Modern Origins of Happiness and Well-being Economics in Public Policy

1. The History of Gross National Happiness
Modern Origins of Happiness and Well-being Economics in Public Policy
Mónica Correa
monica.correa@posgrado.economicas.uba.ar
Professor
Universidad Dr. Rafael Belloso Chacín (URBE)
(2015)
Bachelor of Education (B.Ed.), History | University of Zulia (LUZ)
(2004 – 2013)
Bachelor of Arts (B.A.), Journalist | Dr. Rafael Belloso Chacin University (URBE)
(2005 – 2010)

2. Abstract:
This paper summarizes the historical evolution of happiness and wellbeing as a public policy in the past
century. It examines key events and publications that led to an important scientific and policy change
resulting in the integration of happiness and wellbeing as main elements of the global economic
development agenda. The author traces the main sources and ideas behind this change by reviewing
and comparing available literature on public policy innovations related to the subject matter.
Historical Review
From modern political history, one can see happiness emphasized as part of a political philosophy, when
the phrase “pursuit of happiness”1
was used as an important human right in 1776 Declaration of
Independence of the United States. However, happiness policy remained an abstract idea, with no
specific or real legislative, scientific and economic implementation framework.
Economists have been calling for an alternative proposal to the GDP economic growth model since
1930s. Simon Kuznet, one of GDP’s main authors was aware of its limitations when he stated that “The
welfare of a nation can scarcely be inferred from a measurement of national income as defined by the
GDP.”2
In 1979 the Fourth King of Bhutan King Jigme Wangchuck, coined the term “Gross National Happiness”
by chance in 1979 during an interview in Bombay Airport when His Majesty said “We do not believe in
Gross National Product. Gross National Happiness is more important.”3
The Gross National Happiness or (GNH) phrase was initially used as an off-hand remark to indicate the
King’s lack of interest in western materialistic style of economic development and the preservation of
Bhutan’s Buddhist culture. His government officials, later, enunciated the king’s GNH four pillars as:
1.Economic self-reliance 2. Cultural preservation 3. Environmental conservation and 4. Good
governance.4
Although, the GNH phrase started as a clever play on words, it appeared to have led to a political
movement.
The critics of the King say that GNH was an isolationist and racist political philosophy that was marketed
by well-meaning western economic scholars who did not know the political history and inadvertently
changed the original meaning of GNH to something positive. The evidence they present is the actual
policies of the government under the same King. The strongest arguments supporting the view against
the original meaning of GNH is the translation of the GNH pillars of cultural preservation and good
governance into ethnic cleansing and isolationist policies. The implementation of the GNH philosophy
1
Declaration of independence of the United States http://www.ushistory.org/DECLARATION/document/
2
Saint Luis Federal Reserve newsletter https://files.stlouisfed.org/files/htdocs/pageone-
economics/uploads/newsletter/2013/PageOne0513.pdf
3
Fourth King of Bhutan King Jigme Wangchuck http://earthjournalism.net/stories/6468
4
Gross National Happiness Commission. Royal Government of Bhutan (2009). Tenth five year plan 2008-2013: p.31
http://www.gnhc.gov.bt/wp-content/uploads/2011/10thplan/TenthPlan_Vol1_Web.pdf

3. was an anti-consumerism ideology that meant to limit exposure to western civilization that resulted in
banning TVs and Jeans. 5 6
Over 100 thousand people or one sixth of the population of Bhutan of Nepalese origin and Hindu faith
were expelled from the country because they “would not integrate with Bhutan’s Buddhist culture”7 8 9
Even after the evolution of GNH, Bhutanese still suffer from GNH cultural preservation policies. Women
are pressured into wearing traditional dresses. 10
Good governance meant dictatorial monarch government at the time; it took the country about thirty
years until 2008 to conduct its first democratic elections.
The author of this paper agrees with the preceding criticism and analysis, however from a historical
perspective, the GNH phrase has been referenced in key public policy innovation papers and its
influence cannot be ignored. In fact, the most important paper to the development of happiness
economics, IIM GNW / GNH 2005, cited the GNH phrase as the inspiration by its author.
It is clear that Bhutan GNH philosophy has evolved over the last decade through the contribution of
western and local scholars to a version that is more democratic and open. Therefore, probably, the
more accurate historical reference is to mention the coining of the GNH phrase as a key event, but not
the Bhutan GNH philosophy, because the philosophy as understood by western scholars is different
from the philosophy used by the King at the time.
The Beginnings of Scientific and Western Acceptance of GNH
For about three decades, no real progress was made inside Bhutan, GNH became a formal policy in 2008
when it was included part of the constitution.
In 2004 a GNH conference talked about implementing GNH, but none of the papers produced specific
economic policies and econometric tool to help implement and measure happiness and wellbeing. The
adage, “you cannot manage what you cannot measure” holds true when it comes to implementing a
new happiness and wellbeing economic policy.
The North American Breakthrough
Most western economists considered the Bhutan GNH concept as touchy-feely until the introduction of
the first scientific and secular GNH Index in 2005 (also known as GNW Index) by Med Jones, an American
Economist at the International Institute of Management. This proposed econometric framework along
5
Bhutan: a land frozen in time http://news.bbc.co.uk/2/hi/country_profile/54627.stm
6
Bill Frelick. Bhutan's ethnic cleansing. https://www.hrw.org/news/2008/02/01/bhutans-ethnic-cleansing
7
https://www.amnestyusa.org/countries/bhutan/
8
https://www.hrw.org/news/2008/02/01/bhutans-ethnic-cleansing
9
GNH and Unhappy People http://www.bhutannewsservice.org/gnh-and-unhappy-people/
10
Only ‘Ada Rachu’ defames GNH, degrades Women http://www.bhutannewsservice.org/only-ada-rachu-defames-gnh-
degrades-women/

4. with a secular global survey provided the first integrated public policy decision framework for measuring
wellbeing and happiness. 11
The model allowed, for the first time, the translation of happiness vision into a measurement system
that economists can use. Jones cited the inspiration for the paper the King’s GNH phrase. The working
paper was followed by a policy white paper in 2006, by the same author calling for the implementation
of GNW / GNH in the US. 12
The GNW / GNH paper was widely reference by high-level government
officials and researchers in Europe, Africa and Asia.13
In the policy white paper, the international institute of management came up with a list of strategic
recommendations: “The recommendations address six main public policy areas: Government,
Economics, Work, Media, Education and Environment.”
The main recommendation was that “The role of government should shift from managing economic
growth to socioeconomic development. American public policy should shift its focus from: The standard
of living to the quality of life; Material possessions to well-being (physical, mental, and material);
Unsustainable economic development to sustainable environmental development; Consumerism to
investment; Economic-driven education to socioeconomic-driven education”.
The paper stated: “A new integrated qualitative and quantitative approach is needed to assist in the
creation of a new socioeconomic development model to measure and monitor he development of the
nation's most important asset - its people.”
The paper presented a new first of a kind design the econometric framework as follows: “The metric
measures the socioeconomic development by tracking seven development areas, including the nation's
mental and emotional health. The metric value is proposed to be an index function of the total average
per capita of the following subjective and objective measures: Mental, Physical, Workplace, Economic,
Environmental, Political and Social.”
The European Adaptation
In 2008, President Nicolas Sarkozy started a similar initiative in France calling for the inclusion of
happiness and well-being in the criteria for national governance policies. He commissioned two Nobel
Laureates and a French Economist, Joseph Stiglitz Amartya Sen, and Jean Paul Fitoussi to develop a new
framework for measuring happiness and well-being to overcome the limitation of GDP. The Commission
is known as the Commission on the Measurement of Economic Performance and Social Progress
(CMEPSP). It included 29 respected professors and researchers.14
CMEPSP came up with the following
recommendations:
“From production to well-being: Another key message, and unifying theme of the report, is that the
time is ripe for our measurement system to shift emphasis from measuring economic production to
measuring people’s well-being. And measures of well-being should be put in a context of sustainability.
11
Gross National Happiness / Wellbeing GNW Survey https://www.iim-edu.org/polls/GrossNationalHappinessSurvey.htm
12
Gross National Happiness and Wellbeing Policy White Paper https://www.iim-edu.org/grossnationalhappiness/
13
IIM Happiness Economics page https://www.medjones.com/happinesseconomics
14
'Journal Editorial Report,' September 26, 2009 http://www.foxnews.com/story/2009/09/28/journal-editorial-report-
september-26-200.html

5. Despite deficiencies in our measures of production, we know much more about them than about well-
being. Changing emphasis does not mean dismissing GDP and production measures. They emerged from
concerns about market production and employment; they continue to provide answers to many
important questions such as monitoring economic activity. But emphasizing well-being is important
because there appears to be an increasing gap between the information contained in aggregate GDP
data and what counts for common people’s well-being. This mean working towards the development of
a statistical system that complements measures of market activity by measures centered on people’s
well-being and by measures that capture sustainability… Well-being is multi-dimensional …the
Commission has identified the following key dimensions that should be taken into account. At least in
principle, these dimensions should be considered simultaneously: i. Material living standards; Health;
Education; iv. Personal activities v. Political; vi. Social vii. Environment viii. Insecurity, of an economic as
well as a physical nature. All these dimensions shape people’s well-being, and yet many of them are
missed by conventional income measures. Objective and subjective dimensions of well-being are both
important” 15
When comparing the message, language, and recommendations of IIM GNW of 2005 with CMEPSPS
report of 2009, one can find they are almost identical. This validated the importance of the National
Wellbeing and Happiness in public policy, even more.
Happiness Becomes Mainstream Public Policy
In 2011, UN published Happiness: towards a holistic approach to development where emphasized “the
pursuit of happiness was a fundamental human goal, recognized that the gross domestic product (GDP)
indicator was not designed to—and did not reflect adequately—the happiness and well-being of
people.” 16
The Implementation of GNH in Bhutan
In Bhutan, a non-profit organization, the Center for Bhutan Studies, with the help of Oxford scholar,
Sabine Alkire’s Methodology of 2010, they published their first local GNH Index in 2012 that is very
similar to the IIM GNW / GNH Index of 2005.17
According to the Alistair Campbell, the Strategy Director
of the former Prime Minister Tony Blair, “The concept and issues at the heart of the Bhutanese
approach are not dissimilar to the metric used by Med Jones”18
15
Report by the Commission on the Measurement of Economic Performance and Social Progress
http://library.bsl.org.au/jspui/bitstream/1/1267/1/Measurement_of_economic_performance_and_social_progress.pdf
16
UN. Happiness: towards a holistic approach to development (2011)
http://repository.un.org/bitstream/handle/11176/291712/A_RES_65_309-EN.pdf?sequence=3&isAllowed=y
17
GNH and GNH Index http://www.ophi.org.uk/wp-content/uploads/Ura-et-al-Bhutan-Happiness-Chapter.pdf
18
Alastair Campbell. In Pursuit of Personal and Political Happiness. P. 30 -31 https://books.google.com/books?id=OSy7Ubd-
PX8C&pg=PA30&lpg=PA30&dq=Med+Jones+Alastair+Campbell&source=bl&ots=mHEZvUp2AZ&sig=vyArmvTOIM3e6EMO70WA
_huZVUk&hl=en&sa=X&ved=0ahUKEwjzy-Wd5tnTAhVPImMKHd-
oBcsQ6AEIOzAE#v=onepage&q=Med%20Jones%20Alastair%20Campbell&f=false

6. Campbell also advised The French President Sarkozy and the British Prime Minister Cameron, to use the
same principles of the framework in the GNW and GNH economic policies.19
Upon review, researchers can see, the Bhutan GNH Index is almost identical to the IIM GNW / GNH
Secular Framework with customization for the Buddhist Spiritual values that added Karma and Prayers
indicators.
It is clear that the major economic milestone that bridged subjective and objective measures and led to
the acceptance of happiness in the west were influenced directly or indirectly by the IIM GNW / GNH
framework of 2005 and the policy white paper of 2006.
In 2012, researchers at the Kennedy School of Government at Harvard University prepared a detailed
synopsis and exploration of well-being and happiness factors. This report was presented to the United
States Congress by Congressman Hansen Clark. The authors of the report cited the GNW and GNH as
one of the frameworks to consider. 20
Latin America Incursion
Study of happiness has a recent incursion in Latin America, in 2013, Venezuelan president; Nicolas
Maduro created the Vice Ministry for The Supreme Social Happiness of The Venezuelan People. “Its
main objective is to provide care and assistance, at all times to citizens in general, without any
distinction individually, either in a personalized or written form in order to manage before public and
private organizations requests for help and / or support to the President of the Republic.”21
However,
there’s no public data or national survey related to its situation.
Middle East Incursion
In 2016, the UAE National newspaper announced that the government of Dubai established the Ministry
of Happiness in an article that referenced the International Institute of Management’s Gross National
Wellbeing Index of 2005 as the background for the initiative. 22
Other Findings
In the past decade, many economists, environmentalists, and sociologists have begun studying and
researching if happiness can play a significant role in economic growth in secular countries such as the
United States and the Europe. Some of the noteworthy initiatives include the Sustainable Society Index
(SSI) in Netherlands in 2008, the Sustainable Economic Development Assessment (SEDA) in 2013, and
20
21st Century GDP: National Indicators for a New Era
https://www.hks.harvard.edu/content/download/67149/1241406/version/1/file/PAE+Beachy_Zorn_2012.pdf
21
Vice Ministry for the Supreme Social Happiness of the Venezuelan People
http://www.presidencia.gob.ve/Site/Web/Principal/paginas/classVice_Suprema_Felicidad_Social_Pueblo.php
22
The happiness portfolio is no laughing matter http://www.thenational.ae/opinion/comment/the-happiness-
portfolio-is-no-laughing-matter

7. the Social Progress Index (SPI) of 2014. SPI while more famous, appears to be the combination of SSI and
SEDA and both are in line with to CMEPSP 2009 and IIM GNW / GNH 2005 recommendations. They also
share the same basic econometric frameworks.
Conclusion:
The origin of the modern Happiness and Wellbeing Economics and Public Policy, has a surprising history
that can be traced to two individuals and events;
The first event is the accidental coining of the political phrase of GNH by the fourth King of Bhutan - A
young Monarch of one of the tiniest and poorest countries of the world.
The second event is the scientific contribution of an American think tank, the International Institute of
Management that created the missing link between happiness, wellbeing, and socioeconomic and
environmental development.
For centuries, scientists and economists were not able to present an integrated tool for happiness and
wellbeing development, this was partly due the challenges of quantifying subjective feelings and
diversity of cultural values, let alone integrate them into an econometric framework. This has changed in
the past decade, thanks to IIM GNW / GNH framework and GNW Index of 2005.
The political acceleration and promotion came from three political actors, the Bhutanese government,
the former French President Sarkozy, and the United Nations declaration of International day of
happiness.
References and Sources
GDP does it measure up? St Luis Federal Reserve Newsletter
https://files.stlouisfed.org/files/htdocs/pageone-
economics/uploads/newsletter/2013/PageOne0513.pdf
Declaration of independence of the United States http://www.ushistory.org/DECLARATION/document/
The story of a king, a poor country and a rich idea http://earthjournalism.net/stories/6468
Gross National Happiness Commission. Royal Government of Bhutan (2009). Tenth five year plan 2008-
2013: p.31 http://www.gnhc.gov.bt/wp-content/uploads/2011/10thplan/TenthPlan_Vol1_Web.pdf
Bhutan: a land frozen in time http://news.bbc.co.uk/2/hi/country_profile/54627.stm
Bhutan's ethnic cleansing https://www.hrw.org/news/2008/02/01/bhutans-ethnic-cleansing
GNH and Unhappy People http://www.bhutannewsservice.org/gnh-and-unhappy-people/
Only ‘Ada Rachu’ defames GNH, degrades Women http://www.bhutannewsservice.org/only-ada-rachu-
defames-gnh-degrades-women/
Med Jones. The American Pursuit of Unhappiness https://www.iim-edu.org/grossnationalhappiness/

8. The International Institute of Management, happiness economics page
https://www.medjones.com/happinesseconomics
'Journal Editorial Report,' September 26, 2009 http://www.foxnews.com/story/2009/09/28/journal-
editorial-report-september-26-200.html
Report by the Commission on the Measurement of Economic Performance and Social Progress
http://library.bsl.org.au/jspui/bitstream/1/1267/1/Measurement_of_economic_performance_and_soci
al_progress.pdf
Measuring National Well-being: Personal Well-being in the UK, 2014 to 2015
https://www.ons.gov.uk/peoplepopulationandcommunity/wellbeing/bulletins/measuringnationalwellb
eing/2015-09-23
Bhutan GNH and GNH Index http://www.ophi.org.uk/wp-content/uploads/Ura-et-al-Bhutan-Happiness-
Chapter.pdf
Alastair Campbell. In Pursuit of Personal and Political Happiness. Page: 30
https://books.google.com/books?id=OSy7Ubd-
PX8C&pg=PA30&lpg=PA30&dq=Med+Jones+Alastair+Campbell&source=bl&ots=mHEZvUp2AZ&sig=vyAr
mvTOIM3e6EMO70WA_huZVUk&hl=en&sa=X&ved=0ahUKEwjzy-Wd5tnTAhVPImMKHd-
oBcsQ6AEIOzAE#v=onepage&q=Med%20Jones%20Alastair%20Campbell&f=false
Ben Beachy, Justin Zorn. John F. Kennedy School of Government. Harvard University. 21st Century GDP:
National Indicators for a New Era
https://www.hks.harvard.edu/content/download/67149/1241406/version/1/file/PAE+Beachy_Zorn_20
12.pdf
Vice Ministry for the Supreme Social Happiness of the Venezuelan People
http://www.presidencia.gob.ve/Site/Web/Principal/paginas/classVice_Suprema_Felicidad_Social_Puebl
o.php
Geurt van de Kerk and Arthur Manuel, Sustainable Society Index (SSI), Netherlands, 2008
http://www.ssfindex.com/ssi2016/wp-content/uploads/2017/03/GrossNationalHappinessIndexand-
theSSI.pdf
Sustainable Economic Development Assessment, 2012, BCG
https://www.bcg.com/expertise/industries/public-sector/sustainable-economic-development-
assessment.aspx
The Social Progress Index, Michael Porter and Michael Green, 2014
http://www.socialprogressimperative.org/wp-content/uploads/2016/06/Social-Progress-Index-2014-
Executive-Summary.pdf