Monday, October 13, 2008

Human Economics in Bhutan

Listening to NPR yesterday, I heard a very interesting short segment on happiness derived from wealth; something I take personal opinion to as being relatively unrelated. (Read: As most commodities, wealth seems to have diminishing marginal returns. That is, as wealth increases, the satisfaction derived from each additional unit tends to decrease. It becomes harder to become marginally happier as we get richer. Make sense? Of course it does. Unfortunately, most standard measurements of implicit happiness in countries is GDP-- a country's income. It is assumed that as standards of living increase, and people become marginally more well-off financially, their happiness will increase continually as well. This is not true, logically as well as scientifically.

Perhaps if someone has very little wealth, an increase in income will decrease the burden of taking care of a family, paying bills, paying rent or a mortgage, whatever. This will be very noticeable when this person's income is increasing from very little to begin with. After a certain point, though, it will have little or no effect on happiness. Human beings are social creatures, and need human interaction to lead content and satisfied lives. Money has a little to do with happiness, but is vastly overestimated. The country Bhutan started a Gross International Happiness Program, based on Buddhist principles, in which GDP is not a fair measure of well-being of a country's citizens. Bhutan has attempted to isolate itself from the effects of globalization and international trade. Over recent years, this has proved to be somewhat impossible and perhaps as a result, the Gross Happiness Index has fallen.

Interesting concept, don't you think?

"Increases in income are matched by increases in aspirations for income. And the net effect is no change in happiness."-Prof. Richard Easterlin; happiness economist.

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