In pursuit of happiness

In pursuit of happiness

The anniversary of Lehman’s collapse this week seems as good as any to decry capitalism. Right on tune, French President Nicolas Sarkozy joined a chorus of economists —and Bhutan—to advocate using “happiness" as an economic indicator.

After all, when so many edifices are under question, why not do away with traditional indicators of growth? A petit problem: what will replace these indicators, especially for developing countries?

In 2008, Sarkozy appointed a commission—comprising Nobel Prize heavyweights such as Joseph Stiglitz, Amartya Sen and Kenneth Arrow—to evaluate how economic performance and social progress are measured. The commission’s grouse, in a report published on Monday, is that the gross domestic product (GDP) conceals other human indicators. Recommendations include trying to “capture people’s life evaluations, experiences and priorities" and assessing “quality of life".

First, how any government will account for such subjective measures is anyone’s guess. The jury’s still out on this area of economics—and these are questions that have plagued every philosopher. But there’s the danger that “happiness" serves as a guise for socio-political agendas.

Second, as Georgetown University economist Arik Levinson wrote in Mint this week, people’s preferences adapt to circumstances. This can render any valuation of “happiness" dubious. If Bhutan is any guide, countries will soon bid goodbye to things apparently as nefarious as commercial advertising.

Third, even if there’s cause for rich nations to focus more on human indicators, the same can’t be said of developing countries. In Maslow’s hierarchy of fulfilling a nation’s needs, India and China have still not managed to feed all its citizens, forget trying to help them achieve quality of life.

That’s not to say there isn’t any lesson here. The report suggests looking at national income and consumption, not only production. For instance, a dominant financial sector may buoy GDP, as it did in the US and the UK before 2007 at the cost of, say, the savings rate—we know how this story ended. Still, governments need some objective criteria for even such evaluations. Yet, Sarkozy is hinting in a direction that denigrates the “religion of statistics". Governments, unlike life and liberty, can’t guarantee happiness—at most, they can help avoid misery. The way governments measure success at this limited aim is through hard quantifiable statistics.

Can happiness be measured? Tell us at