9 May 2017

GNH as a development index in Bhutan

Krisna writes:*

Bhutan, located in the Himalayas between China and India, did not open its borders for foreign influences till the 1960s. From this point onwards, the king of Bhutan was careful in not repeating the mistakes other developing countries made, including economic, political, social or cultural disruption [pdf], and decided to slowly assimilate the country to foreign influences and technologies, while maintaining their local system of values. This development was facilitated by using gross national happiness (GNH Index) as an economic measure from the late 1980s. GNH has its focus on the happiness, or emotional well-being of the population, unlike the usual economic goals associated with GDP. Although GNH may seem like a wonderful measure of development, its shortcomings are worth discussing, but first, the method of measurement will be shortly described.

The nine components of the index, each equally weighted, are: psychological well-being, whether individuals feel like they have enough time to do non-work related activities, the strength of community relationships and interactions, diversity and resilience of cultural traditions, health, education, environment, living standards, and governance (rested on transparency, equity and quality). Bhutanese people fill in surveys based on these components, and their happiness is measured through a system in which there are two thresholds [pdf]: the first at which a person can be considered to enjoy sufficiency, and the second at which the person can be considered happy. This system can in a way provide similar insight as the economic function of decreasing marginal utility (see image). This is because it highlights that any resources that will lead to ‘extra’ happiness of a person that has already surpassed the second threshold, can better be allocated to another person who has not reached this threshold (yet), because it will have a higher utility there. Therefore, any large shortcomings in any aspect are weighed more heavily than small shortcomings.

The general critique for any indices, and therefore also for GNH, is the danger of aggregating factors or values, which can cause political decision makers to overlook certain issues in a country. For example, although the aspect of good quality governance would generally be perceived as important to include, the problem in Bhutan is that many are not yet involved in decision making processes (especially the rural communities). Furthermore, the issues with assessing ‘psychological well-being’ is that this is easily subjected to temporary emotional states, as well as adaptive preferences [pdf] or expectations, in which an individual chooses to be mentally content because they are habituated to their situation, but relatively may not have access to resources such as health care facilities. A special case of this can be applied to regions with a strong religion or belief. Especially Buddhism encourages the acknowledgement of emotions and letting them go. Lastly, a major critique rests on the ethnic tensions in Bhutan, and the absence of guarantees for human rights which caused thousands of ethnic Nepalese to flee to Nepal in 1990. This is not included in the index, and therefore in this aspect, does not provide a good representation of the well-being of the population as a whole.

These issues can be placed under one umbrella which criticizes the method of measurement of GNH. Since there is no clear agreement on how to measure happiness, GNH can easily be used to simply speak of striving for happiness of the Bhutanese people, but at the same time not actively tackle issues hindering Bhutan’s development. Tshering Tobgay is the current Prime Minister of Bhutan since 2013, and is distancing Bhutan from GNH, contrary to the former prime minister Jigmi Thinley who strongly advocated it. Mr Tobgay reasoned the following: “If the government of the day were to spend a disproportionate amount of time talking about GNH rather than delivering basic services then it is a distraction”.

In the end, no matter how great GNH sounds as an economic indicator, it still falls under a political agenda, especially since the main objective of the country is to maintain its sovereignty. So through aggregation, the true measure of some values, or even the shortcomings of another, can mask the quality of life of the Bhutanese people. However, it should be acknowledged that it does a better job in indicating development than the commonly used GDP which is focused on production in a country, and not on the well-being of individual citizens. Another strength also lies in the afore mentioned minimal level of conditions that must be met before a citizen is considered happy. However, this ‘level’ can also be debated.

Bottom Line: The strength of GNH lies in its ability to partially measure population well-being but it remains subject to political implications due to its characteristic to aggregate components, like any index, which can mask the areas where Bhutan requires prioritized reforms.

* Please comment on these posts by students in my growth & development economics course. It really helps if you highlight unclear analysis, alternative perspectives, better data, etc.

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