Happiness

The mental state of well-being defined by pleasant emotions ranging from contentment to intense joy is
Happiness. The Global Happiness report states the Global data on national happiness and evidence from
the emerging science of happiness shows that the quality of people’s lives can be assessed by a variety
of subjective well-being measures, collectively through as happiness

The economics of happiness is an approach to assessing welfare which combines the techniques
typically used by economists with those more commonly used by psychologists. It relies on surveys of
the reported wellbeing of hundreds of thousands of individuals across countries and continents. It also
relies on more expansive notions of utility than does conventional economics, highlighting the role of
non-income factors that affect well-being. It is well suited to informing questions in areas where
revealed preferences provide limited information, such as the welfare effects of inequality and of
macroeconomic policies such as inflation and unemployment. One such question is the gap between
economists’ assessments of the aggregate benefits of the globalization process and the more pessimistic
assessments that are typical of the general public.

The study of happiness or subjective well-being is part of a more general move in economics that
challenges these narrow assumptions. The introduction of bounded rationality and the establishment of
behavioral economics, for example, have opened new lines of research. Happiness economics—which
represents one new direction—relies on more expansive notions of utility and welfare, including
interdependent utility functions, procedural utility, and the interaction between rational and non-
rational influences in determining economic behavior

The economics of happiness does not purport to replace income-based measures of welfare, but instead
to complement them with broader measures of well-being. These measures are based on the results of
large-scale surveys, across countries and over time, of hundreds of thousands of individuals who are
asked to assess their own welfare. The surveys provide information about the importance of a range of
factors which affect wellbeing, including income but also others such as health, marital and employment
status, and civic trust.

The Easterlin paradox

Easterlin, in his original study, revealed a paradox that sparked interest in the topic but is, as of yet,
unresolved. While most happiness studies find that within countries wealthier people are, on average,
happier than poor ones, studies across countries and over time find very little, if any, relationship
between increases in per capita income and average happiness levels.

On average, wealthier countries (as a group) are happier than poor ones (as a group); happiness seems
to rise with income up to a point, but not beyond it. Yet even among the less happy, poorer countries,
there is not a clear relationship between average income and average happiness levels, suggesting that
many other factors—including cultural traits—are at play.
 Deprivation and abject poverty in particular are very bad for happiness. Yet after basic
needs are met, other factors such as rising aspirations, relative income differences, and the security of
gains become increasingly important, in addition to income. Long before the economics of happiness
was established, James Duesenberry noted the role of changing aspirations on income satisfaction, and
its potential effects on consumption and savings rates (Duesenberry, 1949). Any number of happiness
studies has since confirmed the effects of rising aspirations, and have also noted their potential role in
driving excessive consumption and other perverse economic behaviors.

Once again, this is useful in interpreting divergent assessments of welfare in the globalization process.
While many people are making income gains and are exposed to new opportunities, aspirations are also
rising, both among those making gains and also those who are falling behind. The technological
revolution and the widespread increase of global information, for example, have increased the
awareness of millions of individuals, even in remote areas in poor countries. Thus in the instance of
globalization, aspirations may be driven by new global reference norms, while opportunities are
constrained by local conditions (for a summary of research on the topic, with evidence from Peru and
Russia, see Graham, forthcoming).

A common interpretation of the Easterlin paradox is that humans are on a “hedonic treadmill”:
aspirations increase along with income, and after basic needs are met, relative rather than absolute
levels of income matter to well-being. Another interpretation of the paradox is the psychologists’ “set
point” theory of happiness, in which every individual is presumed to have a happiness level that he or
she goes back to over time, even after major events such as winning the lottery or getting divorced
(Easterlin, 2003). In this case, the implications for policy are that nothing much can be done to increase
happiness.

Happiness Index

The phrase ‘gross national happiness’ was first coined by the 4th King
of Bhutan, King Jigme Singye Wangchuck, in the late 1970s when He
stated, “Gross National Happiness is more important than Gross
Domestic Product.” 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 and
happiness.

Since then, the idea of Gross National Happiness (GNH) has influenced
Bhutan’s development policy, and also captured the imagination of
others far beyond its borders. In creating the Gross National
Happiness Index, Bhutan sought to create a measurement tool that
would be useful for policymaking and create policy incentives for the
government, NGOs and businesses of Bhutan to increase societal
wellbeing and happiness.

The GNH Index includes both traditional areas of socio-economic

concern such as living standards, health and education and less
traditional aspects of culture, community vitality and psychological
wellbeing. It is a holistic reflection of the general wellbeing of the
Bhutanese population rather than a subjective psychological ranking
of ‘happiness’ alone.

Structure of the GNH Index

The framework contains nine constituent domains of GNH. They are

psychological wellbeing, health, time use and balance, education,
cultural diversity and resilience, good governance, community vitality,
ecological diversity and resilience, and living standard. The nine
domains include 33 GNH conditions expressed as indicators. The
indicators and domains aim to emphasise different aspects of
wellbeing and human flourishing, and different ways of meeting
underlying human needs.
 The GNH Index generates various types of results;

1. Incidence of happy people: The share of people who are happy

because their sufficiency score is 66% or higher. Value ranges from X
to X.
2. Incidence of not-yet-happy people: The share of people who are not-
yet-happy. The value ranges from 0 to 1. Note that if you subtract the
headcount of happy people from 1 then you will get the headcount of
not-yet-happy people, which reflects the percentage of the population
who are not-yet-happy.
3. Average sufficiency among happy people: The average level of
sufficiency among happy people is the average sufficiency score of
happy people. The value ranges from 0% to 100%.
4. Average sufficiency among not-yet-happy people: The average level of
insufficiency in weighted indicators among not-yet-happy people is the
average sufficiency score of not-yet-happy people. The value ranges
from 0% to 100%.
5. Censored sufficiency headcount ratio: Share of the population who are
happy and sufficient in the indicator. Each headcount ratio represents
the percentage of the population who are happy and sufficient in the
indicator.
6. Uncensored sufficiency headcount ratio: Share of the population who
are sufficient in the indicator. Each headcount ratio represents the
percentage of population who are sufficient in that indicator,
irrespective of whether they are happy or not-yet-happy.
 Nepals Case

The current status of happiness index of Nepal is 5.269. Thishappiness index of Nepal is
significantly increased from 4.156 in 2013 to 4.962 in 2017 then it slightly decreased in 2018 and
reached to 4.88. In 2019 it is increased and reached to 4.913.

Fifteenth development plan has prosperity and happiness as the founding pillar of the planning
process. Four and six goals for prosperity and happiness are respectively mentioned in the document,
and further 33 indicators are set to quantify the results on prosperity and happiness. Well-being and
decent life; safe, civilized and just society; healthy and balanced environment; good governance;
comprehensive democracy; and national unity, security and dignity are six long term goals for happiness.
This task is familiar to Bhutan, which is considered the birthplace of Gross National Happiness (GNH), a
term that attempts to record the holistic approach of development philosophy, beyond the notion of
Gross Domestic Product (GDP). Nine key domains and 33 indicators to measure GNH are developed by
Bhutan which includes psychological well-being; good governance; living standard; community vitality;
ecological diversity; resilient health and education; time use; cultural diversity; and resilience. Bhutan
developed three category of happiness: extremely, deeply and narrowly happy with separate
thresholds, according to the Center for Bhutanese Study and GNH