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Issue 35.5

Gross National Happiness

An interview by Edward Burch

The Gross Domestic Product (GDP) is an oft-cited statistic that enables economists to measure a nation’s economic growth, or lack thereof.  Many mistakenly use fluctuations in GDP as an indicator of a society’s wellbeing: “If its GDP is up, a country is doing well.  If it is down, the country is doing poorly.” 

Some are beginning to question whether an alternative measure of national wellbeing is needed, and have begun work to create those metrics.  In the following interview, Edward Burch speaks with Ron Coleman of GPI Atlantic about one such GDP-alternative: the Genuine Progress Index. 

Can you tell me a little about what it is GPI Atlantic does?

Ron Colman: We’re a non-profit research group that started about eight-and-a-half years ago. Our mandate is to create better measures of wellbeing and progress than we currently have.

Usually when politicians and economists and journalists tell us we’re better off, they’re referring to a very narrow range of economic factors. If the economy’s growing, people tell us we’re better off. But that can be very misleading when the more you deplete your natural wealth, the more the economy will grow. Economic growth just depends upon spending money. It doesn’t matter. If you have a hurricane or war or pollution or crime, these things can make the economy grow if you’re spending money on prisons and weapons and pollution clean-up and storm damage clean-up. So just the fact that you’re spending money doesn’t necessarily mean you’re better off; nevertheless, that’s what our politicians assume.

What the Genuine Progress Index (GPI) does is to try to look at things more accurately and more comprehensively. So we take into account the full value of our environmental assets, our social and human assets, not just a narrow range of economic factors.

I’ve read some work by folks doing what they describe as “true cost economics,” arguing that products and policies should take into account all of the various costs, so I assume you are in the same camp with them.

We are in the same camp. That’s exactly what we do. We try to look at the full benefits and costs of any particular activity.

Sometimes, there’s a lot of good news we have. For example, conventional economic measures only count paid work but we’ll look at the value of unpaid work. The work that volunteers do is completely invisible, even though it contributes directly to wellbeing. It contributes to the wellbeing of communities, of youth in need, the elderly, the sick, the disabled. Even things like firefighting and environmental protection, theatre, arts, culture, a lot of that contributes to our wellbeing and is work that volunteers do. But that’s invisible in conventional measures of progress.

In our work, we give value to all things which contribute to our wellbeing, and we count as costs things which detract from our wellbeing. It’s a more comprehensive—and therefore a more accurate—measure of how we are doing as a society.

What sorts of things can you think of where certain costs—positive or negative—don’t tend to register and end up, in effect, externalized upon society?

There are many examples. There are examples in the social realm, in the environmental realm. Environmental costs are very clearly excluded from conventional accounting mechanisms. The more trees you cut down and the faster you cut them down—or the more fish you catch and the quicker you send them to market—the more the economy will grow. We count what we extract from our natural resource base; we forget to count what we leave behind.

The state of our fish stocks or the health of our natural forests is ignored. You could have depleted fish stocks and it’ll never show up in your conventional economic growth measures. Or you could have degraded forests, cut down all your old-growth forests, and it looks good in your economic measures because you’re only counting the timber being sent to market. But the loss of the resource is invisible. Let alone things like the costs of air pollution, the damage caused by acid rain, or the damage caused by greenhouse gas emissions and climate change.

Now, these past couple months has been the first time that I’ve seen some actual awareness in that public arena that the intense hurricane activity might, in fact, be linked to human activity. That we’ve been happily burning up fossil fuels for a long time might be a contributing factor to the damages which we’re now experiencing. When we were burning up fossil fuels and getting “cheap” gas, we didn’t count the potential costs of increased hurricane activity, just the costs of fuel.

In our more expanded accounting measures, yes, every carbon molecule emitted into the atmosphere carries a cost, so we count those costs. Some countries in Europe are way ahead of us because they have instituted carbon taxes which do account for the fact that when you put carbon into the atmosphere, it carries a cost. New Zealand has just implemented a nationwide carbon tax for that reason.

Speaking of hurricane activity on the Gulf Coast, some attention has been brought to the fact that there were explicit decisions to drain the coastal wetland barrier regions which serve as buffers once a storm hits land—or that explicit decisions were made not to fund the stabilization of the levees in New Orleans, for which we are now witnessing not only the high costs, but the lethal consequences.

That’s exactly right. That’s a good example. In our work, we actually value wetlands. We show what kinds of functions wetlands perform that actually have economic value—they protect against erosion, they recycle nutrients. There’s a wide range of functions that wetlands provide to human society which are invisible in the standard accounts. It’s not just negatives, or costs, which are ignored, but the value that these resources provide are also not properly counted.

It’s really a matter of counting your full wealth—the natural wealth, but also the human and social wealth. To take something like crime, you could argue that an event like 9/11 is actually good for the economy. The more money you spend on war, on hiring extra security guards, on high-tech surveillance equipment, the more the economy will grow.

Actually, the Wall Street Journal had an article after the Oklahoma City explosion some years ago saying that this was good for the economy because government buildings, after that event, invested in all this high-tech equipment, hired more guards, and so forth.

From the GPI point of view, crime is a cost—not a gain—to the economy. If we weren’t spending money on that stuff, we’d be able to put our resources toward more humane activities. In that case the spending of more money on security in the sign of a decline rather than a sign of a gain. After the Columbine High School massacre, schools became one of the biggest investors in security equipment.

What are some measures of community wellbeing beyond economic factors, and how can they be measured?

Well, the good news is that, these days, we can measure it. So we look at the health of a population, the safety of communities, and we now have good measures of these things. We have reported crime rates, but we also have victimization surveys that measure and assess the rates of unreported crimes. We know things like that. We can measure the strength of the volunteer sector through time-use surveys that measure how many hours people put into volunteer work. We have better measures than ever before on environmental variables. Twenty or thirty years ago, we didn’t have that. So we can actually start to measure these human, social, and environmental factors far more accurately than we used to be able to and we can get a more comprehensive picture of how we’re doing.

Would it be helpful to show the various ways in which the GDP functions as an indicator of “Gross Domestic Misery”?

Well, GDP is just a quantitative measure. It can only tell you whether the economy is getting bigger or smaller. The people who came up with the GDP, who started it years ago, they knew that and they said that you should never use these measures to assess the welfare of a nation. You really have to ask what is growing.

Just the fact that something is growing doesn’t really mean anything. I mean, cancer cells thrive on growth, right? The more growth there is, the better—from the point of view of a cancer cell that could be highly destructive. Nature thrives on equilibrium, not unlimited growth. We have this illusion that the more the economy grows, the better things are, that unlimited growth is a good thing, and that’s very problematic.

Obviously, money can’t buy happiness, but it gives one the resources to buy access to health care, to an education, to shelter.  Is there some minimum level of income, or of social services, that’s needed in order for people to be happy or contented?

I think that’s an essential part of it. In fact, livelihood security—or income security—is one of our core measures of progress. Certainly, being able to provide your food, shelter, clothing, being able to support your children and have them get a decent education, and so forth—all of that is an essential input into wellbeing.

It’s interesting that surveys that are being done show that, after a certain point, simply having more doesn’t necessarily make people happier.  There’s not necessarily a commensurate increase in satisfaction or wellbeing or happiness once you start increasing beyond a level of being able to meet your own needs.

It also appears from a lot of those surveys that economic security is much more important to people than simply having more stuff. People can keep accumulating more stuff and hording, but if they’re living in an atmosphere of insecurity where they think that they could lose their job any moment, or the economy is very unstable, then that can create a sense of insecurity even if people have resources. Having some kind of economic stability or security or sense that they can provide for their own needs is a very important part of wellbeing and it’s part of our indicators as well.

That’s different from economic growth alone. There may be enough income in society to provide for everybody, but it may be so unevenly distributed that the GDP may continue to grow while the gap between rich and poor is widening. That happened in the United States throughout the 1990s. GDP was growing, but real incomes were either stagnating or declining, and the gap between rich and poor grew. It doesn’t necessarily have to do with how much income a society produces; it also has to do with how it is shared. GDP tells us how much there is, but in our Genuine Progress Index we also look at how that income is distributed. Economic factors are important, but it’s how they’re used.

What is the relationship between leisure time, or time with one’s family, and happiness?  And is there a connection between income and leisure time?

In the end, a lot of things boil down to values. One of the reasons that economic growth statistics are so dominant is that we have become a very materialist society. Even at the personal level, we think we’re better off if we can buy a bigger car or we can add a deck to our house. So it’s not just a matter of governments getting it wrong, when at a personal level we define our well being in terms of how much more stuff we can accumulate.

But if you really look at what matters to people, if you polled just a little more deeply, you’d find that other factors actually matter a lot to people: do they have time to spend with their children, with their families, are they healthy, are their neighborhoods safe, and so forth. Those non-material things really do matter to people.

If you look at the Scandinavian countries, when unions engage in collective bargaining for new labor agreements, wages are not at the top of the agenda. You’ll find they’re mostly talking about improving family-friendly work arrangements, flexible work hours, balancing work and life—they’re looking at quality of life issues. Here in North America, we tend to be very wage focused and materialist in our approach.

If we create a lifestyle for ourselves that requires a very high level of income to maintain, then other things may get lost—leisure time, time with family, free time, time to relax, time to enjoy culture, music, nature. All of these things could fall by the wayside. So I think it’s time for us to look deeply at our values and identify what really matters to us.

I’ll give you another example from Europe, the Dutch have the shortest work hours of any industrialized country, where here in North America our work hours are increasing. The Dutch work, on average, eleven weeks less per year than we do. They don’t take all of those eleven weeks in extra vacation, but they work shorter hours during the week. The Dutch have the highest rate of part-time work of any industrialized country. They have deliberately done that; they have deliberately chosen a way of development that favors a work-life balance that provides more free time. They have a very high rate of labor force participation, but those people who are in the labor force are working shorter hours. So they’ve redistributed work to create a better balance.

Countries have done this and their economies are healthy and prosperous, so it doesn’t mean that you’re going to drive a society to ruin. On the contrary, a lot of the European countries are doing very well. It’s a matter of what matters, of what your values are. And I think that Americans, as human beings, share a lot of these values. It’s just that the balance has been tipped so far to the materialist side that we’ve somehow forgotten to nurture the other things that matter to us.

It’s interesting to consider how other countries are figuring in these human aspects of the equation.  A lot of these “Gross National Happiness” innovations are coming out of the Kingdom of Bhutan.  Monarchy seemed to make a lot of Americans unhappy a couple of centuries ago. 

Well, I guess you can have benevolent monarchs and you can have despots.

Right. I’ve always fantasized about wanting to be a benevolent dictator. Is there any connection between a system of rule a culture has and levels of national happiness?

I don’t think so. You can point to tyrants and despots who make their people’s lives completely miserable. Or you can look at some monarchs who are genuinely benevolent and who exist for the sake of their people, who see their entire reason for being there to serve the wellbeing of their people. So I think it depends very much upon who happens to be in power.

Now in Bhutan it’s quite interesting. The king is willingly, of his own initiative, letting go of a lot of his power. He’s relinquishing a lot of his powers to a new national assembly and a new constitution in Bhutan, so he’s not having power forcibly taken away from him by means of a revolution. He’s actually nurturing the growth of democratic forms within Bhutan. I think Bhutan is fortunate enough to have a monarchy that isn’t entirely despotic they way that some of them are.

Bhutan has quite consciously in the last thirty years made an effort to balance its economic development with care for the environment, protection of its culture, social values, and they’ve tried to do that very deliberately and carefully so that they don’t just ride roughshod over their culture and their natural wealth. And it’s not that Bhutan is some kind of Shangri-La; they have their own problems and difficulties and challenges. They have a minority Nepali population that doesn’t get equal rights. There are issues that they deal with, but at least it’s a country which is making an effort to balance its development and to move forward in a more harmonious way.

How can we ensure that the focus on commerce and consumption that dominated the 20th century not become the norm once again in the 21st century?

That’s the key question. And I’m really an optimist, I have to say, even though a lot of what we report on may not look like such good news—depleted forests, greenhouse gas emissions, climate change, economic insecurity. Nevertheless, we tried that in the 20th century and we found that such a narrow focus on growth at all costs really didn’t work.

We’re finally waking up. I mean, when President Bush goes on the air and says that we really ought to think about conserving energy, there’s at least some recognition that the old system isn’t working anymore. People can’t pretend any more.  The reality is that we’ve found that the narrow-minded focus just on pure, materialist growth really hasn’t worked.

There is an increasing understanding that we do have to take care of our social and environmental assets if we’re going to prosper and if we’re going to develop in a positive way. I think the direction we’re going with these new measures of progress is definitely the wave of the future. If I were to look at the awareness of these issues, then actually I’m very optimistic.

Twenty years ago, we were suffering under the illusion that natural resources were forever, that we could somehow just keep exploiting the environment and there would be no consequences. It is now quite pervasive in our social understanding that this is not the case.

I think the ferocity of these hurricanes is a real wake-up call. We cannot definitively prove that there is a connection to global warming, but we do know that meteorologists and climate change experts have told us that one of the consequences of global warming is more intense storm and hurricane activity. We do know that the hurricanes gathered strength more because the waters of the Caribbean and the Gulf were warmer than usual. We also know from the power of these events in the last year that we don’t have the luxury to sit around on our hands another fifteen or twenty years, happily buying more SUVs and burning up more fossil fuels.

We also know that more stuff doesn’t necessarily make us happier; we realize that there’s more to life than that. I think there’s some understanding that exists today that maybe wasn’t as clear thirty or forty years ago when we thought we could have it all, grow, and get richer and richer and richer and still have a good life. I think we’ve come to understand that things are more a matter of balance, more a matter of equilibrium rather than just accumulation and consumption alone.

The good news is I think there’s more awareness of that; the question is whether that awareness penetrated deeply enough and whether the political will exists to act with some urgency within the narrow window of opportunity that we have.

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