In 1972, at the age of 17, the newly crowned King of Bhutan declared that happiness was more important than economic growth. As such he developed a concept for happiness; Gross National Happiness (GNH). Instead of doing the predictable accumulation of power and wealth during his reign, the 4th King of Bhutan, HM Jigme Singye Wangchuck made the happiness of the people of Bhutan the guiding goal of development. He decided that gross national happiness was a much better way to measure a country’s real wealth than gross national product. He believed that happiness is an indicator of good development and good society. When the nation transitioned from an absolute monarchy to a democratic nation in 2008 the reigning king (the 5th King of Bhutan) ensured that happiness would remain a priority and he built it into the young country’s constitution. In 1972, channelling growth in GDP towards happiness was considered quite new (if not absurd) but in recent times, GNH has attracted attention. Opinion around the world has started to converge on happiness as a collective goal and a tool to measure happiness has been developed. Additional, research has also indicated considerable benefits to the workplace in that happiness raises productivity by increasing workers' effort.
Wednesday, December 15, 2010
Productivity and Happiness
Nothing contributes more to a society’s well-being than productivity. “Productivity isn’t everything, but in the long run it is almost everything.” Economists have long analysed ways to boost productivity through improved skills and education, changing technologies and uses of capital.
Happiness economics typically looks at how macro-level variables such as economic growth affect happiness (standard of living). However, having analysed Bhutan’s philosophy, the question that should be asked, is how does happiness affect economic growth?
Studies have been undertaken to identity whether a rise in happiness might change behaviour at the micro-level, looking specifically at productivity. These studies have confirmed that happiness has large and positive causal effects on productivity. Positive emotions appear to invigorate human beings, while negative emotions have the opposite effect. Happier workers’ effort levels go up, while their precision is unaltered. At the same time, high level (i.e. death in family) unhappiness reduces productivity to a striking degree.
If happiness in the workplace brings increased returns to productivity, then human resource managers, business managers and policy makers need to consider the implications.
There are numerous organisations which have developed tools to measure employee engagement. It’s time for leaders to distinguish between what they can easily count (“are you being paid enough?”) with what employees most value. The intangibles of mission and meaning and happiness are powerful fuel for employers, so finding appropriate ways to measure, and act on, these vital inputs is critical.
Finally, economists need to take the emotional state of economic agents seriously. A recent 18-month study of two Nobel economists recommended that the largest countries of the world end their obsession with GDP and consider some new intangible metrics. In essence, they suggested that GDP – which focuses exclusively on tangible production and consumption – no longer should be our sole definition of global success especially at a time when 64% of the world’s GDP now comes from the intangible service industry.
Happiness economics typically looks at how macro-level variables such as economic growth affect happiness (standard of living). However, having analysed Bhutan’s philosophy, the question that should be asked, is how does happiness affect economic growth?
Studies have been undertaken to identity whether a rise in happiness might change behaviour at the micro-level, looking specifically at productivity. These studies have confirmed that happiness has large and positive causal effects on productivity. Positive emotions appear to invigorate human beings, while negative emotions have the opposite effect. Happier workers’ effort levels go up, while their precision is unaltered. At the same time, high level (i.e. death in family) unhappiness reduces productivity to a striking degree.
If happiness in the workplace brings increased returns to productivity, then human resource managers, business managers and policy makers need to consider the implications.
There are numerous organisations which have developed tools to measure employee engagement. It’s time for leaders to distinguish between what they can easily count (“are you being paid enough?”) with what employees most value. The intangibles of mission and meaning and happiness are powerful fuel for employers, so finding appropriate ways to measure, and act on, these vital inputs is critical.
Finally, economists need to take the emotional state of economic agents seriously. A recent 18-month study of two Nobel economists recommended that the largest countries of the world end their obsession with GDP and consider some new intangible metrics. In essence, they suggested that GDP – which focuses exclusively on tangible production and consumption – no longer should be our sole definition of global success especially at a time when 64% of the world’s GDP now comes from the intangible service industry.
Gross National Happiness Index
Economic growth is generally the mandate for all governments and economies, under the auspices that greater economic growth results in a higher standard of living. Economic growth is generally measured by a number of indicators, including Gross Domestic Product (GDP). GDP is the term used to indicate the increase of output per capita and reflects the quantity of physical output of a society. GDP is heavily biased towards increased production and consumption, regardless of the necessity or desirability of such outputs.
Economic indicators determine policies, embody values and drive societies in a certain direction. The almost universal use of GDP-based indicators to measure progress has helped justify policies around the world that are based on rapid material progress perhaps at the expense of other more holistic criterion such as environmental preservation, cultures and community cohesion.
With a focus on happiness, and as many contemporary indicators of progress and development do not reflect GNH adequately, the Royal Government of Bhutan directed the Centre for Bhutan Studies (CBS) to develop a GNH index, which is to provide appropriate indicators for Bhutanese development. The government recognised the need for GNH indicators because without some kind of measurement system, GNH cannot guide practical policies and programs, however, with a measurement tool, GNH indicators can become tools of accountability.
The CBS constructed a single number index for Gross National Happiness. The purpose of the GNH index is to reflect GNH values, set benchmarks, and inform and track policies and performances of the country. The index can be broken down into individual component indicators that are useful for different sectors for planning and technical purposes at the ministerial and departmental levels.
The GNH indicators have been designed to include four pillars with nine core dimensions and 72 metrics that are regarded as components of happiness and well-being in Bhutan. The nine dimensions were selected on normative grounds, and are equally weighted, because each dimension is considered to be relatively equal in terms of equal intrinsic importance as a component of gross national happiness.
The nine dimensions are:
1. Psychological Well-being
2. Time Use
3. Community Vitality
4. Culture
5. Health
6. Education
7. Environmental Diversity
8. Living Standard
9. Governance
In Bhutan’s perspective, happiness comprises having sufficient achievements in each of the nine dimensions.
Essentially, by developing an index, Bhutan is measuring those inputs that influence the output (GDP) in a more holistic manner to determine whether they are creating a sustainable success.
As a result, Bhutan, a little, almost-mythical country in the Himalayas, has developed a tool to measure the intangible and is now is revolutionizing how world leaders are looking at the definition of development and success.
Economic indicators determine policies, embody values and drive societies in a certain direction. The almost universal use of GDP-based indicators to measure progress has helped justify policies around the world that are based on rapid material progress perhaps at the expense of other more holistic criterion such as environmental preservation, cultures and community cohesion.
With a focus on happiness, and as many contemporary indicators of progress and development do not reflect GNH adequately, the Royal Government of Bhutan directed the Centre for Bhutan Studies (CBS) to develop a GNH index, which is to provide appropriate indicators for Bhutanese development. The government recognised the need for GNH indicators because without some kind of measurement system, GNH cannot guide practical policies and programs, however, with a measurement tool, GNH indicators can become tools of accountability.
The CBS constructed a single number index for Gross National Happiness. The purpose of the GNH index is to reflect GNH values, set benchmarks, and inform and track policies and performances of the country. The index can be broken down into individual component indicators that are useful for different sectors for planning and technical purposes at the ministerial and departmental levels.
The GNH indicators have been designed to include four pillars with nine core dimensions and 72 metrics that are regarded as components of happiness and well-being in Bhutan. The nine dimensions were selected on normative grounds, and are equally weighted, because each dimension is considered to be relatively equal in terms of equal intrinsic importance as a component of gross national happiness.
The nine dimensions are:
1. Psychological Well-being
2. Time Use
3. Community Vitality
4. Culture
5. Health
6. Education
7. Environmental Diversity
8. Living Standard
9. Governance
In Bhutan’s perspective, happiness comprises having sufficient achievements in each of the nine dimensions.
Essentially, by developing an index, Bhutan is measuring those inputs that influence the output (GDP) in a more holistic manner to determine whether they are creating a sustainable success.
As a result, Bhutan, a little, almost-mythical country in the Himalayas, has developed a tool to measure the intangible and is now is revolutionizing how world leaders are looking at the definition of development and success.
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