Going beyond GDP: The happiness index

6 min read

04 Feb 2021

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Anne Salomäki

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123RF

6 min read

04 Feb 2021

Text:

Anne Salomäki

Photo:

123RF

In the past decade, various indices measuring the wellbeing and global contribution of nations have popped up. What are their benefits and where do they fall short? This story is part of our Beyond GDP series.

In the early 2010s, a small country in the eastern Himalayas started to trend in global news. “The big idea from a tiny state that could change the world,” read the headline of a 2012 story in the Guardian about Bhutan’s decision to measure its success in terms of happiness.

It might be fair to say that until then, there were few people in the Western world who could have easily placed the country on the world map. Due to the vast and overwhelmingly positive news coverage, however, awareness of the country and its people grew rapidly.

“It was a very successful nation branding project,” says Robert Govers, nation branding expert, independent advisor and author. “It’s a clear indicator of how Bhutan wants to position itself, and you really see a clear link with what kind of tourists it wants to attract.”

The idea of measuring happiness to show a country’s success rather than a more traditional economic metric like gross domestic product (GDP) isn’t unique to Bhutan. For example, the Human Development Index (HDI) considers factors such as life expectancy and education on top of income per capita; the Good Country Index, which is created by Govers and policy advisor Simon Anholt, measures the overall global contribution of each country; and indices like the World Happiness Report rank countries based on wellbeing indicators and surveys.

Most of these indices are created by collating secondary data. Others, such as those looking at nation branding, are based on consumer surveys.

Money can’t buy happiness, but it can help

Frank Martela, a Finnish philosopher and researcher of wellbeing psychology at Aalto University, points out that GDP, the traditional measure of a country’s success, works well in tracking economic activities, but it fails to deliver when it comes to wellbeing. Martela notes that ironically, this is especially the case in wealthy countries.

“In poorer countries, the connection between GDP and wellbeing is stronger, but in countries like Finland they’ve got very little to do with each other,” he explains. “For example, in the United States, GDP is among the highest in the world, but despite strong GPD growth, life expectancy has decreased, and inequality is growing.”

Using GDP in making conclusions about wellbeing can be misleading, Martela says, since it doesn’t take into account things that are quintessential for happiness, such as close relationships, safety, and personal freedom. Money can add to happiness to an extent – it’s difficult to be happy when there’s no food on the table – but research shows that happiness flattens out and, in some cases, begins to decrease after income and wealth reach a certain point.

For example, while the Nordic countries frequently top the list of happiest and ‘best’ countries, it is harder to become super-rich in the region due to the relatively high taxation rates. Martela says this is an indication that wellbeing is not only about economic success.

“The reason Finland ranks better in these indices in comparison to countries with higher GDP is that the political system works well, and people can trust it,” he adds. “Elections are fair and transparent, the press is free, and people are at liberty to express themselves as they wish.”

Widening the scope

Both Martela and Govers emphasise that the indices aren’t meant to replace GDP; instead, their aim is to widen the scope of what it means to be a successful country.

“Unfortunately, the world is still all about money,” Govers says, “but that’s one of the big benefits of these indices: they reinforce the fact that you have to look at other factors, not just economics.”

Martela adds that there are plenty of examples that show how dangerous it can be to only focus on money. He notes that at the end of last year, UNICEF started a campaign to feed hungry children in the UK, one of the wealthiest countries in the world.

“What these indices can do is help us shape policies that contribute to personal and global wellbeing,” he says. “For example, if benefit cuts are made, we can find the ones that least affect wellbeing, and also identify the benefits that should be left untouched.”

Govers has been disappointed to see how superficially the alternative indices are generally covered in the media and received by policymakers. Only countries that score high tend to get media coverage at all, and even then, it makes a good but very simplistic story.

“Most people don’t look into details and see what’s in the name,” he notes. “The indices aim to make complicated things and huge problems digestible, but most won’t look at the complexity behind them.”

Hoping for a detailed debate

Govers emphasises that the indices are only as valuable as the data they contain. For example, the Good Country Index includes aspects such as sustainable development, safety and security, culture, health, wellbeing, science and technology. Since there is no internationally standardised data available for these subjects, the index relies on information from organisations like the UN, UNESCO, UNDP and the World Bank.

“We are aware that the index isn’t the ultimate truth, but it’s a way to get access to public debate and help bring about improvements,” Govers explains. “Our task is to make people aware of the impact they have outside their borders, and then we hope for a more detailed debate to take place. Currently the indices aren’t really utilised for that.”

Martela, too, would like to see wellbeing metrics being used in policymaking. He believes that as the indices have been around and updated for about a decade now, there is much more data available to understand the causes and effects of policies on wellbeing.

“There’s much more evidence-based knowledge around than there used to be. We just need to make it part of our national processes and use it ambitiously,” he concludes. 

Want to go further beyond GDP? Read the other stories in our series.