For years. Bhutan has been using the GNH index – Gross National Happiness – as its key indicator of success. For a remote impoverished country, it certainly makes sense to focus on non-traditional economic measures, but this recent announcement is the first I had heard about a westernized, industrialized, relatively rich country even contemplating the idea!
I am no economist, but I will share with you my understanding of how this works. Please post any corrections!
Currently, most macroeconomists focus their attention on the GDP – the Gross Domestic Product – as the ultimate measure for the economic health and well-being of a country. However, in the past decades, even as countries like the US, Canada, France, England, etc, have become richer and more prosperous by GDP measures, mental health issues like depression have increased exponentially. And it’s not just because the populations are rising – your lifetime likelihood of being diagnosed with depression is increasing as well.
There are several factors that are not included in GDP. For example, sustainability – if you own a farm, and produce enough food to feed your family, you are not contributing to GDP. In fact, you are detracting from it because now you don’t have to go to a store and buy anything. My little backyard garden of basil and tomatoes may save me a few dollars every year, but I am taking away from the economic well-being of my country according to current measurements.
Care-giving, as another example, is not calculated in the GDP. All that time that you spend looking after your child or your ailing parent – for no pay or reimbursement – does not count towards the GDP. If, however, you put your child into daycare, and your parent into a nursing home, and money changes hands, now there is a positive economic factor and jobs are being created and this is considered to be beneficial for the economy.
Forested areas do not count, until they are harvested and the wood is sold. Fish in the rivers do not count until they are caught and the fish are sold. Nothing, as I understand it, counts towards GDP until money changes hands.
You can see where this leads us. In order to increase our GDP, we essentially have to over-produce – grow more food than we need just for us. Catch more fish than we need just for us. And we need to give up some of our social and familial duties – have someone else look after our children and ailing parents.
Could it be better for social and individual well-being if we did count other factors? What if the number of acres of virgin forest counted towards the economic well-being of your country? What if growing your own sustainable garden counted? What if looking after your own child or your own parents counted? What would be the social and individual benefits? It could be huge – even though no money changes hands.
I don’t know the details of what Joseph Stiglitz and Armatya Sen, both Nobel Prize winners, have proposed. But I do know that, just the mere fact that this new model is under consideration in a westernized civilized country is big news. Certainly for positive psychology, and possibly for the world.
If anyone has an “in” to Nicolas Sarkozy, let me know – I’d love to hop on the next plane to Paris and help out! And yes, I even speak French…