Happiness beats GDP gauge

Ross McDonald says a Gross National Happiness index is working well in Bhutan. Photo / Natalie Slade

Governments around the world are moving away from relying on GDP alone to measure the success of their people, says a University of Auckland researcher.

Historically, most countries - especially Western ones - have considered high productivity to be the main indicator of an acceptable domestic situation.

Ross McDonald, a senior lecturer in the University of Auckland Business School, said that kind of thinking was being replaced by a more all-encompassing approach.

A 2008 Euro-barometer poll indicated that more than two-thirds of European Union citizens believed social and environmental indicators should be used, alongside economic measures, to evaluate progress.

Last year, French President Nicolas Sarkozy said the focus on GDP as a measure of a nation's prosperity was a major contributor to the global financial crises, the Daily Telegraph reported.

Sarkozy suggested using a measure of well-being and happiness to gauge France's progress, instead of GDP.

The New Zealand Government was "not as committed as others" towards broadening its approach to progress away from GDP, McDonald said.

"But I think they would be foolish if they were unaware of the fact the tide is changing."

He said GDP was useful only as a measurement of the economy - nothing more.

"The problem is that [GDP] is now used for purposes which its founders never designed it for," he said.

"It's become an overall measure of our well-being, but it is undiscerning as a process."

McDonald said a rising prison population would add to GDP, through the money pumped into sustaining jailed populations and building new facilities.

"But in fact a rising prison population is a sign of a decline in society," he said.

In the same way, car accidents contributed to GDP through new vehicles being bought and money spent on repairs.

An alternative to the traditional GDP approach existed in the tiny Himalayan kingdom of Bhutan, where the term Gross National Happiness (GNH) was coined by a former king in the 1970s and used as a serious indicator of the nation's well-being since the 1990s.

McDonald travelled to Bhutan six times to study the media and education implications of GNH.

From his observations the GNH system was working well and Bhutan seemed quite a happy nation, he said.

McDonald said GNH indices in Bhutan measured crime rates, time use, how satisfied citizens felt with their lives and environmental indicators.

Economic measures were also included in the GNH indices, and GDP was measured separately, he said.

According to the IMF, Bhutan's per capita GDP was $7631 (New Zealand's sat around $37,701).

"[In Bhutan] economics is part of it, as it has to be in gauging any society's progress, but it's contained within, and balanced by, a whole raft of other measures so you can create a holistic perspective on how well society is doing."

McDonald said the ideals of GNH gave the opportunity to run a society in a way that had a "real pay-off" in terms of well-being "as opposed to blindly assuming that its going to be delivered by endless sacrifices to the market place".

"We know for a fact that that type of materialist obsession is a dead end in terms of happiness and well-being."