators, which are used to rank countries into four tiers of human development. The United Nations Development Programme (UNDP)’s Human Development Report Office uses the HDI to measure a country’s development.

It is time we in India took these two ways of measuring welfare – GNH and HDI – seriously and adapted them to our conditions and needs so that we have a better measure of national welfare than we do at present using as we do GDP and growth rate of GDP.

(The author is a writer and poet; preview his poetry at https://a.co/fyEOQFa )


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