When you read headlines about the economy, the subject matter usually relates to whether the markets are up or down, the changing value of currency, oil prices or job market statistics, and a deeper inspection of the overall economy will often cite GDP results. But what does all this translate to in our day to day lives? Does it make us all more content when the market is doing well? Does a growth of 10,000 more jobs in a month mean that 10,000 more people are doing a job that brings them satisfaction? Can a thriving economy accurately fulfill our aspirations? Is growth making us happy?
Even GDP’s creator, Simon Kuznets, stated that “[t]he welfare of a nation can scarcely be inferred from a measurement of national income” in 1934. Do we need to find new economic indicators, ones better suited to providing contentment and a feeling of prosperity?
The GDP you’ve likely heard of is an acronym for Gross Domestic Product. GDP represents the total dollar value of all goods and services produced over a specific time period. For simplicity’s sake, let’s say if in 2016, as a country, we produced $100 worth of goods and services, and in 2017 we produced $103. Economists would tell us our economy has grown three percent. Obviously, the United States of America aims to produce far more than $103 worth of goods and services—in 2015, the GDP reached a record high of $18036.65 Billion.
Genuine Progress Indicator
Maryland is the leading state when it comes to American progressive economic measurement, and in 2010 they introduced the Genuine Progress Indicator. The GPI is designed to measure sustainable economic welfare, rather than solely economic activity. This more nuanced measurement aims to account for income inequality, include non-market benefits from the economy, environment and society, and identify and deduct costs such as environmental degradation, human health effects and loss of leisure time. Interestingly, the GDP and GPI only began to diverge in the United States in the early 1980s:
Gross National Happiness
When the King of Bhutan said, “[w]e do not believe in Gross National Product. Gross National Happiness is more important,” he was referencing GDP and other nations’ use of the flawed metric. Bhutan’s constitution now includes the directive that “the State shall strive to promote those conditions that will enable the pursuit of Gross National Happiness.”
However, the aspiration to promote happiness does not necessarily lead to happiness. Critics claim that because GNH depends on a series of subjective judgments regarding well-being, governments may be able to define GNH in a way that suits their interests. This may be one of the key reasons GDP has been used as a policy tool for so long, as it is based on measureable outputs rather than the feelings of the population, or how those in charge define happiness.
The Harris Poll has been measuring Americans’ happiness since 2008, using an index calculated by taking an average of those who strongly agree with certain positive statements, and strongly disagree with certain negative statements.
World Happiness Report
The World Happiness Report is published by the United Nations. The variables currently include: real GDP per capita, social support, healthy life expectancy, freedom to make life choices, generosity and perceptions of corruption.
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