by Matthias Schlögl

In 1974 Easterlin published a paper entitled "Does economic growth improve the human lot?" In this paper he explained for the first time what is known today as the Easterlin Paradox. If we examined the subjective wellbeing (meaning the life satisfaction) of Austrians today, we would probably find out that richer Austrians not only have more money but are also more satisfied with their lives. Wealth positively correlates with SWP (subjective wellbeing). Despite that, Easterlin showed in 1974 that the SWP of US citizens has not risen over time though the GDP has.

Although at a certain time a rich person is more likely to be happy than a poor one the happiness of people does not rise only because their wealth in absolute terms grows. The most popular explanation of this paradox is the theory of relative incomes. What does this theory say? To put it simple, people do not care about how much they have but how much they have compared to their neighbors. People do not rate their lives (or wealth or happiness) in absolute but in relative terms.

But in the first place Easterlin just proved that happiness and GDP do not correlate. Since then a lot of new instruments, mainly indices, for measuring the forthcoming of mankind have been developed and one country put the "Gross National Happiness" as the main goal into its constitution - Bhutan. In this article I want to put emphasis on selected attempts, including the "Gross National Happiness", to measure developments.

The Happy Planet Index¹

The Happy Planet Index is a frequently misunderstood index. Other than one could assume when reading the title, the HPI does not measure happiness of people in the first place. It is a tool for evaluating "the ecological efficiency with which human well-being is delivered around the world"². In detail the HPI is Happy Life Years (life satisfaction x life expectancy) divided by the ecological footprint. It is the first index trying to combine well-being (as a qualitative component) with ecological impact (as a quantitative component). Although this seems to be an innovative approach in times of climate change the index faces plenty of methodological problems.

Due to insufficient happiness data the designers of the HPI have combined two different surveys (Gallup World Poll and World Value Survey) into one indicator and because Bhutan was not covered by either of them they used a third poll (Bhutans GNH survey 2008) to estimate the SWP of Bhutan. It is a known issue that Gallup and WVS, despite using a virtually identical question³, do not always find the same life satisfaction rates in any given country. Therefore 4 variables, including the HDI and a dummy variable for Anglo-Saxon countries, have been introduced to even out the differences between the two surveys. Furthermore, the ecological footprint had to be estimated for 9 out of 143 countries due to lack of data. Not to mention the quality of the data: Is it really possible to estimate CO2 emissions of countries such as Mali if we cannot even trust the GDP figures of these countries? Did the survey in Colombia include people living in the civil war area?⁴ To cut a long story short, it is questionable to combine data from different sources to a single indicator but moreover the data itself is questionable as well.

In his book "Mickey Mouse Numbers in World History"⁵ D. C. M. Platt urged "no more than we expect from our pocket calculators: the illuminated display is checked against common sense."⁶. Checking the HPI against common sense brings up some quite interesting questions.

Why does a country like Brazil, though, according to Greenpeace, destroying 20,000 km² of rainforest every year, rank 9th in an index that predicts to measure ecological efficiency?
To answer this question we have to look into the methodology of the ecological footprint (that is used to calculate the HPI). A footprint of, in the case of Brazil, 2.3 means that average Brazilians use 2.3 gha (global hectares) of biologically productive land and water per person and year. The footprint itself does not say anything about devastation of natural resources. In the case of Brazil it even does the exact opposite: In Brazil large areas of rainforest are cleared every year to make space for energy crops. They account for nearly 17% of the country's total energy consumption in the automotive sector. For burning 1,450 liters of petrol per year every country is charged 1gha in the footprint. Taking into account that every hectare of land produces up to 4,000 liters of biofuel⁷, burning down the rainforest is a good bargain, not only in monetary but also in footprint terms.

Why is Austria (57) less efficient than Palestine (56)?
Austrians live longer and are by far more satisfied with their lives (both contributes to Happy Life Years) but Palestine has a footprint of 1.5, Austria of 5 and so Palestine has a slightly better HPI. The question the index does not ask is whether this footprint is due to efficiency or poverty. A nation dying of starvation has a very low footprint but do we call that efficiency? Austria has a GDP of 46,260 $, divided by a footprint of 5 we get 9,252 $ per gha, compared to 860 $/gha (1,290 $ GDP) in Palestine, this seems quite efficient.

Gross National Happiness

On 24/11/2008 the Prime Minister of Bhutan launched the Gross National Happiness Index⁸. The Centre for Bhutan Studies, responsible for designing the index, emphasizes that indices determine policies and as Bhutan is the only country in the world striving for Gross National Happiness, it needs a new tool for evaluating its developments.

Several indicators contribute to nine dimensions including psychological well-being, time use, community vitality, environmental diversity and others more. Especially the composition of the dimension of "psychological well-being" is a little bit uncommon. In the sub-dimension "spirituality index" for example, they ask questions like "Do you say/recite prayers?" or "Do you consider karma in the course of your daily life?". Due to the fact that GNH is an index and not a simple population census, answers to such questions have to be judged. For this purpose every question has a threshold, comparable with a goal line. The index reflects the distance of results beyond the goal line to the goal line. Every result above is counted as 1, as sufficient, hence the distance is 0. The threshold in the examples above is "Daily", meaning that your "psychological well-being" decreases if you do not pray or not consider karma daily. Taking into account that the index was launched because "indices determine policies", spreading religion seems to be one of them. Besides some other questionable queries like "How important is it for children to learn discipline?" (threshold: very important), we can also find very promising dimensions in the index. For example it is putting duty upon the government by introducing a dimension called "Good Governance indicators", where people are called to rate their governments' performance.

However, the GNH index also faces a more general problem (as most happiness indices do): We saw at the beginning of the article that happiness indicators have not (substantially) risen during the last decades, at least in western countries (the only data we have). If we follow the theory of relative incomes, people draw comparisons to their neighbors to determine how happy they are. As this is always a relative rating at a certain time, is it really capable of evaluating the development of a whole society through time? To stress the common sense again: Happiness is bounded, either you are happy or you are not, but development seems, at least up to now, not. The problem with happiness is that you cannot possibly know what the future might bring. For example: Someone asks you how satisfied you are with your life and you answer very satisfied. 5 years later you are asked again, ever since you won in the lottery, found the love of your life and got offered the best job one could imagine. Although you are twice as happy as you were 5 years before, all you can do is to check very satisfied again. Therefore a question like: "How satisfied are you with your life compared to 5, 10 and 15 years ago?" seems to be the more promising one.

Of course there are "limits to growth" but that does not automatically mean that there are also limits to development. Rising efficiency is definitely development but it is not "growth" in the way the Club of Rome conceived it (growing consumption of resources). Nevertheless the concept of GNH offers some great opportunities to push measuring development of a society beyond solely economic data, like GDP.

The Facebook Global Happiness Index⁹

A Facebook researchers group recently presented the new Facebook Global Happiness Index for the US. It is based on two years of "status updates" of 100 million users. Status or mood updates are small fields were users can easily inform the community about what they are doing or how they feel. The researchers used LIWC (Linguistic Inquiry and Word Count dictionary)¹⁰, a dictionary determining the rate at which the users use positive or negative emotion words, to analyze whether they were happy or not. According to this index Americans tend to be happy on holidays, such as Christmas or Thanksgiving, and Fridays. They are considerably sadder on Mondays and when celebrities, for example Michael Jackson, die.

However, it is worth noting that this status updates might be used for communicating with others such as: "Wish you all a happy Christmas!" or "We will miss you Michael!", rather than expressing personal feelings.

Nevertheless, social networks, such as Facebook, Twitter or StudiVZ contain tons of interesting data waiting for social sciences to be lifted, though it might need a slightly more elaborated approach than this one.

Although this article just presents a very small subset of tools dealing with measurement of happiness or broader development, it showed that happiness indices still encounter a lot of problems. Especially because happiness is not, as development seems to be, opened to the top.

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