Happiness or GDP?

Abstract

As a summary measure of well-being and a guide to policy, happiness has many more merits than GDP. First, happiness is more comprehensive. Whereas GDP is confined to the economic side of life, focusing on output and business firms, happiness centers on people’s feelings about their lives as a whole and their many everyday concerns. Also, happiness is a measure with which people can personally identify, while GDP is an abstraction without personal meaning. Moreover, happiness counts everyone in the adult population equally, whereas GDP is disproportionately determined by those who have more money to spend. Finally, and perhaps most important, the evaluation of happiness is made by the persons whose well-being is being assessed, by self-reports. By contrast, GDP, as well as more recently proposed “dashboard” measures of well-being, relies on outside observers (“experts”) who themselves define well-being, construct a model, and then judge others accordingly.