Column : Measuring prosperity

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Column : We always overcome

: There is widespread dissatisfaction with Growth National Product as a country’s overarching goal. It has major conceptual flaws. It is restricted to goods and services traded in the market. Valuations are determined by the underlying distribution of income and wealth. It doesn’t directly measure well-being, nor the freedom of people to pursue a life of their choosing—in Amartya Sen’s formulation of the ends of development.

There has been a recent resurgence in interest in broader measures of well-being. President Sarkozy of France appointed a Commission on the Quality of Life involving both Sen and Joseph Stiglitz. In economics and psychology, happiness literature has itself become growth industry. The most famous, and hotly debated, result is the so-called Easterlin Paradox: that measures of subjective well-being show little or no improvement with rising incomes after basic needs have been satisfied. Even in the United States, a society seemingly obsessed with material rewards and consumption, there has been little improvement in subjective reports on happiness since the 1970s.

Bhutan, India’s small neighbour, has been officially pursuing an alternative concept for decades. The previous King Jigme Singye Wangchuck announced that Gross National Happiness (GNH) was the country’s national goal soon after he came to power in 1972. It has four pillars: promotion of equitable and sustainable socio-economic development, preservation and promotion of cultural values, conservation of the natural environment, and establishment of good governance. Bhutan just became a democracy and remains fully committed to GNH. Earlier this month it hosted an international meeting on how to get better of the concept.

I used to think the Bhutanese concept of GNH quirky, perhaps only appropriate for a small Buddhist country run by a benevolent King. After a recent visit, I think it raises genuinely important issues, as relevant to India as any country. Here are three.

First, the influence of material changes on well-being depends on a person’s initial position. As already noted, material conditions matter more the poorer a person is. And shocks to material welfare are especially costly when there are adverse shocks. This can lead to heightened insecurity, the loss in dignity associated with the loss of work, and heightened mental stress. This is a strong policy case to take more action for poorer groups and to reduce economic insecurity.