Is Gross National Happiness the Way Forward?

While much of the world is fixated on the quest for GDP growth, wealth, and modernity, Bhutan – a landlocked kingdom with a tiny population squeezed between India and China – has chosen a different path, emphasizing human happiness and well-being. Does the Bhutan model hold the key to a prosperous, sustainable future for all?

In the 1970s, Bhutan’s fourth king, Jigme Singye Wangchuck, declared that GDP was less important than “Gross National Happiness” (GNH). After all, the goal of economic growth, as Bhutanese Prime Minister Lyonchhen Dasho Tshering Tobgay later put it, was always supposed to ensure people’s “contentment” and enable them to become “better human beings, socially, economically, and morally.”

Bhutan’s “GNH index” has four pillars: sustainable and equitable socioeconomic development, environmental conservation, preservation and promotion of culture, and good governance. The index then has nine domains: psychological well-being, health, education, time use, cultural diversity and resilience, governance, community vitality, ecological diversity and resilience, and living standards. According to these metrics, Bhutan has achieved some progress, with its overall GNH rising from 0.743 in 2010 to 0.781 in 2022. But how meaningful is this figure, and can it be applied globally?

The challenge in constructing any index is to determine not only which factors to include, but also how to weight each one. When it comes to happiness, this challenge is compounded by the ways sentiment shifts over time, owing not least to crises, from wars to natural disasters and even fear of future calamities. Moreover, the weighting of factors is likely to vary across generations, genders, and ethnic or cultural groups. Using such a complex index for cross-country comparisons would be particularly difficult.

With this in mind, an alternative index was developed. Introduced in 2012, the World Happiness Report asks nationally representative sets of respondents to evaluate their current lives and to provide assessments of positive and negative emotions. Since the WHR is much narrower than Bhutan’s GNH Index, and does not rely on data that are not widely available across countries, it offers a more useful means of comparing the well-being of various populations.

The results might not be shocking, but they are revealing. The WHR’s top-ranked countries tended to be smaller Western countries, led by Finland. Larger Western economies tend to perform worse, with the United Kingdom now 20th on the list, and the United States 23rd. Among major developing economies, China ranks 60th and India 126th. Overall, the happiest countries tend to be relatively wealthy, peaceful, and stable, with war-torn or politically and economically unstable countries tending to fare the worst. (Afghanistan comes in last.)

The WHR also highlights differences across age groups. In the US and Europe, the general happiness of older generations is increasingly offset by rising unhappiness among young people. In South Asia, by contrast, happiness levels across all age groups have fallen during the last three years.

As for Bhutan, which is not included in the WHR, plenty of challenges still lie ahead – many reflecting the fact that most of the world does not share its commitment to prioritizing human well-being over GDP growth. For example, Bhutan has staunchly protected its forests, which cover over 70% of the country, including by severely limiting mining operations. This has helped to make Bhutan one of the world’s few carbon-negative countries, with major potential benefits for the planet.

According to recent data, Bhutan’s protected areas could absorb 5.88 million tons of atmospheric carbon dioxide annually and store over 300 million tons of carbon. If the carbon captured were priced at $23.2 per ton (the weighted global average in 2023), it would cover nearly 90% of Bhutan’s net public borrowing in 2024. Unfortunately, the world carbon market does not work that well, so Bhutan is not being adequately rewarded for its good environmental stewardship.

More broadly, Bhutan is a very small country in a big world characterized by growing inequality. Though it has a GDP of roughly $3 billion, its per capita GDP amounts to just under $4,000 – much higher than that of neighboring India ($2,500), with its GDP of $3.5 trillion. But Bhutan’s currency is pegged to the India rupee, in which over 90% of its trade with India, and 70% of its public external debt, is denominated. As a result, Bhutan’s inflation rate is inextricably tied to India’s, which can pose serious economic challenges, such as increasing transport costs for traded goods.

There is also a limit to the economic opportunities Bhutan has been able to provide to local talent. After two years of economic contraction during the pandemic, Bhutan’s real GDP growth recovered, reaching 4.6% last year. But a significant share of its well-educated young people was already leaving the country in search of work, with 13,000 Bhutanese migrating to Australia alone in 2023.

For a country of 792,000, that level of outward migration – 1.64% in a single year – is a major problem, especially if young and better-skilled workers are the ones leaving. Bhutan’s government has announced a plan to deliver more high-quality jobs for its young people, including the Gelephu Mindfulness City, which is intended to serve as an economic hub capitalizing on Bhutan’s position between South and Southeast Asia. Implementing it, however, will require lots of foreign capital and know-how.

The idea that GDP is an inadequate indicator of well-being has gained ground in recent years. In 2009, for example, Nobel laureates Joseph E. Stiglitz and Amartya Sen, along with Jean-Paul Fitoussi, argued that measuring economic performance and social progress accurately demands consideration of “non-economic” factors – what people can do, how they feel, and the natural environment they live in – and whether well-being can be sustained over time. But beyond developing and discussing alternative indices – whether GNH, WHR, or something else – we must operationalize them, and we must reward and support countries like Bhutan that are leading the way.

Copyright: Project Syndicate, 2024. www.project-syndicate.org

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