GDP is a Terrible Way To Measure Quality of Life, "NNP" Is the Future

by Mike Smith · 2009-10-08 08:38:00 UTC
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How do we measure well being and happiness? Bhutan is well known for having a happiness index that the government takes into consideration just as much as GDP to define quality of life — it's called "Gross National Happiness." Could such a system work for the developing world? Or is measuring happiness a useless Western invention that has no application in countries dealings with epidemics, illiteracy, and hunger?

GDP obviously isn't perfect for the developing world, as it doesn't take into account wealth distribution or sustainable growth, and Gross National Happiness is criticized for being too subjective — not something economists are keen on. But there is a middle ground.

President Sarkozy has admitted that the current ways of measuring growth are poor, so he tasked Josepth Stiglitz and fellow economists to work on a model that takes into account education and sustainability. NNP, Net National Profit doesn't quite have the same ring to it as Gross National Happiness. But it aims to better reflect the reality of everyday life that current economic statistics fail to reveal in one number, emphasizing environmental considerations and long-term sustainability and stability of  growth — so we can imagine Gulf States that fail to invest in education program and social reform would slip down from their current GDP position inflated by oil-revenues.

It's far from being an international benchmark, but 20 experts have done the research, and made their recommendations. Now it's up to economic statistics organization to harmonize the one single measurement — that ought to make the economists, politicians, and people of the world a little happier. And hopefully we'll all be in a better position to assess who's lives are being made easier.

Photo credit: Miles Lane

Mike Smith
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