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Bhutan's Gross National Happiness:An Economic Reality or Wishful Thinking ?
Odds with the Traditional Yardstick Cont..
Some economists have expressed that income-happiness relationship holds only in the lower range of income, which is indispensable to meet basic necessities of life. After a certain high level of GDP – when countries enter the era of ‘satiation' as exemplified in most developed countries, notably the US and Japan – happiness does not keep company with GDP. The satiation point, to J.K. Galbraith, was reached by the Affluent Society (1958); to W.W. Rostow, by the Mass Consumption Society (1960); to Johnson, by the Opulent Society (1967); and to Bell, by the Post Industrial Society (1970).The notion that more and more products result in more and more happiness, as the conventional measure presupposes, stood ridiculed. Galbraith remarked, “To furnish a barren room is one thing; but to continue to crowd in more furniture until the foundation buckles is quite another.”9 The baffling variety of lifestyle options proffered by dizzying affluence rather unsettles human mind and unleashes frustration.
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The belief that GDP does not necessarily lead to social happiness has been fortified by a finding in 1974 by Prof. Richard A. Easterlin of South California University.His finding, known as Easterlin's Paradox10, refers to the fact that though rich individuals tend to be much happier than poor individuals within a country, the rich countries do not. Even the same country does not tend to get happier as it becomes richer over time. Easterlin's Paradox is explained, among other things, by the fact that it is the relative income position of the people rather than their absolute income level that confers happiness. A survey of 257 participants comprising students, faculty and staff members of the Harvard School of Public Health conducted by researchers Sara J. Solnick and David Hemenway in 1998 also lent credence to this explanation. The survey revealed that about half of the participants chose the option of earning an annual salary of $50,000 in a universe having an average annual salary of $25,000, even though the other option offered a doubled annual salary of $100,000 in a universe having an average annual salary of $200,000.11 Another explanation to Easterlin's Paradox is aspiration treadmill. People quite fast get inured to a hike in their income and begin to harbour an increasing income aspiration. Various surveys have proved this. |
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Individuals place their self-assessed ‘satisfactory income' levels at higher figures as their actual income levels rise. Rising income aspiration leads to a downward shift of the existing income-happiness function and destroys two-thirds or more of the welfare effect of an increase in income even in a year's time.12 Prof. Richard Layard of London School of Economics has offered a dynamic exposition to Easterlin's Paradox saying that the correlation between a nation's income and its happiness tapers off at a threshold point, say, $20,000 per capita, after which “additional income is not associated with extra happiness”.13 It will then be like asking an elm tree to give pears! An economic journalist has compared income and happiness to two birds ‘More' and ‘Merrier'. For most of human history, the two birds roosted on the same branch; and hurling a stone at ‘More' could hit ‘Merrier' too. But in modern times, this happens no longer. ‘Merrier' has flown off many trees across to make its own nest away from ‘More'.14 That a country's income and happiness do not necessarily march in tandem is evident from the time series data of the US covering the period from 1946 to 1996 (Exhibit I). Disconnect between income and happiness is also manifest in the crosscountry data culled from the World Values Survey Project's 2000 poll.
9] Dale Jr. Edwin L., “Are We Living Too High on the Hog?”, http://www.nytimes.com/books/99/05/16/specials/galbraithaffluent.
html, June 1st 1958
10] Easterlin Richard A., “Does Economic Growth Improve the Human Lot?”, http://graphics8.nytimes.com/images/2008/04/
16/business/Easterlin1974.pdf, pages 118–121
11] Revkin Andrew C., “A New Measure of Well-Being From A Happy Little Kingdom”, http://www.gpiatlantic.org/conference/
media/nyt1004.pdf, October 4th 2005
12] Frey Bruno S. and Stutzer Alois, “Should National Happiness Be Maximised?”, http://www.whatiseconomy.com/
Bruno%20Frey%20on%20Happiness.pdf, March 2nd 2007, page 8
13] Norberg Johan, “The Scientist's Pursuit of Happiness”, http://cache.search.yahoo-ht2.akadns.net/search/cache?ei=UTF-
8&p=additional+income+is+not+associated+with+extra+ happiness&fr=slv8-acer&u=www.cis.org.au/Policy/spring05/
polspr052.htm&w=additional+income+not+associated+extra+extras+happiness&d=H1gaSTWxQxu4&icp=1&.intl=us
14] McKibben B., “Citing: Deep Economy”, The Economic Times, July 24th 2008
