Is happiness more important than economic growth?
Many argue GDP is a faulty economic measure. I have my own quibbles with GDP. While the top-line number isn’t a perfect indicator of economic health, the underlying data is instructive, and it does allow for more of an apples-to-apples comparison across nations.
But many argue ongoing economic growth is unsustainable long term (an oft-repeated fear over the past 200-or-so years that’s always been proven wrong thus far). Some posit we ought to forget growth and instead focus on happiness. After all, money can’t buy happiness.
Then again, happiness is fairly subjective, whereas product is less so. Still, there have been a variety of “happiness” indexes attempted over the years. One such comes from the new economics foundation (nef—they eschew capital letters), which publishes a “happy planet index” which aims to measure “well-being in terms of long, happy and meaningful lives”. Their high-level equation is as follows:
happy planet index is approximately happy life years divided by ecological footprint
Happy life years (which they define as “happiness-adjusted life expectancy”) evidently is average life expectancy multiplied by reported levels of happiness. “Happiness” is measured by responses to a single question: “All things considered, how satisfied are you with your life as a whole these days.” Which may make one wonder things like: How thoroughly are nations polled? How faithfully do nations who do collect this information report it? Even if those questions are answered satisfactorily, “happiness” still seems a touch arbitrary. But, as nef says, “A satisfying life is not ideal if it is very short, but also a long life is not ideal if it is miserable.” Amen to that!
Ecological footprint is measured by the amount of resources required to support each person in a nation. Ecological footprint is the denominator, so in their view, a smaller footprint is preferable.
And it shows in their rankings. If you knew nothing else about how they calculated the “happy planet index” one might believe the defining factor was “sunny and tropical, never mind if the nation is poverty-stricken and/or the government corrupt and autocratic”. Costa Rica ranks first! And Costa Rica is a lovely, tropical place—and democratic to boot! Not so much Cuba, which ranks 7th. Cuba’s government is incredibly oppressive, there’s little (or no) freedom of press and dissidents are regularly disappeared. Citizenry are incredibly impoverished by the autocratic government—per capita GDP is $9,900 (ranked 110th globally). There is little industry—but then again, that means a small per-capita ecological footprint! High marks for Cuba!
Tack on the remaining top 20, and other features not considered in the happy planet index could be things like “equal rights for women” and “militaries that don’t fire on peacefully protesting citizens”.
The US is ranked 113th. Ranked 112th is Madagascar (a tropical place—you’d think it’d rank higher). Ranked 114th is Nigeria. While there are some signs the Nigerian government is trying to make gains against years of rampant corruption, keep in mind Nigerian life expectancy is 52 years and per-capita GDP is about $2,600 (ranked 174th globally). And the US just edges it out. Effectively, what makes the US 113th and Cuba 7th is the ecological footprint. Said another way, the US is developed and Cuba isn’t. (For myriad reasons.)
Maybe some people don’t believe living someplace where there’s inherently more opportunity and less systemic oppression leads to greater happiness. To each his own. For my part, I’m delighted to live somewhere entrepreneurs are free to pursue any wacky idea they choose—like taco delivery via unmanned helicopter. Provided the FAA bends on current regulations against using UAVs (unmanned aerial vehicles) for commercial purposes (please please please, FAA—be cool about this), we may soon get tacos (and, heck, pizza, prescription drugs, survival supplies in emergencies, etc.) air-dropped to us. And it’s a near universal truth that air-dropped tacos make everyone just a bit happier.
(HT: Collin R. Smith and Todd Bliman)
Markets Never Forget But People Do by Ken Fisher (CEO of Fisher Investments) and Lara Hoffmans is available now.
This constitutes the views, opinions and commentary of the author as of March 2012 and should not be regarded as personal investment advice. No assurances are made the author will continue to hold these views, which may change at any time without notice. No assurances are made regarding the accuracy of any forecast made. Past performance is no guarantee of future results. Investing in stock markets involves the risk of loss.
