Is the Greatest Economic Measure Happiness?

Emily Horvath, Stewart AM Period, Honorbound

If increased economic growth does not always lead to increased fulfilment, then why do we think of GDP as being the most important factor in economics? GDP does not measure a country’s happiness, but many economists gave agreed that it’s time to start paying more attention to the happiness in a nation. It seems that the “happiness economics” are finally catching up to Aristotle’s initial beliefs on economics.

“Happiness Economics” is defined as an academic study of the relationship between fulfilments of an individual and predominate economic issues, including employment and wealth [1]. The purpose of the study id to aid governments in designing better public policies [1]. “Happiness Economics” revolves around the awareness that everything makes us happy until a certain point. In this case it is just a matter how we can remain below that certain threshold in order to maintain that happiness. One example of this situation is at a certain point, increases in annual income will no longer bring a greater sense of happiness [1]. Another example is that working more increases happiness up until the point where people feel overworked [1].

Happiness in increasingly becoming a more important economic indicator. Some even ask what the point is of increased production and consumption is it does not bring more human satisfaction [2]? The subject of happiness has been avoided by many economists due to the difficulty of measuring it. But, because of the “happiness economists”, there is a way to combine surveys with objective data, lifespan, income, and education, in order to obtain data with consistent patterns. The former president of Harvard University, Derek Bok, researched the relationship between economic growth and happiness in America [2]. He found that, during the past 35 years, while GDP per capita grew about 60%, the average home has become larger by 50%, and the proportion of families owning a computer as gone from zero to 80% but the percentage of Americans that describe themselves as “very happy” or “pretty happy” has remained the same [2].

In 1972, in the Himalayan kingdom of Bhutan, a 16 year old Jigme Singye Wangchuck ascended the throne. Wangchuck created the phrase “Gross National Happiness” to demonstrate his commitment to creating an economy that would support the happiness of the people. Although it was never implemented, Karma Ura, wanted to change that with the assistance of a Canadian health epidemiologist, Michael Pennock. The two developed Gross National Happiness measures: time use, living standards, good governance, psychological well-being, community vitality, culture, health, education, and ecology [2].

Generally, economics can tell us ten things about happiness. 1) Richer countries tend to be happier countries 2) Richer people are happier people 3) Money has diminishing returns 4) Income inequality reduces well-being, and higher public spending increases well-being 5) Unemployment makes the individual miserable 6) Inflation is also miserable 7) Working more hours makes the individual happier, until it makes them miserable 8) Commuters are less happy 9) Self-employed people are happier and finally 10) Debt strongly relates to anxiety and depression [3]. From these ten points it is clear that the economy has a strong effect on the individuals’ happiness so why does the economy not correlate with the individuals’ happiness?

 

[1] Heinberg, Richard. “Happiness Is The Ultimate Economic Indicator.” Co.Design. February 09, 2012. Accessed June 23, 2017. https://www.fastcodesign.com/1679289/happiness-is-the-ultimate-economic-indicator.

[2] Staff, Investopedia. “Happiness Economics.” Investopedia. August 16, 2012. Accessed June 23, 2017. http://www.investopedia.com/terms/h/happiness-economics.asp.

[3] Thompson, Derek. “The 10 Things Economics Can Tell Us About Happiness.” The Atlantic. May 31, 2012. Accessed June 23, 2017. https://www.theatlantic.com/business/archive/2012/05/the-10-things-economics-can-tell-us-about-happiness/257947/.

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