Credit: (photo: Keith Levit/Newscom)

Chart of the Week

Don’t Worry, Be Happy

Perched in the eastern Himalayas between India and China and home to about 735,000 people, Bhutan is a unique country in terms of both its geography and society. It turns out that Bhutan also boasts a unique approach to policymaking.

Since the early 1970s, Bhutan’s economic development model incorporated the tenets of Buddhist philosophy and holistic development, which has at its core the functions of preserving the environment and emphasizing the role of happiness and collective well-being in peoples' lives. The concept of Gross National Happiness (GNH), and the associated index, guide public policymaking in the country.

To establish the indicators in the index, the Center for Bhutan Studies developed a detailed questionnaire covering the nine key “domains” considered crucial for reflecting the values and principles of national happiness: psychological well-being, health, time use, education, culture, good governance, ecological resilience, community vitality, and living standards.

Bhutan developed GNH indicators in 2005 to move the concept of GNH from an academic notion to a measurable one.

This emphasis on happiness aims to supplement the role of monetary incomes that lies at the heart of the Gross Domestic Product (GDP)-driven global development model. GDP measures the market value of all the goods and services produced by an economy and is often relied upon as a proxy for measuring well-being. The more we produce, the better off we must be. By this account Bhutan has performed well over the years. Real GDP per capita grew from roughly $400 in 1980 to about $2,800 in 2016, with the country now nearing middle-income status.

Our chart of the week, from a recently published IMF staff working paper, illustrates the change in Bhutan’s real GDP per capita from 1980 until 2017, demonstrating a broad, increasing trend for real GDP per capita, which increased by about six times over this period.

The measurement of happiness in Bhutan through the Gross National Happiness (GNH) index also shows an improvement, albeit much more modest. The GNH index score comes from Bhutan’s GNH surveys from 2008, 2010, and 2015. Current trends indicate that Bhutan is likely to follow Easterlin’s Paradox—where gains in per capita income are not fully reflected in gains in well-being—which we discuss in detail in the paper.

The Royal Government of Bhutan developed GNH indicators in 2005 to move the concept of GNH from an academic notion to a measurable one. The indicators aim to check whether programs and policies are consistent with the values of GNH. Our chart below shows that the overall happiness level improved in 2015 compared to the previous survey.

In the 2015 Survey, some 51 percent of men are self-described as “happy” or “extremely happy,” compared with only 39 percent of women. Similarly, some 55 percent of urban dwellers are “happy” or “extremely happy,” compared with only 38 percent of those living in rural areas. Among occupations, Bhutan’s farmers were found to be the least happy.