What is Wealth Anyway?

In Buthan they collect data on Gross National Happiness rather than Gross Domestic Product.

Real wealth has no money flow until humans impose one.” The same goes with happiness. We all know that money doesn’t make people happy, but still we believe that those countries are best off who have the highest GDP and the highest growth rate. GDP is however rather limited. It “does not take into account some of the negative effects of economic growth, like pollution. It does not factor in leisure time, or parts of the “informal economy” (like parents’ unpaid care for their own children) that have value but not necessarily measurable, marketable value. It does not give any sense of how equitably distributed a country’s wealth is; a country could theoretically have both the world’s highest G.D.P. and the world’s highest poverty rate simultaneously. It also does not reflect quality of life or happiness in any given country.”, the NY Times explains.

Therefore let us look at some alternative views on the well-being of a nation.

Bhutan’s Gross National Happiness was initially not a measurable term, but recently the center of Bhutan Studies has started working on creating a measuring tool for GNH. The tool to assess the GNH is a questionnaire covering the “nine key areas considered crucial for reflecting the values and principles of GNH. These key areas fall within the domains of psychological well-being, health, time use, education, culture, good governance, ecology, community vitality and living standards.” You can find the results for the first survery in Bhutan here.

I’m not sure how happy our planet is with what we call wealth and the way we produce it. That is probably also what the NEF thought when they recently added a little “un” to their Happy Planet Index page. The HPI means simply that we take also the environmental cost of the generation of wealth into account or with other words:  “the Happy Planet Index reveals the ecological efficiency with which human well-being is delivered”. The index combines life expectancy, life satisfaction and ecological footprint. According to the research done by the NEF (New Economics Foundation), the planet is the happiest in Costa Rica and the Dominican Republic, and generally the Caribbean region and Central America. The only non-Latin American country in the top 10 is Vietnam.

Another alternatives to GDP is HDI (Human Development Index) which combines life expectancy, literacy, education level and income. Further there is also the Index of Sustainable Welfare whose formula is the following: ISEW = personal consumption + public non-defensive expendituresprivate defensive expenditures + capital formation
+ services from domestic labourcosts of environmental degradationdepreciation of natural capital (that one is a bit more complicated as you can see). China has further tried to create a Green GDP index, you can read about it here.

Whatever alternative measurement you look at, as soon as the environment gets a say, the ranking doesn’t show the same picture anymore as GDP. I think the numbers really speak for themselves. Are we ready to give up on the very limited tool which is GDP?!

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2 thoughts on “What is Wealth Anyway?

  1. Pingback: The Richest People in the World | Kosmos 9

  2. Pingback: Bye Bye GDP | Kosmos 9

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