Should a country measure happiness?

Last month, on the anniversary of the collapse of Lehman Brothers, French President Sarkozy gave a speech calling for change in how countries measure wealth. He suggested the need for a new metric, other than GDP, that would take into account the happiness of a country’s population along with its economic prosperity. When this was noticed at all in the U.S. media, there were the typical sneers and remarks about baguettes, long lunches, and jealousy of American productivity. But there is more than one way of measuring a country’s success, and GDP is certainly very seriously flawed as a measure of progress.

GDP (gross domestic product) measures the total value of goods and services produced within a nation’s borders in a given period. The nature of these goods and services is not considered. For instance, when armament production goes up, that causes an increase in GDP. Similarly, the GDP of the state of Alaska soared after the Exxon Valdez disaster, even though few would claim that cleaning up a giant oil spill were a positive for the state, its people and its wildlife. GDP doesn’t measure the environmental degradation or other long-term effects of growth, often termed “externalities,” that nevertheless have a profound effect on a nation’s true success.

Business could also benefit from examining how success is measured, as my colleague David notes here.

There are already alternative ways of measuring society’s progress. The United Nations’ Human Development Index includes measurements of educational attainment, life expectancy and literacy, along with GDP. (And we notice that 8th ranked France “beats” the US, in 13th place in 2009.) Human development is just one part of the equation, however. One country has gone significantly farther in terms of decoupling progress from uncritical measurement of economic activity. The Himalayan Kingdom of Bhutan guides all governmental policies through the Gross National Happiness indicators, which incorporate four pillars: sustainable development; natural resource conservation; cultural values, and good governance. This balanced approach may be just the ticket to helping the rest of the world measure what real progress is, so we can chart a path towards true happiness.

This post originally appeared on Care2.com.

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