Critical Analysis of Gross National Happiness Index PDF

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Towards a New Development Paradigm:

Critical Analysis of Gross National
Happiness
Gaurav Daga
May 2014
i
Critical Analysis of Gross National Happiness
Table of Contents
Abbreviations ................................................................................................................................. iv
List of figures and table .................................................................................................................. v
Executive Summary ....................................................................................................................... vi
1. Introduction ................................................................................................................................. 1
Idea of GDP .............................................................................................................................. 1
Critic of GDP .................................................................................................................................. 2
Measuring the future we want......................................................................................................... 3
2. Need for alternatives ................................................................................................................... 4
Human development Index .......................................................................................................... 4
The Stiglitz-Sen-Fitoussi Commission ........................................................................................ 6
Green GDP ................................................................................................................................... 8
Genuine Progress Indicator .......................................................................................................... 9
Green GDP with subjective measures........................................................................................ 11
Criticism of models of Green GDP............................................................................................ 12
Subjective measures of well-being ............................................................................................ 13
3. Gross National Happiness Index
• Introduction ....................................................................................................................... 15
• Domains of GNH .............................................................................................................. 17
o Pyschological well being ............................................................................................ 19
o Health .......................................................................................................................... 21
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o Education .................................................................................................................... 21
o Culture......................................................................................................................... 22
o Time Use ..................................................................................................................... 24
o Good Governance ....................................................................................................... 25
o Community Vitality .................................................................................................... 27
o Ecological Diversity and Resilience ........................................................................... 27
o Living Standards ......................................................................................................... 29
• Weighting and Methodology ............................................................................................ 31
• Is GNH a pratical tool for policy implications? ................................................................ 36
4. Critical Analysis of GNH
Advantages of GNH................................................................................................................... 37
Shortcomings of GNH ............................................................................................................... 39
Recommendation for improving GNH ...................................................................................... 42
Comparison of GNH to Social Progress Index and Policy Effectiveness Index ....................... 44
Areas of further research in GNH .............................................................................................. 48
Interference from GNH .............................................................................................................. 49
Conclusion .................................................................................................................................... 51
Biblography................................................................................................................................... 53
Appendix ...................................................................................................................................... 59
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Abbreviations
S.No Abbreviations Full form
1 GNP Gross National Product
2 GDP Gross Domestic Product
3 GNH Gross National Happiness
4 PQLI Physical Quality of Life Index
5 GPI Genuine Progress Indicator
6 HDI Human Development Index
7 HPI Happy Planet Index
8 BLI Better Life Index
9 OCED Organization for Economic Co-operation and Development
10 CIW Canadian Index of Wellbeing
11 SPI Social Progress Index
12 PEI Policy Effectiveness Index
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List of figures and tables
List of figures:
S.No Figure Page number
1 Difference in measurement of per captia income by GDP and GPI 10
2 33 GNH Indicators 18
3 Happiness gradient 35
List of tables:
S.No Table Page number
1 Overview of GNH domains and indicators 17
2 Weights on the 33 indicators 32
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Executive Summary
The concept of GDP emerged out of crisis. A crisis of economic measurement where
governments could know the amount of goods and services with a country so that they could
manage resources for their wartime needs. It was 1940s, which trigged the measurement crisis.
Today, in 2014 we are facing a similar crisis – but for sustainable needs. Our climate is
changing, our fisheries are depleted, our soils are degraded, our water supplies are overextended,
our psychological well being is unknown and our culture is getting affected by modernity. Today
we are in a dire of measurements, which can go beyond the annual output of a country (GDP)
and look at look at wealth in its entirety— combining social, human, natural, mental, physical
and economic capital.
In the past few years, economists and social scientists have made great strides in developing well
being and development measurements. Starting from Morris D. Morris’s Physical Quality of Life
Index, later refined to Human Development Index by Mahbub ul haq and Amartya Sen, to Green
GDP by Joseph Stiglitz, their measurements techniques have deepened our understanding of well
being beyond the traditional income dimensions. Optimistically, measurement and survey
techniques used by government of Bhutan – Gross National Happiness – offers us an alternative
view to look at country’s progress. Its domains range from health, education, culture, time use to
governance, ecology, community and living standards. GNH’s goal is to improve happiness and
create institutions, which can promote such endeavor.
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This master thesis on ‘Towards a new development paradigm: Critical Analysis of Gross
National Happiness’ is an analysis of GNH and a contribution to a quite widespread debate on
how to move beyond GDP. It is not intended to be a comprehensive review of the ‘state of the
art’ or an update of the Stiglitz Commission’s work or Green GDP or even Gross National
Happiness. Rather, it presents the following details, which may prove useful in various ways and
help advance the debate and sustain its momentum.
The Section 1 in this thesis gives an introduction to the idea of GDP, its criticism and followed
by a problem statement. The Section 2 deals with the realm of shifts in well being and
development measurement techniques to discovery an alternative to GDP. Section 3 takes one of
the alternatives – Gross National Happiness (GNH) – endorsed by Bhutanese government, UN,
economist like Jeffrey Sachs and analyses its domains, indicators, measurement techniques,
methodology, weighing rationale and the idea of GNH. Section 4, the critical part of this thesis
deals with the analysis of GNH from its advantages, shortcomings, recommendations,
comparisons and areas of further research. Lastly, Section 5 raises the need of reforming policy
criterion and justifies its necessity.
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Gaurav Daga
May 2014

Happiness is the meaning and the purpose of life, the whole aim and end of human existence.
— Aristotle
! Introduction:
! Idea of GDP:
GDP was introduced in the late 1940’s when the Great Depression and then World War II
pushed Washington to start counting government spending on services and war as a net positive
for the economy. The construction of GDP statistics was not simple; it took decades for more
than a handful of countries to create national accounts and for economists and statisticians to
create methods for comparing GDP over time and across nations. It was not until late 60’s when
economic characteristics of a country become the measures of a country’s development.
GDP a composite index, based on a complicated formula that tells us whether an economy is
growing or shrinking. It is really just a number, but in the relatively obscure world of economic
indicators, GDP became ‘the defining indicator of the last century, a celebrity among statistics’.
1
Economist, statisticians become interested in variety of indicators of measurements such us GDP
per capita, percentage of labor force in agriculture, per capita energy consumption, GDP growth
rate and so on to indicate and classify the condition of region/country’s economy. Today there is
not a country on this planet that ignores GDP as a measure of economic health.
Measurement of GDP is not only of important for policymakers but also for consumers since it
equals the total income within an economy. It became so essential that today’s macroeconomics
101 classes begin with understanding the concepts of GDP and its derivatives.
! Critic of GDP:
Having acquired the celebrity status, there was also an emerging consensus that GDP had
shortcomings.
For example, in the wake of the 2008 recession, Andrew Haldane from the Bank of England
pointed out that according to the UK’s national accounts, contribution to GDP grew at the fastest
rate on record in the fourth quarter of 2008 – the quarter that began a fortnight after Lehman
Brothers collapsed.28 Or to its contrary, according to the economist at MIT - Erik Brynjolfsson,
information sector of the US economy (software, telecoms, publishing, data processing, movies,
TV) has scarcely grown over the past 25 years as measured by GDP. One of the reason,
brynjolfsson et all reckon that because every year consumers in the US are enjoying an extra
$100bn of services online for which they don’t have to pay. 28 (Harford, 2013)
2
Similarly GDP also ignores transaction cost, social costs, environmental impacts and income
inequality. It has nothing to say about the damage caused to environment due to production of
goods and services. And, although GDP growth is taken as a proxy for progress, it was never
intended to measure happiness or welfare. Simon Kuznets, its chief architect, warned exactly for
not - equating its growth with well-being.
Finally, with all such shortcomings question arises - whether the GDP model misjudges the
contributions to the economy considering all factors? Given the problems of inequality, poverty,
economic safety, health, environment and many more.
! Measuring the future we want:
As Robert F. Kennedy once said ‘it measures everything except that which makes life
worthwhile’. It is true that what citizen’s value is beyond GDP, and that the way we adopt our
measurements will determine our future. GDP in some sense underpins the notion that we live in
the society of risk. Given the changing nature of society's relation to production, distribution and
its relation to environment and well being, futurist began to hunt for an alternative measurement
for wellbeing and development. Hence, they started measuring the future one desires. Section 2
‘Need for alternatives’ deals about the various initiatives taken up by futurist on their pursuit for
alternative measures.
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Need for alternatives:
The hunt for need for alternative measurements of GDP started way back in 1974 when
Drenowski’s work on the measurement of levels of living and welfare and the OECD research
programme on the measurement of social well being and development were created. However, it
was Morris David Morris’s Physical Quality of Index (PQLI)*1i, which received some limelight.
Later, it was in the mid 80’s, when Nobel laureate Amartya Sen developed a firm theoretical
basis (deriving from PQLI) for the use of certain social indicators to be employed in assessing
well-being. Sen argued in favor of focusing on the capability to function, that is, on what a
person can do or can be, rather than the standardized concentration on opulence or utility.27
(Mitra, 2006)
! Human Development Index:
Later in 90’s Mahbub ul Haq with Amartya Sen rolled out a very important and continuing,
contribution to measure the status of development and well-being through UNDP’s annual
publication of the Human Development Report. Human Development Index emerged as a critic
to the conventional idea of GDP – that - the more it grows, the better a country and its citizens.
Human development index as commonly known as HDI is not just an index of a country’s entire
economic output — a tally of, among many other things, manufacturers’ shipments, farmers’
*1 PQLI tired to incorporate the average of three indicators: basic literacy rate, infant mortality, and life
expectancy at age one, all equally weighted on a 0 to 100 scale. The PQLI method is considered superior because
it is devoid of those flaws, which exist, in per capita GDP measure.
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harvests, retail sales and construction spending but also on life expectancy and education.
(Citizens’ education, based on adult literacy and school-enrollment data, and its citizens’ health,
based on life-expectancy statistics)
Going technical, Like PQLI, HDI also attempts to rank all countries on scale of 0 (lowest HD) to
1(highest HD) based on 3 goals or end products of development: (1) Longevity - measured by
life expectancy at birth, (2) Knowledge as measured by a weighted average of adult literacy
(two–thirds) and mean years of schooling (one–third weight), and (3) Income as measured by
adjusted real per capita income (i.e., adjusted for the differing purchasing power of each
country’s currency and for the assumption of rapidly diminishing marginal utility of income).
Using these three measures of development and applying a formula to data for different
countries, the HDI ranks all countries into three groups: low HD (0.0 to 0.50), medium HD (0.51
to 0.79) and high HD (0.80 to 1). However, critics later emerged saying HDI measures relative,
not absolute levels of human development. It stresses on the ‘ends of development’ like
longevity, knowledge and material choice, rather on the ‘means’ that has been the case of GNP
per capita.
Fittingly even Amartya Sen agrees on the point and once said ‘I told Mahbub that it’s vulgar to
capture in one number an extremely complex story, just as G.D.P. is vulgar. And he called me
back and said: ‘Amartya, you’re exactly right. What I want you to do is produce an index as
vulgar as G.D.P. but more relevant to our own lives.’11 (Gertner, 2010)
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And later on Mahbub’s request, Sen developed a figure that compresses the immensity of a
national economy into a single data point of surpassing density. The first issue of the Human
Development Report (HDR) was introduced in the 1990. Since then, Human Development Index
has undergone a continuously refinement.
One of the most fascinating thing HDR has done to the global community is that – it has changed
the governments view that only one statistic, the measure of gross domestic product, cannot
really show whether things seem to be getting better or getting worse. This was one of the
reasons that in 2008, Nobel laureates Amartya Sen, Joseph Stiglitz and the French economist
Jean-Paul Fitoussi went on to a commission established by the former President Nicolas Sarkozy
of France to consider devising a framework for alternatives to G.D.P.
! The Stiglitz-Sen-Fitoussi Commission
Since the initial work on Human Development Index, the world had changed radically. There
were much better survey data, which allow for new types of economic and social measurement.
Problems associated with climate change, environment, sustainability became more pressing than
ever before.
In September 2009, the Stiglitz-Sen-Fitoussi commission formally concluded the commission by
releasing a 300 pages long report, which offered a comprehensive list of suggestions, some
methodological and some philosophical, for measuring the progress of nations in the 21st
century. Also, the commission recognized both main criticisms of the GDP i.e.
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• One, fixing the economic measure to better represent individuals circumstances today and
• Two, every country should also apply other indicators to capture what is happening
economically, socially and environmentally.
The commission needed a metaphor to explain what it meant. Eventually it settled on an
automobile. Accordingly Joseph Stiglitz said, ‘Suppose you’re driving. You would like to know
how the vehicle is functioning, but when you check the dashboard there is only one gauge. (It’s a
peculiar car.) That single dial conveys one piece of important information: how fast you’re
moving. It’s not a bad comparison to the current G.D.P., but it doesn’t tell you many other
things: How much fuel do you have left? How far can you go? How many miles have you gone
already? So what you want is a car, or a country, with a big dashboard — but not so big that you
can’t take in all of its information’. 11 (Gertner, 2010)
Using the metaphor, Stiglitz-Sen-Fitoussi commission concluded that assessing a population’s
quality of life will require metrics from at least seven categories: health, education,
environment, employment, material well-being, interpersonal connectedness and political
engagement. They also concluded that any nation that was serious about progress should start
measuring its ‘equity’ — that is, the distribution of material wealth and other social goods — as
well as its economic and environmental sustainability.
Analytically, one challenge the commission puts in for countries is that it does not tell how they
should measure progress but rather tells about how they should think about measuring progress.
In other words, it is recommending using new set of indicators to measure different endeavors
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but not expressing how to do it. For instance – environment and sustainability can be examples
of measuring different endeavors but measuring them remained a challenge.
! Green GDP
Soon after the Stiglitz-Sen-Fitoussi commission, Joseph Stiglitz went on to built an indicator,
which could measure externalities with an aim to separate it from economic growth inscribed in
GDP. That is, to measure the costs or benefits that are not reflected in market prices, meaning not
included in our measurements of GDP. His basic idea was - if there are significant differences in
the level of externalities or other unmeasured aspects of economic welfare between economies,
then our failure to take them into account may distort the comparison of living levels or well
being in a country and between the countries.11 (Gertner, 2010)
There are many examples of such externalities that we would wish to take into account if trying
to assess the quality of life. Pollution and congestion are some examples. For instance,
congestion during traffic jams may increase GDP as a result of the increased use of gasoline, but
obviously not the quality of life. Moreover, if citizens are concerned about the quality of air, then
statistical measures, which ignores air pollution, provides an inaccurate estimate of what is
happening to citizens’ well being. Hence, there is need to distinguish such results from GDP.
And logically, pollution can be monitored, and we could assemble data for emissions of key
pollutants such as CO2, and we could then compare between countries. However such measures
cannot readily be incorporated into the GDP measure, but must sit alongside it.
8
Also while seeking to monitor the quality of life (or “sustainable development”), governments
need to focus on wide range of indicators covering various aspects of well-being. Hence, Green
GDP helps in taking account of consequences caused in environment and resource depletion.
This is particularly important in developing countries like India, China, and Indonesia where
huge number of trees, forests are being cut and nothing sustainable is being done. An example –
were IMF thought Argentina was doing great in the early 1990s came out to its contrary (Luis
Maia et all, 2003).23 The GDP growth rate of around 13%, which Argentina witnessed around
the 1990’s period, came out to be unsustainable. GDP proved to be a wrong indicator measuring
for country’s internal structure and sustainability. Hence Green GDP tries to take externalities
and harm done to be public goods in account.
However, the problem with Green GDP approach is that it becomes impossible to make use of
data for international comparisons. Furthermore, monitoring the overall change in a country over
time also becomes challenging.
One of the most popular measures of Green GDP systems is Genuine Progress Indicator (GPI).
! Genuine Progress Indicator (GPI)
Genuine Progress Indicator – is expressed in monetary units, making it more readily comparable
to GDP. Specifically, it considers annual income, net savings, wealth and environmental costs
and benefits. The metrics is constructed by consolidating 26 indicators critical economic,
9
environmental and social factors into a single framework in order to give a more accurate picture
of the progress – and the setbacks –a country has made.
From the costs of crime, pollution, commuting and inequality to the value of education,
volunteer work, leisure time and infrastructure, GPI tires to portray the true impacts of policies
and gives a picture of adjusted economic measures. Crucially, GPI also considers income
distribution. In other words, a dollar’s worth of increased income to a poor person boosts welfare
more than a dollar’s worth of increased income does for a rich person. And a big gap between
the richest and the poorest in a country — as in the United States and, increasingly, in China and
India — correlates with social problems, including higher rates of drug abuse, incarceration and
mistrust, and poorer physical and mental health.
Robert Costanza and others (in Nature, 2014) shows that a 2013 study comparing the GDP per
capita and the GPI per capita of 17 countries comprising just over half the global population
found startling divergences between the two metrics. The measures were highly correlated from
1950 until about 1978, when they moved apart as environmental and social costs began to
outweigh the benefits of increased GDP. Figure 1 explains the difference in per capita income
by GDP and GPI.
10
Figure 1 – Difference in measurement of per captia income by GDP and GPI,
Source – Robert Costanza et all, 2014) 3
Therefore it can be concluded that life satisfaction is highly correlated with GPI per capita, but
not with GDP per capita.
Encouragingly, governments are taking up this alternative measurement of development and
wellbeing seriously, and have adopted GPI as a measure of progress. The two states in the United
States - Vermont and Maryland have specifically implemented policies aimed at improving GPI.
An alternative to Genuine Progress Indicator is to try modifying GDP for environmental factors,
with subjective measures of well being drawn from surveys.
! Green GDP with subjective measures
This Green GDP school of thought believes that to build a comprehensive picture of sustainable
societal well being, one should integrate subjective and objective indicators together. One
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example of such combination is Happy Planet Index (HPI), introduced by the New Economics
Foundation in 2006. Happy plant index tires to multiply life satisfaction by life expectancy and
divides the product by a measure of ecological impact.24
HPI combines the subjective measures of well-being using Gallup World Poll’s data with
objective measures of life expectancy and ecological footprint by UNDP’s HDI and WWF’s
measurement on resource consumption respectively.
Another example of Green GDP measurement using subjective and objectives indices is Better
Life Index (BLI) - developed by the Organization for Economic Co-operation and Development
(OECD). BLI believes that – ‘There is more to life than the cold numbers of GDP and
economic statistics’. It tries to compare well-being across countries, based on 11 topics the
OECD has identified as essential, in the areas of material living conditions and quality of life. Its
11 topics include – housing, income, jobs, community, education, environment, civic
engagement, health, life stratification, safety and work-life balance. It’s website -
http://www.oecdbetterlifeindex.org/ allows users to choose different weighing variables for
different domains, revealing how weights can change countries’ ranking.
One quick shortcoming of better life index is that it allows comparison only between select
groups of countries from Europe, Americas and few others.
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! Criticism of models of Green GDP:
In terms of the models proposed as a way forward from GDP to Green GDP such as Genuine
Progress Indicator (GPI), Happy Planet Index, Better life Index and so on *2, the most important
critique to GPI is that it arbitrarily includes or implicitly excludes as contributors to or detractors
from welfare. That is, the GPI corrects for income inequality but does not include corrections for
the degree of political freedom or degree of equality between the sexes. The inclusion of almost
every environmentally harmful item (like commuting costs, loss of leisure, noise pollution) has
been challenged because it is unclear whether or not these costs have already been factored into
household and worker decisions.26 (John Talberth et all, 2007). Moreover, as GPI framework
requires a subjective judgment of what does and does not count towards welfare and what does
and does not count as a self-justifying expenditure, it therefore cannot serve its desired role as an
objective measure of sustainable economic welfare.
Another criticism to the models of Green GDP is that it fails to accommodate aspects of
psychological and physical well being of citizens. That is, areas like mental health, spiritual well
being, cultural importance, skills, usage of time, sleep, life satisfaction, emotions are not being
weighed. As Joseph Stiglitz himself quotes ‘You might say, If we have unemployment, don’t
worry, we’ll just compensate the person. But that doesn’t fully compensate them... losing a job
can have repercussions that affect a person’s social connections (one main driver of human
happiness, regardless of country) for many years afterward’. (Gertner, 2010)
*2 Refer Appendix 1 for more on alternative national indicators of welfare and well-being.
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Hence, critics believe that measurement of social capital should also include psychological and
physical well being aspects of citizens in understanding country’s wellbeing and development.
And in this regard, governments should also start focusing on building a indicator of which end
result is an index that attempts to measure our collective welfare in terms of principles of
sustainable development drawn from the economic, social, and environmental, psychological and
cultural domains.
! Subjective measures of well-being.
Subjective well being are increasingly becoming the most appropriate measure of capturing
societal progress. Instruments of subjective well being measures are also incorporating some of
the critics of Green GDP models which were incapable of capturing data’s on time use,
psychological wellbeing and so on. Among many*3, the one of the most popular wellbeing and
development indices of this domain is,
1. The Canadian Index of Well-Being (CIW): It is a national instrument used to
measure whether quality of life of Canadians, in all its key dimensions, is getting
better or worse. The CIW currently covers eight domains, all with their specific
metrics and analysis. These include arts, culture and recreation, community vitality,
democratic engagement, education, environment, healthy populations, living
standards and time use.
*3 Refer Appendix 1 for other subjective indicators of welfare and well-being

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In conclusion, this realm of shift from PQLI to subjective measures of well being in this section
has helped us understand that the economy’s character of a country and what citizen’s value is
beyond GDP and that the way we measure the economy will determine the way we want things
to be. Section 3 of this thesis takes one of the alternatives - ‘Gross National Happiness’ and deals
in detail with its philosophy of the index, domains and indicators, methodology and weighing
techniques, followed by its critical analysis in Section 4. Gross National Happiness is one such
unique index that combines subjective and objective measures of wellbeing and development in
its entirety.
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Gross National Happiness
Introduction:
We strive for the benefits of economic growth and modernization while ensuring that in our drive
to acquire greater status and wealth we do not forget to nurture that which makes us happy to be
Bhutanese. Is it our strong family structure? Our culture and traditions? Our pristine
environment? Our respect for community and country? Our desire for a peaceful coexistence
with other nations? If so, then the duty of our government must be to ensure that these invaluable
elements contributing to the happiness and wellbeing of our people are nurtured and protected.
Our government must be human.
- Extract from His Majesty of Bhutan’s speech during the Madhavrao Scindia Memorial Lecture on 23 Dec. 2009
Coined in 1972 by Bhutan’s fourth king, Gross National Happiness refers to the nation’s policy
of balancing modernity with preservation of traditions, mostly by resisting laissez-faire
development (Wall Street Journal, 2013).1 The concept implies that sustainable development
should take a holistic approach towards notions of progress and give equal importance to non-
economic aspects of wellbeing.2 Its four pillars have often explained the concept of GNH: good
governance, sustainable socio-economic development, cultural preservation, and
environmental conservation. The four pillars have been declassified into nine domains in order
to create widespread understanding of GNH and to reflect the holistic range of GNH values. The
nine domains are: psychological wellbeing, health, education, time use, cultural diversity and
resilience, good governance, community vitality, ecological diversity and resilience, and living
standards. Furthermore, the nine domains together comprise 33 clustered indicators, each one of
which is composed of several variables. When unpacked, the 33 clustered indicators have 124
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variables. Each domain represents components of wellbeing of the Bhutanese people, and the
term ‘wellbeing’ refers to fulfilling conditions of a ‘good life’ as per the values and principles
laid down by the concept of Gross National Happiness.2
Legally stating the Constitution of Bhutan (2008, Article 9) directs the State ‘to promote those
conditions that will enable the pursuit of Gross National Happiness’ (Karma Ura et all, 2013). In
other words, if the government cannot create happiness for its people, there is no purpose for the
government to exist. After the establishment of a constitutional monarchy in 2008 and the
coronation of the Fifth King, the Government of Bhutan is legally obliged to specify this
objective such that policies and programmes advanced by the new democracy continue to be
coherent with it.
In principle,
• GNH seeks to be policy-sensitive – changing over time in response to public action.
• Its indicators try to reflect public priorities directly.
• It tries to address the strengthening or deterioration of social, cultural, and
environmental achievements whether or not they are the direct objective of policy.
• GNH indicators are carefully chosen so that they stay relevant in future periods as well
as at the present time in order to measure progress across time and
• Finally, the GNH Index consists of sub-group consistent hence decomposable by
regions and groups.
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Nonetheless some of these principles will be challenged in the Section 4 ‘Critical analysis of
GNH Index’ of this thesis.
Domains of GNH:
This section explains how each of the domains and indicators in GNH has been constructed as
well as their cutoffs have been set. Talking about the domains, there are 9 domains of 2,3 or 4
indicators. Table no.1 explains its various domains and the corresponding variations,
Table 1 - Overview of GNH domains and indicators, (Karma Ura et all, 2013).
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On unpacking each indicator, Figure no. 2 breakdowns the sub sections it has.
Figure 2 – 33 GNH Indicators, (Karma Ura et all, 2013).
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Explaining the methodology of its construction, we now consider each domains and indicators
one by one,
1) Psychological Wellbeing:
Psychological wellbeing is a characteristically significant and coveted state of being. Diener, et
al (1997) categorize indicators of psychological wellbeing according to reflective or affective
elements,9 while the Sen-Stiglitz and Fitoussi commission emphasizes the importance of using
diverse wellbeing indicators. It states, ‘different aspects (cognitive evaluations of one’s life,
happiness, satisfaction, positive emotions and negative emotions)…should be measured
separately to derive a more comprehensive appreciation of people’s lives (Jeffrey Sachs et all,
2013)
Besides the reflective life evaluations and hedonic experiences, GNH also considers spirituality
as one of the indicator that needs to be emphasized.
Explaining each indicator - Life satisfaction - combines individuals’ subjective assessments of
their happiness levels with respect to health, occupation, family, standard of living and work-life
balance. The respondents are asked to say how satisfied or dissatisfied they were in these five
areas on a five-point scale (1= very dissatisfied, 5=very satisfied).*4
*4 - Because of its length (42 page document), the Second Gross National Happiness Survey Questionnaire April
2010 could not be attached in the Appendix section. If required, can be provided on request.
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The life satisfaction indicator sums their responses across the five areas. It could have a score as
low as 5 (low satisfaction) or as high as 25 (high satisfaction). The sufficiency threshold for the
life satisfaction score is set at 19.
The positive and negative emotions indicator reports the emotions such as compassion,
generosity, forgiveness, contentment and so on for positive emotions and while selfishness,
jealousy, anger, fear and worry were used to represent negative emotions.
For both sets of emotions the respondents are asked to rate the extent to which they have
experienced them during the past few weeks with reference to a four-point scale. The scale
ranges are: 1 ‘never’, 2 ‘rarely’, 3‘sometimes’, and 4 ‘often’.
Both the positive and negative emotion indicator scores run from 5 to 20 (from low to high
incidence of positive or negative emotions). For positive emotions, a sufficiency threshold of 15
is set. The negative emotion indicator the threshold level is set in regards to its sub indices. That
is, 5 (for two items with maximum score of 8) and 7 (for three items with maximum score of 12)
were set respectively for two sub-indices of negative emotions.
Considering Spirituality indicator - It covers a person’s self-reported spirituality level on the
frequency with which they experience karma, prayer recitation, and meditation. The indicator
runs on spirituality level of citizens’, which measures from ‘very spiritual’ to ‘not at all’. Scores
range from 4 to 16 with 16 indicating a greater degree of spirituality. The threshold has been set
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at 12, which implies that at least three of the four indicators must be rated ‘regularly’ or
‘occasionally’ for individuals to be defined as happy.
2) Health
In GNH system, health has always been associated with both physical health and mental health.
Considering it as an outcome of relational balance between mind and body, between persons and
the environment, its four indicators are -
Self-reported health status: An proxy measure to complement other health indicators - healthy
days, mental health and disability. For a person to be sufficient in self-reported health status, he
or she must have a rating of ‘excellent’ or ‘very good’
The Healthy days - indicator reports the number of ‘healthy days’ a respondent enjoyed within
the last month. For instance, answers can be 26 days health days, so it allow for deviants from
normality. Similarly for mental health indicator
The Long-term disability examines an individual’s ability to perform functional activities of
daily living without any restriction. Citizens are asked whether they had any longstanding illness
that had lasted over six months so that causality can be traced out. The threshold is set such that
those individuals who are disabled but are ‘rarely’ or ‘never’ restricted from doing their daily
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chores are classified as sufficient. Conversely, individuals with a disability whose daily activities
are restricted ‘sometimes’ are classified as deprived.
3) Education
GNH tries to highlight the importance of a holistic educational approach, which ensures citizens
gain a deep foundation in traditional knowledge, common values and skills. In addition to just
studying, reading, writing, math’s, science and technology, students are also encouraged to
engage in creative learning and expression. The indicators include – literacy, educational
qualification, knowledge and values.
For knowledge – the indicator attempts to capture learning, which could have occurred either
inside or outside formal institutions. Five knowledge variables are chosen: knowledge of local
legends and folk stories, knowledge of local festivals knowledge of traditional songs, knowledge
of HIV-AIDS transmission, and knowledge of the Constitution. The responses for each question
follow a five-point scale, which ranges from ‘very good knowledge’ to ‘very poor knowledge’.
The threshold is set to 19, which implies that citizens should have an average of ‘good’
knowledge across the five variables.
With values indicator – respondents are asked whether they considered five destructive actions
to be justifiable: killing, stealing, lying, creating disharmony in relationships and sexual
misconduct.
4) Culture
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Preservation and promotion of culture should be highly valued both by government and the
people and GNH rightly tires to capture it. Culture is not only viewed as a resource for
establishing identity but also for mitigating it from negative impacts such as its effects on forms
of language, traditional arts and crafts, festivals, events, ceremonies, drama, music, dress and
etiquette and so on (Jeffrey Sachs et all, 2013). To assess the strength of various aspects of
culture, four indicators have been considered: language, artisan skills, cultural participation
and the way of harmony.
Language - it is a self-reported indicator, which is measured by a fluency level in one’s mother
tongue on a four-point scale. The ratings vary from ‘very well’ to ‘not at all’. It assumes that
since everyone must be fluent in their mother tongue, a high threshold is necessary to maintain
standards.
Artisan skills - This indicator assesses people’s interest and knowledge in thirteen arts and crafts
and reports on number of skills possessed by a respondent. These skills and vocations are the
basis of historical material culture of Bhutan when it was trading far less.
For the indicator, people were asked if they possessed any of the 13 listed*5 arts and crafts skills.
A sufficiency threshold was set at one, which implied that a person must possess at least one skill
to be identified as sufficient.
*5 The 13 arts and crafts include - 1) weaving, 2) embroidery, 3) painting, 4) carpentry, 5) carving, 6) sculpture,
7) casting, 8) blacksmithing, 9) bamboo works, 10) goldsmiting and silversmithing, 11) masonry, 12) leather
works and 13) papermaking.
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Socio-cultural participation - In order to assess people’s participation in socio-cultural
activities the average number of days within the past 12 months is recorded from each
respondent. The days are grouped on five-point scale ranging from ‘none’, and ‘1 to 5 days’ to
‘+20 days’. The threshold was set at 6 to 12 days per year. It identifies 33.2 per cent to have
achieved sufficiency.
The Way of Harmony is expected to rate citizens’ behavior of consuming, clothing, moving
especially in formal occasions and in formal spaces. Respondents are asked to rate its importance
on a three-point scale of being very important to not important. In addition, respondents were
also asked if there were any perceived changes in the practice of this particular form of etiquette
over the years.
5) Time Use
The balance of time between paid work, unpaid work and leisure is important for one’s
wellbeing. Similarly, a flexible working life is vital for the wellbeing of individual workers and
their families and communities. In the GNH, simple time use diaries are administered - asking
respondents to recall their activities during the previous day collects information on how people
use their time. Different categories spent on different kinds of activities such as work, leisure,
sleep, personal care and so on are recorded.
Time use data also helps to reveal the gap between GDP and non-GDP activities that reflects the
gap between market and household economy sectors. Such data are helpful in accounting for a
more comprehensive output of goods and services that GDP omits (Karma Ura et all, 2013). 5
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Working hours - The GNH definition of working hours includes even unpaid work such as
childcare, labor contribution to community works, voluntary works and informal helps.
Accordingly to Bhutanese law, eight hours is also the legal limit, applied to formal sector, for a
standard workday. Since a main objective of the indicator is to assess people who are
overworked, those who work for more than eight hours are identified as time deprived.
Sleeping hours - Sleep is clearly beneficial for a person’s health and impacts nearly every area
of daily life. However, sleep requirements can vary substantially with different human beings. In
general most healthy adults need an average of seven to eight hours of sleep for proper
functioning. Hence, eight hours is considered the amount necessary for a well functioning body
for everyone. With this threshold, about 66.7 per cent achieve sufficiency.
6) Good Governance
Four areas of measures are developed to signify effective and efficient governance. These
include in the domain of fundamental rights, trust in institutions, performance of the
governmental institutions and political participation. The good governance indicators try to
combine political activities with access to government services. The fundamental rights
indicator includes – right to vote, freedom of speech, join a political party, to be free of
discrimination and a perceptual indicator on government performance.
The political participation indicator seeks to asks two questions based on –
• The possibility of voting in the next election and
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• The frequency of attendance in community meetings.
The respondents are asked if they would vote in the next general election and the response
categories are simply ‘yes’ or ‘no’ or ‘don’t know’. An individual has to report ‘yes’ in the
voting criteria and has to attend at least one meeting in a year to be classified as sufficient in
political participation.
For voting, the threshold is straight forward because it is agreed by everyone that developing true
democratic processes requires the active participation from citizens – minimally, by voting. In
terms of attendance in meetings the threshold has been set to one time.
Third, the government performance indicator captures the performance of government at
national and local level. It asks questions related to employment, inequality, health services,
environment, basic services, agriculture, sanitation, education and so on. It even attempts to
assess people’s perceptions about the functioning of human rights in the country as enshrined in
the Constitution of Bhutan. The seven questions related to political freedom ask people if they
feel they have: freedom of speech and opinion, the right to vote, the right to join political party of
their choice, the right to form association or to be a member of some, the right to equal access
and the opportunity to join public service, the right to equal pay for work of equal value, and
freedom from discrimination based on race, sex and so on. All have three possible responses of
‘yes’, ‘no’ and ‘don’t know’.
The thresholds for all rights were set to ‘yes’. So, a person has a sufficient condition in the
indicator if he or she has all seven rights fulfilled.
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Lastly, the Service delivery - This indicator tires to test people’s perceptions of overall service
delivery in the country. Respondents are asked to rate the performance of the government in the
past 12 months on seven major objectives of good governance: employment, equality, education,
health, anti-corruption, environment, media, law, culture and many more. These outcome-based
questions enable respondents to rank the services on a five-point scale from ‘very good’ to ‘very
poor’. The overall indicator has a maximum value of 35 and minimum value of 7.
A threshold of 28 was adopted, which means that a person has to perceive that public services
are ‘very good’ or ‘good’ in at least five of the seven objectives.
7) Community Vitality
From a GNH standpoint, a community must possess strong relationships amongst the community
members and within families, must hold socially constructive values, must volunteer and donate
time and/or money, and lastly must be safe from violence and crime.
The indicators in this domain cover four major aspects of community: 1) social support which
depicts the civic contributions made 2) community relationship, which refers to social bonding
and a sense of community 3) family relationships, and 4) perceived safety.
All these are subjective indicators and thresholds weights are set minimally.
8) Ecological Diversity and Resilience
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According to the Constitution of Bhutan, every Bhutanese citizen shall ‘…contribute to the
protection of the natural environment, conservation of the rich biodiversity of Bhutan and
prevention of all forms of ecological degradation including noise, visual and physical
pollution…’
The environmental domain includes three subjective indicators related to perceptions regarding
environmental challenges, urban issues and responsibilities, and one more objective question,
related to wildlife damage to crops. Like other subjective indicators, the interpretation of these
indicators is clouded by different and possibly shifting frames of reference, so they the weighing
thresholds are minimally – 10%.
The pollution indicator – tries to capture citizens’ environmental awareness and their ability to
perceive environmental problems. Seven environmental issues of concern were shared with
respondents, and their responses follow a four points scale from ‘major concern’ to ‘not a
concern’.
They are not added into a single number but rather a conditional threshold is applied whereby an
individual is insufficient if he or she has rated ‘major concern’ or ‘some concern’ in at least five
of the seven environmental issues. Their reference frame is within the past 12 months.
The environmental responsibility indicator - attempts to measure the feelings of personal
responsibility towards the environment. It is crucial to reinforce attitudes that will encourage
people to adopt eco-friendly approaches and also to identify any deterioration in the current very
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environmentally aware views of citizens. The responses also run on a four point scaling system
and the threshold is set at ‘highly responsible’.
Wildlife - The wildlife indicator incorporates information on damage to crops. The wildlife
indicator is rural-specific since it pertains to farmers. This indicator is later offset by the urban
issue indicator, which in turn applies to urban dwellers only.
Urban issues - Since urbanization has both positive impacts on human wellbeing and negative
effects these adverse impacts on wellbeing have been incorporated into the GNH index.
Respondents are asked to report their worries about four urban issues: traffic congestion,
inadequate green spaces, lack of pedestrian streets and urban sprawl. The threshold is set such
that a person can report any one of the issues as major threat or worry to be sufficient.
This indicator mainly acts as a proxy for sustainable urban development, which is one of the
major objectives of the government.
9) Living Standards
It refers to the material wellbeing of the Bhutanese people. It ensures the fulfillment of basic
material needs for a comfortable living. There are wide ranges of indicators used in the literature
to assess standards of living. The three indicators to assess people’s standards of living are -
household per capita income, assets and housing conditions. Assets include livestock, land
and appliances, while housing conditions pertain to room ratio, roofing and sanitation. These are
included so that there are enough complementary measures for self-reported household income.
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Household income – indicates income earned by all the individuals in a household from varied
sources within or outside of the country. The household income here has been adjusted for in-
kind payments received.
Moving on the Assets - indicator uses data on selected household assets, such as durable and
semi-durable goods of everyday use, to describe household welfare. The concept is based on
evidence that income/expenditure measures are incomplete measures of the material wellbeing of
households especially in developing countries where such data may have higher measurement
errors.
Further, asset data were found to be more reliable and easier to collect. Commonly, appliances
such as a mobile phone, radio or TV or bicycle define asset indicators; however, because of the
sociocultural context, livestock and land ownership were also considered assets. Livestock is
understood as an integral component in agricultural and rural economies in Bhutan. Even
animals are included in asset list.
The asset indicator is created consisting of three major components: 1) appliances (mobile
phone, fixed-line telephone, personal computer, refrigerator, color television and washing
machine) 2) livestock ownership and 3) land ownership.
The thresholds are applied at two levels: they are set initially on each of the three indicators and
then later, an overall threshold is applied to classify insufficiency in the asset indicator.
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Lastly about Housing quality indicator – it tries to capture the housing space, size, conditions
and so on from an individual’s as well as from a community perspective. On the individual level,
having one’s personal space is considered fundamental for one’s biological, psychological and
social needs since it is a place where most spend a significant part of their everyday lives. And
from community level, roofing and toilet in a house are considered important. Hence, the quality
of housing indicator is composed of three indicators: the type of roofing, type of toilet and room
ratio. The thresholds have been set based on the Millennium Development Goals such as
corrugated galvanized iron (CGI) or concrete brick or stone for roofing, pit latrine with septic
tank for toilet and two persons per room for overcrowding, and all three conditions must be met.9
So, overall an individual is sufficient in housing if he or she lives in a house that has a good
roofing structure (CGI or concrete brick or stone), a pit latrine with a septic tank, and uncrowded
rooms. The threshold is set about 46.2 per cent are sufficient in housing quality.
! Weighting and Methodology:
This section explains the weighting and methodology of the domains of GNH. The index uses
two kinds of thresholds to satisfy one as happy -
• Sufficiency thresholds, and
• Happiness threshold.
Sufficiency thresholds: show us how much a person needs in order to enjoy sufficiency in each
of the 33 indicators. Meanwhile, the happiness threshold seeks to answer the question of “how
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many domains or in what percentage of the indicators must a person achieve sufficiency in order
to be understood as happy”?
The GNH also weights all the domains of its indicators as equally because it believes all are of
equal importance, and no indicator can be permanently ranked as more important than others.
However, among the 33 indicators some are self-report indicators are subjective and thus have
lighter weights attached to it. The below table 2 helps us to understand the different weights,
Table 2: Weights of the 33 indicators, Source - (Karma Ura et all, 2013).
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As mentioned the GNH index uses two kinds of thresholds or cutoffs: sufficiency thresholds,
and the happiness threshold. One of the reasons for second cut-off is to allow for variation or
fluctuations in the measurement. So, in reporting the GNH, the population is different into four
sub groups (unhappy, narrowly happy, extensively happy, and deeply happy) and their achieved
sufficiency is marked with 50%, 66%, and 77% of the weighted indicators.
Furthermore, all these groups can also be analyzed in dimensions which they lack sufficiency,
and how these change by gender, region, age, and occupation.
Conceptually, the GNH is constructed using the Alkire-Foster method, which is often used for
measuring multidimensional concepts such as poverty, wellbeing or inequality.
However, it does not strictly use the Alkire-Foster method, rather the GNH Index is created from
the following two quantities:
o Headcount ratio: % of people who are happy
o Breadth: % of domains in which people who are not-yet happy enjoy sufficiency
(this is similar to “intensity” in poverty measures using the Alkire-Foster method)
To construct the GNH Index using this methodology six steps are followed:
1. Choose indicators
2. Apply sufficiency thresholds (who has enough)?
3. Apply weights for each indicator
4. Apply the happiness threshold
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5. Identify two groups:
a. Happy people (extensively and deeply happy)
b. Not-yet-happy people (policy priority) (unhappy and narrowly happy)
6. Identify among the not-yet-happy people, what percentage of domains they lack
sufficiency, and in what percentage they enjoy sufficiency.
Now, to calculate the GNH, the data of the population are aggregated into a decomposable
‘Adjusted Headcount M0’ measure that is sensitive to the ‘breadth’ of achievements (Alkire and
Foster, 2007, 2011). M0 is constructed by multiplying HnAn, where Hn represents the
percentage of people who have not achieved sufficiency in 6 domains thus are identified as not-
yet-happy, and An is the average proportion of dimensions in which those not-yet-happy people
lack sufficiency.
The Adjusted Headcount ranges in value from 0 to 1, with larger numbers signifying greater
insufficiencies and less happiness. In order to create the GNH Index in which a higher number
reflects greater happiness, the Adjusted Headcount is subtracted from 1 to obtain the GNH.
Therefore, GNH = 1- HnAn.
For instance, if we take the following three numbers -
1. The percentage of happy people - Hh is 43%.
2. The percentage of not-yet-happy people - Hn is 57%.
3. The percentage of domains in which not-yet-happy people enjoy sufficiency – As - is
48.9%.
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Then the final GNH formula would answer as follows: GNH=(Hh) + (Hn x As) = 43% + (57% x
48.9%) = 0.7309. Now, applying the adjusted headcount, then: 1 – 0.307 = 0.2691 = 26.91%.
Therefore, only 26.91% of the populations are deeply happy, rest needs dire attention of the
government.
Figure 3 – Happiness gradient, (Karma Ura et all, 2013).
Also, to identify the happiness gradient, two additional cutoffs of – 50% and 77% are placed. As
Figure 3 shows, when we apply the 50% cutoff we find that only one person, Thinley, is
unhappy. Looking between 50-65% we find three people are narrowly happy: Dorji, Jampel and
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Tashi. Two people have sufficiency in 66-76% of domains: Tshering and Chhimi. And finally,
one person, Sangay, is deeply happy with achievements in over 77% of domains. We can
compute the average sufficiency for each group also: for example, in the case of the narrowly
happy people, the average sufficiency is [(4.6/9 + 5/9 + 5/9)/3] = 54%. Similarly, sufficiency can
be computed for other groups of people.
! Is GNH a practical tool for policy implications?
Having explained the idea, domains, indicator, methodology and technique of GNH
measurements – the most important question arises whether GNH can serve well as a practical
tool that will help Bhutan’s leaders and practitioners in government, business and civil society to
implement policies and programmes informed by the measurement?
Section 4 of this thesis ‘Critical Analysis of GNH Index’, deals with the advantages,
shortcomings, comparisons, areas of further research and inference from GNH.
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Critical Analysis of GNH Index
! Advantages of GNH:
1. Setting an alternative framework of development: Bhutan’s GNH vision of development
is distinctively holistic. The nine domains of GNH, taken together, portraits more about
citizen’s life and well being than the standard welfare measure of GDP per capita.
2. Allocating resources in accordance with the need of people: The index provides an overall
picture of how GNH is distributed across the population and also gives an ability to zoom in
to look at who is happy, unhappy, narrowly happy, extensively happy, and deeply happy. It
also tells us about wellbeing by different subcategories of gender, rural-urban area, districts,
age and so on. All of these functions make it a useful tool for policymakers as they seek to
address the question of ‘how can GNH be increased?’ and also it allows them to compare
problems across subcategories.
3. Providing indicators for sectors to guide development: The GNH Index helps policy
makers provide certain indicators that can guide development by monitoring activities in a
particular domain. For example “electricity,” a component of the GNH, is a priority in the
10th five-year plan.29 Insofar as the GNH indicators monitor outputs, the GNH Index will
provide impetuses to administrators, in light of the fact that their achievements will
noticeably help achieve higher GNH.
4. Usage of GNH screening tools: Bhutanese government rightly understands that while the
composition of the GNH may not be a sufficient guide for policy, a clear understanding of
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how the achievements and shortfalls in different dimensions of GNH vary over time and
space is necessary. Hence, it’s screening tools mechanism, which uses the GNH indicators as
a checklist, come handy to convey if a particular policy can be implemented, or not.
5. Measuring people’s happiness and well-being: The index and its component aims to
capture human well-being in a fuller and more profound way than traditional GDP, socio-
economic measures of economic development, human development or social progress have
done. One of the important aims of the measurements is to make general public understand
what it is for. And rightly, GNH provides case studies of differently happy people, so that
citizens can assess whether the index broadly seems intuitive and has room for their own
aspirations and values.
6. Measuring progress over time: The indicators of the GNH are to be sensitive to changes
taking place over time. In other words, it tries to be responsive to relevant changes in policy
action. In this way, the composition of well-being, as well as its overall level, can be
observed over decades. Similarly, inequalities among groups and populations that require
special attention can be identified. Again GNH Survey results come handy.
7. Sustainable Development: At a time when countries like China are moving towards market
friendly policies, it is compelling to see that Bhutan is pursing more environment, ecological,
well being based policies. Furthermore, GNH also tries to give people more voice and
information so that the policies are made in line to the recommendations made by the public.
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8. GNH is not only an outcome indicator but also a process indicator. That is, it helps
administrators to identify the link between processes and outcomes. Accordingly it helps in
modifying, examining and implementing policies.
! Shortcomings of GNH:
1. Defining happiness: The measurement of GNH reflects the fact that happiness is a deeply
personal matter and subjective. However arriving at a definition of happiness and working it
out is difficult. Hence, debates are needed to see if it frames and captures the philosophy of
GNH.
2. Measurement Problems: In regards to having such vast array of indicators and domains,
one problem with survey based subjective measurements is that citizens might choose to
under/over report some of the issues. Furthermore, when Bhutan is pursuing policies like
forbidding immigration, restricting tourism, it becomes even challenging to assess the impact
and effectiveness of GNH. Hence, it is crucial to analysis what it preaches.*6
3. Practicality of carrying out GNH surveys:
• Since Bhutan has a population of around 700,000 people, it can be said that it is feasible
to do subjective surveys for 7,000 people. However it becomes difficult to carry out such
surveys in countries like India, China, Indonesia, and United States where factors like –
*6 Note - In its 2011 survey – nearly about 59% of Bhutanese people reported as not-yet-happy and they were
more deprived in all 33 indicators than the happy people
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population, geography, topography, resources constraints, budget constraints kicks in.
Hence, uncertainty arises on the question of ‘Can GNH be exported to other countries’
• The GNH survey questionnaire, which has 249 questions with 750 variables are
objective, subjective, and open-ended in nature. The Centre for Bhutan Studies & GNH
Research reveals that it takes minimum 5-6 hours to complete a survey from a
respondent. It might be very well true that respondent might lose interest after a certain
point of time because of a tedious interrogation. And also not only respondent’s
education but also his/her exposure to the outside world plays an important part in the
choice of answer they pick. Moreover, out of 20 districts in Bhutan only 12 districts were
covered in the 2010 GNH survey.22 Hence it can be concluded that there are problems
related to selection biases in the surveys.
• The latest 2010 GNH survey took nearly 9 months to complete the survey. Given
constant changes in the political, social, economic and various other conditions questions
can be raised on the validity and relevance’s of the answers.22
4. GNH Surveys – Is it necessary? National statistical data of Bhutan says that youth
unemployment (5.8% in urban areas and 2% in rural areas), need for universities, access to
health care (need for modern hospitals and indigenous dispensaries) and education (63% of
literacy for 6 and above), inflation and transportation are some of the most hard-hitting
problems of Bhutan’s society. Furthermore, it also revealed high acceptance levels of
domestic violence - around 70 percent of women felt they deserved to be beaten if they
refused to have sex with their husbands, argued with them, or burned the dinner. Also, people
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in rural areas are deprived of basic living standards and so on. Thus, question arises - Is
philosophy of GNH reflected in the pursuit of GNH?
5. Cultural intolerance: The cultural domain of GNH model has inclinations to Bhutanese
traditional culture. On one hand, such indicators are necessary to see the effects of modernity
on culture. However, on other hand it ignores the cultural values of 25% Hindus and 5% of
others (Muslims and Christians) who live in Bhutan. In other words, besides preserving and
promoting Bhutan's culture, the government is also defining, limiting and sometimes even
inventing it. For instance, the compulsory rule of wearing national dress and use of national
architectural pattern is very Buddhist centric. When many Hindu nepali’s resisted to wear the
national dress, around 100,000 people of 800,000 population ended up leaving the country.
Furthermore, some schools even dropped the third national language – Nepali – from the
school curriculum.
6. Interpretation of survey forms: It is not clear whether people’s answers to survey questions
in different languages and in different cultures really mean the same thing.
7. Limits in Indicators:
• Education - Schooling plays an important role in developing children’s mental well-
being and development. GNH, which tries to capture a holistic development of child’s
cognitive development, fails to capture the capacity of soft skills. Skills such as self-
control, perseverance, the capacity to delay gratification, and the ability to cope with
shocks are some of the strong predictors of positive wellbeing development.
Indicators like – knowledge, value in education domain tires to capture but they fail
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in its entirety. Capturing the lack of soft skills issues also inspire teachers to nurture
them accordingly.
• Health - Mental health is a major determinant of overall health. The GNH survey
result, which talks about people’s perception on mental health, yet has not established
a single institution to tackle mental problems. For instance, alcoholism in Bhutan -
GNH survey results show us that around 65% of people are involved in alcohol, yet
there are no rehabilitation centers in place to tackle such issues.
• Service delivery – Its indicator tries to capture the access to basic services and
institutions for the citizens. However, it completely rules out ‘access to education’ as
one of its vital part.
• Spirituality – Since GNH tires to give subjective measures lighter weights; it
overlooks spirituality indicator in this regard.
8. International comparison: When different countries are adopting different methods of
happiness measurements (like – HPI, BLI) it becomes difficult to do transnational
comparisons. Moreover with huge number of variables used in GNH approach it becomes
impossible to make use of data for international comparisons. Henceforth, evaluation of
GNH becomes restrictive.
9. GNH or GDP - Many scholars believe that ‘the vast majority of Bhutanese are only paying
lip service to GNH as they vigorously pursue the goods, services, and lifestyle of their GDP
measuring counterparts’ (David Luechauer, 2013)
! Recommendations for improving GNH:
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1. ‘Guidelines on Measuring Subjective Wellbeing’ can help solve measurements
problems: Given subjective wellbeing has been examined extensively in academic literature,
including from the perspective of which subjective wellbeing measures to collect, and how to
collect them, there was until now no consistent set of guidelines for national statistical
agencies to draw on. However recently, OECD released a report on ‘Guidelines on
Measuring Subjective Wellbeing’,32 which represent an important step forward in moving the
measurement of subjective wellbeing from a primarily academic activity to the sphere of
official statistics. Hence some of the problems of measurement in GNH can be resolved.
2. Incorporating natural capital in accounting system: The objective elements of well being
measurement are important in assessing their country's overall well-being. In the year 2011-
12, the forestry share to the GDP increased from 16.1% to 17%. This meant that more
environmental degradation was taking place. However, no indicators are established to find
effectiveness of the forest use and replantation. Hence Bhutan needs to incorporate natural
capital and the ecosystem services it provides into its national accounting framework to help
screen GNH based policies.
3. Report on survey evaluation is must: Since GNH involves surveying around 7000 citizens
out of its 700,000 populations, it is not clear by the government reports or by GNHC reports
on how the survey is conducted and what technique is used. The Center for Bhutan Studies
needs to bring out a report on its survey evaluation for public scrutiny.
4. Include indicators for natural disasters – In the last 34 years from 1980-2014, nearly about
68,000 people have suffered from some of kind disaster in Bhutan. Getting idea of people’s
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need, their perception of government in disaster prone times, supplying of basic needs and
others can help improve government manage disasters in a better way.
5. Expansion and contraction of GNH: If certain dimensions of GNH contracts, or are being
crowded out by material progress, then GNH Index needs to convey such information as the
imbalances enter. In order to do so, it needs to create a platform for public deliberation.
! Comparison of GNH to Social Progress Index and Policy Effectiveness Index:
Also with the advent of outcome oriented evidence-based indices, tools like Social Progress
Index, Policy Effectiveness Index that builds up to an important legacy of measuring wellbeing
unlike GDP. It becomes challenging to see whether GNH can serve well as an important tool that
can be used by leaders in government, business and civil societies to benchmark success,
improve policy, and catalyze action. The principle of actionability*7 built in Social Progress or
Policy Effectiveness index tests the importance of GNH.
The Social Progress Index34 (SPI), which measures social progress directly, independently of
economic development, is a holistic and rigorous construct of measurement. It consists of three
dimensions: Basic Human Needs, Foundations of Wellbeing, and Opportunity. Each dimension
*7A practical tool with sufficient specificity to help leaders and practitioners in government, business, and civil
society to benchmark performance and implement policies and programs that will drive faster social progress.
45
is composed of four components, and each component contains between two and six
indicators.*8
Similarly, Policy Effectiveness Index (PEI) developed by Jindal School of Government and
Public Policy33 is a multidimensional and a multi-indicator measure, which is a composite of
four component indices, namely: Livelihood Opportunity Index; Social Opportunity Index; Rule
of Law Index; and Physical Infrastructure Development Index.*9
Both these indices try to reflect human wellbeing from basic needs to being able to enjoy:
livelihood opportunities; a socially meaningful life; security of life and rule of law; and amenities
for a sustained improvement in living standards. They provide a worthy tool for understanding
holistic, objective, outcome-based measure of a country’s wellbeing that is independent of GDP
per capita.
When compared to Gross National Happiness, both the indices do not follow the core
methodology approach of measuring citizens well being through surveys. SPI, which promotes
*8 The first dimension, Basic Human Needs, assesses how well a country provides for its people’s essential needs
by measuring whether people have enough food to eat and are receiving basic medical care, if they have access to
safe drinking water, if they have access to adequate housing with basic utilities, and if they are safe and secure.
Overall SPI has 12 components and 54 distinct indicators. More can gathered by visiting -
http://www.socialprogressimperative.org/
*9 Policy effectiveness index – PEI – is an India based index, which tries to assess policies based on the four
domains from the period 1981 to 2011. It attempts to provide evidence for some commonly made observations on
India's development process and some other less recognized outcomes. Its report – India Public Policy Report
finds that at the all-India level there is a gradual, but only a marginal, improvement in the policy effectiveness
index over the three decades. It is being compromised by a near stagnancy in expansion of livelihood
opportunities and deterioration in law and order and justice dispensation environment in the country. The state
level analysis is instructive for undertaking policy correctives to address the chronic development gaps. More can
be gathered by visiting - http://www.jsgp.edu.in/content/india-public-policy-report
46
the principle of actionability believes that subjective survey measures of wellbeing provide little
guidance on what wellbeing actually means in terms of its components. SPI believe that there is
no way to empirically explore causation, since the factors driving the perception of citizens
cannot be disaggregated. Also, nor can results be robustly compared over time and between
countries, since subjective perceptions are hard to benchmark and hold consistent.
However, Gross National Happiness which incorporates economic indicators with non-economic
indicators believe that – happiness data can be disaggregated and can hold the principle of
actionablitiy valid. It might be true that with subjective measures citizens may report higher
levels of life satisfaction for reasons that we believe are inconsistent with social progress, such as
by prioritizing current consumption at the expense of the environment, or by discriminating
against minorities. But GNH as PEI or SPI also informs,
• Governments – about outcomes of policies executed and it even gathers information on
what citizen’s value and think. It creates a bottom line approach for governments to act on
issues rather than just governments aspiring to commit. Furthermore, democratically elected
governments generally stay only for 4 to 5 years. If a problem or issue is deep rooted then
governments generally deployed a task force and it takes years to report on. Hence, GNH as
SPI or PEI creates accountability and comes handy in tackling the problem through system.
Also we often realize that governments often don’t look on issues broadly. For instance, a
Department of Health might just focus on few indicators of health and would not think
beyond on issues like – how much water is required, how much education is required to
47
deliver health policies and so on. In that regard GNH*10 (which is done once in two years)
can help government track programs and help citizens make informed decisions.
• For Businesses – GNH helps them do evidence based policies, so that firms which are
tackling basic needs of society can deliver them more effectively and efficiently. Public
Private Partnership models are perfect examples, which can benefit from such indexes.
Also, the broader message of GNH, PEI and SPI is that not only governments but also
businesses, civil society should be committed in tackling social problems and help developed
a sustainable path. Credit rating agencies can use such indices to rate firms on their progress
to create solutions.
• Civil society - with the help of these survey/index results can make leaders, governments,
and political parties accountable and actionable. Unlike PEI or SPI, it is true that GNH is
limited in measuring the efficiency of effort put by governments or business in pursing the
aim. Yet GNH can serve civil society well in understanding the path taken by government
and various other stakeholders.
Succinctly, GNH does hold the principle of actionability valid to a certain extent when compared
to SPI or PEI. It positively holds government actionable for the work done and can topple
regimes if they don’t deliver. For businesses, GNH does provide a framework and guideline on
how a policy should be shaped and how it should be implemented. It is true that rigid labor
regulations, stiffer rules to get business licenses are some of the reasons for Bhutan scoring 141
out of 189 countries in the World Bank’s 2014 “Doing Business” Index. Nonetheless, GNH’s
*10 Even SPI can do but only if it is rolled out more frequently.
48
policy screening tool serves businesses well enough to be committed to pursue Bhutan’s vision –
happiness.
However detailed study might be required to understand how happiness and business mix in
Bhutan and how GNH till now has served as a practical and effective tool for government leaders
and policymakers for fulfilling need based policies.
! Areas of further research in GNH:
1. Moving beyond cost benefit analysis: Designing policies to enhance social and personal
wellbeing is a new field, but the innovation of evaluating changes in wellbeing, rather than
income, remains a concern. The traditional Cost Benefit Analysis becomes irrelevant in such
scenarios. For instance, valuing an extra unit of wellbeing to someone already experiencing a
high level of wellbeing when compared to someone who has low initial wellbeing becomes
tricky. Work needs to be done in such areas. Governments, think tank organizations, funding
agencies need to act on it. More experimentation in the design of policies would help inform
policymakers on what works and what doesn’t.
2. Study needed on understanding the effectiveness of GNH: It’s compelling to see that
GNH tires to give communities and citizens more information so that informed decisions are
made. However, we don’t know the counterfactual. Priorities of public policies differ from
person to person. Hence it is vital to understand or do a research on effectiveness of GNH
index in public policy priorities ranking.
49
3. Freedom & Liberty: One question, which is crucial in understanding the policies and use of
GNH is that – is it impeding into the freedom and liberty of its citizens? In recent years,
Bhutanese government has put ban on sale of tobacco, restrictions on tv channels & internet
usage, mandatory usage of traditional dresses in public places, surrender of citizen’s passport
on return from their travel abroad trips and so on. It leads to the question - whether
authoritarian policies are being adopted by the Bhutanese government. However, a study
would be required in order to understand whether Bhutanese government is promoting its
own version of happiness or of its citizens. An analysis of freedom & liberty in Bhutan is
vital.
4. Is happiness and sustainability compatible? : An important challenge for GNH is to
address the perceived tensions between happiness and sustainability. These tensions relate to
trade-offs between individuals and society, short-term and longer-term goals, present and
future generations, and human and nonhuman welfare. People can be happy and benefit from
unsustainable government policies, even from ecological destruction.
5. Is GNH a crude measure of happiness: The GNH survey records for both subjective
factors, such as how satisfied respondents are with their lives, and objective factors, like
standard of living, health, and education, as well as participation in culture, community
vitality, ecological health, and the balance between work and other activities. However, it
remains to be seen whether such diverse factors correlate well with each other. Also, when
trying to reduce them to a single number, it requires value judgments to be made. Therefore,
it is crucial to understand the crudeness involved in measuring happiness.
50
6. Is Bhutan using different policies for different needs of the population? Having the
ability to allocate different resources in accordance with the need of people, it is not sure if
Bhutan is pursing needs based policies.
! Inference from GNH:
The intent of GNH is laudable and rhetoric. It in some sense tries to promote a wider public
dialogue around the index so that people can share their own understandings and appreciate how
they could increase their own GNH. Tools like screening methods are being used on policies so
that all agencies whether public or private are encouraged to think holistically.
Implementing and assessing new methods of economic development and models of sustainable
growth requires political will, time, and a host of resources. Bhutan is in its premature stage,
which needs better conceptualize, operationalize, measurement techniques, and critical
evaluation of its indicators. It can be too early to say Bhutan/ GNH provides an ideal model to be
followed or rejected. One has to remember that Bhutan is trying to build the future - the world’s
desire - that it is better to be approximately right than precisely wrong.
Hence the take away from Bhutan’s GNH model is that - we should measure wellbeing more
often and do so comprehensively. This would help governments improve policies, develop
appropriate development plans and people live more satisfying lives. For policy makers from all
walks of life the message is:
51
• Environment, ecology, culture, community, health, education should also be important
criteria in measuring country’s wellbeing and development.
• Such criteria’s should also be a major criterion in policy choice.
Public policy does not lend itself to the controlled trials, but rather to the future evaluative
research, which help in reforming the status quo. In the meantime, Section 4 of this thesis has
raised some uncertainties about GNH – an alternative to GDP, but conclusive evidence has yet to
be produced.
52
Conclusion
The global community faces an enormous challenge in improving people’s lives in a way that is
sustainable, equitable and socially just. Measurement futurist can play a central role in meeting
this challenge, and can change the way in which governments measure progress. One important
point is clear that to increase human well-being, we need to ensure environmental sustainability,
maintain cultural existence and community togetherness.
With changes to what is systematically measured, comes the opportunity to change what is
widely deemed important, and that can facilitate changes to what is done in the name of progress.
Hence, if governments can move beyond GDP and alter their measurement systems to give
environmental sustainability and well-being their due weight, then they help pave the way for a
happy, fulfilling and sustainable future for their own citizens, for others throughout the world,
and for future generations.
Obviously their exists barriers but these can be overcome, not least through persistent pressure
on the part of officials, thinkers, academics, the media and others, and through bold leadership
that helps to shift the idea of sustainability in its entirety. As Albert Einstein observed: ‘We can’t
solve problems by using the same kind of thinking we used when we created them’. In other
words, the successor of GDP should be a new set of metrics that integrates current knowledge of
how ecology, economics, psychology and sociology collectively contribute to establishing and
measuring sustainable well-being and development. Moreover, creating such successor will not
53
only help measure a country’s well being but also help measure the progress of new set of UN’s
Sustainable Development Goals (SDGs).
Care should be taken that devising and measuring new indices has become a growing industry
where very little evidence is know of such measurements influencing policies. For instance, the
UNDP advocates the conception of human development, and the more limited conception of it as
measured by the HDI. UNDP does not use HDI to allocate its funding for development, rather it
uses GDP per capita! Similarly, policymakers devoted a lot of time in refining the participatory
action learning methods. Yet there is little evidence that district and village planning is informed
by the outcomes of these exercises. Again must agree with Einstein that: ‘Everything that can be
counted does not necessarily count; everything that counts cannot necessarily be counted."
Therefore, before arriving at conclusion about any indices, critical analysis is essential.
After that governments and global community can turn their attention to policy and political
action. If undertaken with sufficiently broad participation, the hunt for the successor to GDP can
be completed by 2015. Once that future is near then the global community can be hopeful about
really improving lives, sustaining nature, protecting culture and being a global village.
54
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59
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60
Appendix
Some alternative of national indicators of welfare and well-being,
Indicator Type Units Area Temporal Website

Domains Indicators Coverage Ref.
coverage
Index of 17 countries,
Sustainable GDP modification $ 4 26 several states 1950-various 1-3 http://genuineprogress
Economic and regions
Welfare .net/
(ISEW) and
Genuine
Progress
Indicator
(GPI)
Income http://web.worldbank.
Genuine accounts $ 3 5 140 countries 1970-2008 4,5 org/WBSITE/EXTER
Savings modification NAL/TOPICS/
ENVIRONMENT/EX
TEEI/0,,contentMDK:
20502388~me
nuPK:1187778~pageP
K:148956~piPK:2166
18~theSiteP
K:408050,00.html
Capital
Inclusive accounts $ 4 8 20 countries 1990-2008 6 http://www.ihdp.unu.
Wealth modification edu/article/iwr
Index
Australian Survey-based Index # 14 14 Australia 2001-present 7 http://www.deakin.ed

Unity Well- index u.au/research/acqol/a
Being Index u wbi/index.php
1981-2008
World Survey-based Index # 10 100's 73 countries intermittent 8,9 http://www.wvsevsdb.
Values index com
Survey
Gallup- Survey-based Index # 6 39 50 states in 2008-present 10 http://www.well-

Healthways index US beingindex.com/
Well-Being
Index
http://www.grossnatio
Gross Survey-based Index # 9 33 Bhutan 2010 11 nalhappiness.com/
National index
Happiness
Human Composite Index Index # 3 4 177 countries 1980-present 12 http://hdr.undp.org/en

Development /
Index (HDI)
Happy Composite Index Index # 3 3 153 countries 3 yrs 13,14 http://www.happyplan
Planet Index etindex.org/
Canadian Composite Index Index # 8 80 Canada 1994-present 15 https://uwaterlo

Index of o.ca/canadian-
Well-Being index-
wellbeing/
http://www.ons.gov.uk
National Composite Index Index # 5 5 56 countries 1 yr 16,17 /ons/guide-
Well-Being method/user-
Index guidance/well-
being/index.html
61
OECD Composite Index Index # 11 25 36 OECD 1 yr 18,19
countries http://www.oecdbetter
Better Life lifeindex.org
Index
Well-Being Composite Index Index # 20 63 180 countries 1990-2000 20 http://sedac.ciesin.col

of Nations umbia.edu/data/set/ce
sic-wellbeing-of-
nations
Sustainable Composite Index Index # 5 22 150 countries 2 yrs 21 http://www.ssfindex.c

Society om/
Index
Endnotes:
i
PQLI is objected on the ground that it is a limited measure, it has not included social and
psychological properties, which is suggested by the term ‘quality of life’ – security, freedom,
justice, human rights, satisfaction, happiness and so on. This was one the reason why
‘Population Action International’ prepared the ‘International Human Suffering Index’ in
1987, which measured the difference in living.
The PQLI measure keeps in view the welfare considerations, and it attaches the fruits of
economic growth with human betterment. The GDP on the other hand, is criticized for its
incapability to throw light on the distribution of income. Whereas the PQLI also analyses
the nature of distribution of income as the more life expectancy, decrease in IMR and
increase in literacy rates can become possible due to better distribution of income. The
PQLI can also be used like GNP method to make comparisons between countries.
62

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Towards a New Development Paradigm:

List of figures and table .................................................................................................................. v

Executive Summary ....................................................................................................................... vi

Idea of GDP .............................................................................................................................. 1

Critic of GDP .................................................................................................................................. 2

Measuring the future we want......................................................................................................... 3

2. Need for alternatives ................................................................................................................... 4

Human development Index .......................................................................................................... 4

The Stiglitz-Sen-Fitoussi Commission ........................................................................................ 6

Green GDP ................................................................................................................................... 8

Genuine Progress Indicator .......................................................................................................... 9

Green GDP with subjective measures........................................................................................ 11

Criticism of models of Green GDP............................................................................................ 12

Subjective measures of well-being ............................................................................................ 13

3. Gross National Happiness Index

• Domains of GNH .............................................................................................................. 17

o Pyschological well being ............................................................................................ 19

o Time Use ..................................................................................................................... 24

o Good Governance ....................................................................................................... 25

o Community Vitality .................................................................................................... 27

o Ecological Diversity and Resilience ........................................................................... 27

o Living Standards ......................................................................................................... 29

• Weighting and Methodology ............................................................................................ 31

• Is GNH a pratical tool for policy implications? ................................................................ 36

4. Critical Analysis of GNH

Shortcomings of GNH ............................................................................................................... 39

Recommendation for improving GNH ...................................................................................... 42

Areas of further research in GNH .............................................................................................. 48

Interference from GNH .............................................................................................................. 49

1 GNP Gross National Product

2 GDP Gross Domestic Product

3 GNH Gross National Happiness

4 PQLI Physical Quality of Life Index

5 GPI Genuine Progress Indicator

6 HDI Human Development Index

7 HPI Happy Planet Index

8 BLI Better Life Index

9 OCED Organization for Economic Co-operation and Development

10 CIW Canadian Index of Wellbeing

11 SPI Social Progress Index

12 PEI Policy Effectiveness Index

S.No Figure Page number

1 Difference in measurement of per captia income by GDP and GPI 10

S.No Table Page number

1 Overview of GNH domains and indicators 17

2 Weights on the 33 indicators 32

and economic capital.

techniques used by government of Bhutan – Gross National Happiness – offers us an alternative

create institutions, which can promote such endeavor.

National Happiness’ is an analysis of GNH and a contribution to a quite widespread debate on

help advance the debate and sustain its momentum.

development measurement techniques to discovery an alternative to GDP. Section 3 takes one of

criterion and justifies its necessity.

Towards a New Development Paradigm:

economic characteristics of a country become the measures of a country’s development.

not - equating its growth with well-being.

economic safety, health, environment and many more.

! Measuring the future we want:

! Human Development Index:

based on life-expectancy statistics)

has undergone a continuously refinement.