Jul 28, 2010

Choosing the right economic indicator – Gross National Happiness vs. Gross Domestic Product index

Since the days of the Club of Rome and Canada's Conserver Society, the underlying debate about economic growth vs. resources depletion and environmental limits has continued relentlessly. Politicians and governments are focused on GDP growth. Environmentalists are looking for alternatives.

But Oliver Moore in a recent Globe and Mail article reminds us that there is at least one other way of measuring the success of a society: Gross National Happiness. He cites the example of Bhutan, a small idyllic mountainous country snuggled between Bangladesh and China. Faced with increasingly rapid change from the pressure of globalization, which threatened its traditional way of life unspoiled by colonialism, it was looking for an alternative. The country came up with a 9 x 72 matrix set of indicators that would assess the population’s mood.

The resulting Gross National Happiness or GNH index is based on residents’ assessment of nine domains including psychological well-being, time use, community vitality, culture, health, education, environmental diversity, living standard and governance. Each of these in turn is broken down into indicators or variables. For example, for living standard, there are eight indicators, i.e. household income, income sufficiency to meet everyday needs, food insecurity, house ownership, room ratio, purchase of second hand clothes, difficulty in contributing to community festivals, and postponement of urgent repairs and maintenance of house. In total, for the nine domains, there are 72 indicators or variables, each of which has an associated survey question and a resulting index. See the Centre for Bhutan Studies web site for details.

This GNH process has moved beyond a method of assessing the population.

The country's leaders now use it as a screening tool to assess whether decisions fit its criteria. For example, a recent proposal to join the WTO initially appeared attractive. But when it was screened against the GNH criteria, it was determined that the WTO policy would not further the GNH objectives. And so the proposal was rejected. A good analysis of the underlying thought process is given by Mark Mancall of Stanford University in the December 2009 issue of the Journal of Bhutan Studies:

The pursuit of GNH depends upon the affirmation and reinforcement of Bhutan’s ability to exercise self determination in the positing of long-range objectives, short and intermediate-range policy decisions, and the development of the institutions and values in which those long-range objectives will be embedded and the procedures through which they will be realized. WTO membership weakens and diminishes national self -determination institutionally, procedurally, and culturally.

A key Canadian expert who helped Bhutan in adopting GNH is Ron Colman of Nova Scotia, founder of GPI Atlantic. He started by promoting the notion of a Genuine Progress Index (GPI) for Atlantic Canada. He sees progress as being more closely related to quality of life than depletion of resources such as fisheries or forestry.

More recently, the movement spread to the United States through GNH USA, which held a very successful conference last June in Middlebury, Vermont. Countries that expressed interest in GNH include Brazil, which had its own international conference on GNH last year and South Africa.

France is another country interested in alternative measures of progress. It recently published a report on alternatives to GDP as a measure of success through its Commission on the Measurement of Economic Performance and Social Progress. The French translate Gross National Happiness as…”Joie de vivre”!

Clearly, there is a long way to go before elections are won and lost on GNH progress, but the conceptual foundations are gradually being laid. And in Canada we are off to a good start now that Montreal has been ranked as the second happiest city in the world.

No comments: