Are Bhutanese people grossly happy?

Photo by Suzy Bates

Just about everyone who has heard of Bhutan would know that this tiny country – with population of about 800,000 in an area similar in size to Switzerland - has adopted Gross National Happiness as a national objective. The objective apparently has its origins in the 1970s in an assertion by the former king of Bhutan, Jigme Singye Wangchuck, that ‘Gross National Happiness is more important than Gross National Product’. Despite the origins of gross national happiness (GNH) in a play on words it is now recognized as an objective in Bhutan’s constitution.

I wrote a literature review article about GNH last year for Asian-Pacific Economic Literature (Vol 23 No 2). The article considers whether aggregate happiness is an appropriate policy objective and the advantages and disadvantages of various well-being indicators. (A policy brief summarising the article is available here; the final version of the article can be purchased here; and a draft is freely available here.) My conclusions, very briefly, were that it is possible to make sense of GNH as a policy objective if we think in terms of creating conditions in which individual strivings can succeed; that there are problems with happiness surveys and with composite measures of well-being (such as the human development index) as well as with GNP (and GDP). I acknowledged that the recently developed approach to GNH measurement in Bhutan is an impressive contribution, but my bottom line was that the best approach to well-being assessments is to gather together a suite of relevant indicators.

How is GNH measured in Bhutan? A few years ago the official answer was that happiness was measured by looking at the breadth of the smiles on the faces of the people. However a more quantitative and technical approach to measurement has recently been adopted. The underlying philosophy seems to be that a range of minimum conditions must be met before a person can be considered to be happy. The methodology involves attempting to measure the extent to which the attainments of members of the population approach a ‘sufficient level’ in nine dimensions: psychological well-being, time use, community vitality, diversity and resilience of cultural traditions, health, education, environment (perceptions and ecological knowledge), living standards and perceptions of governance. The methodology gives greater weight to large deficits in particular dimensions than to small deficits in several dimensions.

So, how happy are the people of Bhutan? Unfortunately, since Bhutan is the only country attempting to measure GNH, we can’t use the GNH methodology to compare the well-being of people in Bhutan and other countries. The initial survey results enable comparisons to be made between people in different regions in Bhutan – which may be useful for policy purposes within Bhutan – but is not helpful in making international comparisons.

In any case, I think the best way to assess the well-being of the Bhutanese people is to use a suite of indicators to look at how they are faring by comparison with India, their big neighbour. For example:

• GDP per capita in 2007 was $US 4,837, 75% higher than in India;

• the growth rate of real per capita GDP was 7.9% per annum over the decade to 2007; that for India was 4.9% per annum;

• average life expectancy is only slightly higher than in India - 65.7 versus 63.4;

• adult literacy is lower than in India - 53% versus 66%;

• poverty rates are much lower in Bhutan than in India – 26% with daily income below $1.25 versus 42% for India;

• average life satisfaction in Bhutan (according to nef estimates) is about 11 per cent higher than in India.

It seems to me that even though the people of Bhutan have plenty to smile about there is still room for improvement in some aspects of their well-being e.g. health and education.

Is there a progress paradox?

In his book, ‘The Progress Paradox’ (2004) Gregg Easterbrook suggested that if his readers’ great-great-grandparents materialized in the United States of the present day they might say that it is the realization of utopia, ‘except for the clamour and speed of society, and trends in modern music’ (p. xv). The supposed paradox is that people who live in the U.S. (and other countries with similar standards of living) ‘live in a favored age yet do not feel favored’ (p. xx).

The sub-title of Easterbrook’s book is ‘How life gets better while people feel worse’. His account of how practically everything in our lives has been getting better seems to me to be comprehensive and unassailable. However, I don’t think his suggestion that ‘people feel worse’ while life gets better stands up to scrutiny.

Easterbrook claims:

‘Today Americans tell pollsters that the country is going downhill; that their parents had it better ; that they feel unbearably stressed out; that their children face a declining future ...’ (p. xv).

Let us look at each of the claims made in the quoted passage, in turn:

• Have Americans been telling pollsters that the country has been going downhill while their own lives have been getting better? The latest Gallup poll appears to provide support for that proposition: only 19 percent of Americans are satisfied with ‘the way things are going in the United States at this time’. But this data is highly volatile. Since this poll started in 1979 there have been three other periods of sub-20 percent satisfaction ratings - all of which have coincided with difficult economic times. In 1999, after several years of strong economic growth, about 70 percent of Americans were satisfied with the way things were going. The evidence does not support the view that Americans have been telling pollsters that the country has been going downhill during periods when their own lives have been getting better.

• Have Americans been telling pollsters that ‘their parents had it better’? No. In surveys conducted by the Pew Research Centre nearly two-thirds of respondents say that their standard of living exceeds that of their parents at the age they are now. The proportions have been similar in all survey years since 1994. (Chart here.)

• Have Americans been telling pollsters that ‘they feel unbearably stressed out’? Not really. In a 2008 survey, conducted by the Pew Research Centre, 36 percent said they experience stress frequently, a similar proportion said they experience stress sometimes and the remainder claimed that they experienced it rarely or never.

• Have Americans been telling pollsters that ‘their children face a declining future’? No, at least not in the survey results I have seen. Research by the Pew Research Centre suggests that the number of Americans who consider that the future will be better than the present substantially exceeded those who consider it will be worse in all years surveyed from 1964 to 2006. It would not be surprising if these numbers have turned around since the global financial crisis – but that could hardly be attributed to people feeling worse while life gets better.

In my view Easterbrook’s progress paradox is a myth.

If there is a progress paradox in the U.S. it relates to the happiness of particular groups rather than to the whole population. For example, there is a puzzle as to the causes of declining female happiness, which is discussed in a recent article by Betsey Stevenson and Justin Wolfers.

There has also been a declining trend since the 1970s in the percentage of those who identify with the political left who are ‘very happy’. It might be possible to argue that this is a progress paradox if one could believe that self-styled progressives are actually in favour of progress.

Leaving that aside, Gregg Easterbrook’s thoughts about what he calls complaint proficiency might provide an explanation for the apparent decline in happiness of those who identify with the political left:

‘About many things, especially injustice, we should complain. But we practice complaining so much, and on so many minor issues, that we become too proficient: And then complain more, if only because we are confident we are good at it. Expressing gratitude or appreciation does not come easily to us because we practice it so little’ (p. 118).

Is democracy akin to a process of scientific experimentation?

In his book, ‘The Science of Liberty’ (2010), Timothy Ferris argues that liberal democracy and science are similar in important respects:

‘Both start with tentative ideas, go through agonies of experimentation, and arrive at merely probabilistic conclusions that remain vulnerable to disproof. Both are bottom-up systems, constructed more from individual actions ... than from a few allegedly impervious precepts. A liberal democracy in action is an endlessly changing mosaic of experiments, most of which partially or entirely fail’ (p 13).

Ferris acknowledges that these failed experiments make the democratic process frustratingly inefficient but he argues that the great strength of liberal democracy is its capacity to sustain the experimental process.

I think this view of liberal democracy as akin to a scientific process is a desirable ideal rather than a description of how democratic systems actually work. Before elaborating, however, I would like to praise this book for shedding light on the relationship between liberty and science. With the benefit of having read the book, I think it is valid to depict the relationships between liberty, economic progress and the advance of knowledge as shown below.

If I had drawn such a diagram before I read the book I doubt whether I would have thought to draw an arrow running directly from liberty to advance of knowledge. The author’s main achievement, to my mind, is in describing the historical relationship between liberty and the advance of knowledge. The book illustrates that, to use the authors words ‘science demanded liberty and demonstrated its social benefits, creating a symbiotic relationship in which the freer nations were better able to carry on the scientific enterprise, which in turn rewarded them with knowledge wealth and power’ (p 7).

Before reading the book I was aware of some of the relevant history, such as the Vatican’s attempts to suppress Galileo’s ideas and the negative influence of Lysenko and communist ideology on the biological sciences and agricultural production in the Soviet Union. At the same time, however, I tended to think of the advance of knowledge as something that occurs exogenously with the passage of time - as it is often modelled in the economic growth literature – rather than as a product of liberty.

One of the most interesting things I learned from the book is the extent to which scientifically-minded individuals have been at the forefront in promoting liberty. Isaac Newton was not only a scientist but also a strong proponent of liberty and a close friend of John Locke. Thomas Paine, Benjamin Franklin and Thomas Jefferson, who played large roles in inciting and carrying out the American revolution, were amateur scientists. Thomas Jefferson apparently ranked his service as first head of the U.S. Patent Office as comparable with having written the Declaration of Independence and been twice elected president.

In my view Ferris makes a strong case that the U.S. founding fathers deliberately adopted a structure of government that would sustain an ongoing series of policy experiments, rather than attempt to guide society towards a specific goal (p 102). By contrast, the French revolutionaries assumed that the point of the revolution was to implement a particular philosophy – stemming from Rousseau’s view that the power of the state should be used to impose equality (p 120). The American revolution resulted in an imperfect system of government but the French revolution resulted in a major disaster for the people of France.

As I see it the main problem in viewing liberal democracy as akin to a process of scientific experimentation is the weakness of democratic processes for ending policy experiments that partially fail. Elections seem to be a reasonably effective way for citizens to avoid being governed by despots, to get rid of politicians who are obviously corrupt and to experiment with new policies. However, even policy proposals that are viewed as radical reforms rarely involve more than a tweaking of the failing policy experiments that already exist.

The mosaic of policy experiments being conducted under liberal democracies at any time seems to me to be much more path dependent than scientific research. Unproductive avenues of research are replaced much more readily than government programs that are failing. The best we can hope for from policy reforms is that the tweaking of the existing policy experiment will set in train an evolutionary process that will eventually result in better outcomes.

The increasing involvement of the federal government in funding of hospitals in Australia illustrates the processes involved. The basic problem prior to federal intervention was ensuring appropriate access to hospital services for people who did not qualify for free access under the means tests applied by the hospitals and state governments. Some policy experimentation by the federal government was probably inevitable to attempt to solve the perceived problem – whenever the states experience a funding problem a substantial proportion of the Australian electorate expect the federal government to ‘do something’.

There were basically two kinds of policy experiment that might have been conducted. Under the first approach the federal government would offer to fund hospital care for those who claimed to be unable to pay for insurance, using the federal tax system to recover funds from those who were falsely claiming financial hardship. Under the second approach, the federal government would give funds to the states on condition that the state governments solved the means test and access problems. The second approach was adopted and we ended up with free access to basic hospital care for everyone who is still alive when they reach the top of the waiting list – as well as confusion of responsibility for service delivery, with state governments blaming inadequate federal funding for ongoing problems.

If the democratic process in Australia was akin to a process of scientific experimentation it seems reasonable to suppose that the current hospital funding experiment, that had its origins in the 1940s, would have long been abandoned in favour of a different kind of experiment more in tune with the market realities. Instead, what we have is a federal government proposal to tweak federal funding – to make it more closely related to services actually provided – being put forward as a major reform initiative. I think the most we can hope is that if it is implemented this proposal might possibly push the evolution of hospital funding in a more sensible direction.

Similar problems of path dependency are evident in the policy experiments in many different policy areas in Australia and in many policies adopted in other liberal democracies. The world would be a better place if democratic processes were more like the processes of scientific experimentation.

Is a great big new tax such a bad idea?

‘Where have you been? Have you been hiding from me?’ I saw it was Jim speaking when I looked up from reading the paper. I hadn’t exactly been avoiding him, but then I hadn’t really missed not seeing him for a few months.


Jim asked me if I could give him a lift home. He gave me some long and convoluted explanation about why he needed a lift, but I thought he was probably just looking for a captive audience - someone to talk to about something that was on his mind.

He certainly did have something on his mind. As soon as we started off he asked me what I thought of the outcome of the Copenhagen climate change summit. I admitted that I thought it was fairly predictable. Given the way western governments were approaching the issue it would have been hard for China and India to accept that they were serious about achieving concerted action even if the science was settled. I said that if governments thought the stock of greenhouse gas emissions was a serious problem they would be focusing on the incentives needed to develop technologies that would reduce the stock of emissions, rather than just attempting to cap the growth of emissions.

Jim said: ‘I thought that emissions trading schemes, like the one Kevin Rudd is proposing were meant to provide appropriate incentives for firms to develop better technologies.’ I responded that in my view Rudd’s ETS stood for Enormous Transfer Scheme. I suggested that the Australian government was attempting to confuse welfare issues with environmental issues in order to smuggle income redistributions into the scheme. I added that it was crazy for Australia to go it alone without concerted international action and that if we are concerned about incentives for developing new technologies we should be thinking in terms of explicit taxes rather than cap and trade systems.

Jim said: ‘Ah, that’s Warwick McKibbin’s view isn’t it.’ While I was still pondering whether I had under-estimated Jim’s knowledge of the topic, he pointed to a house we were just passing. ‘Look at that abomination’ he said. I assumed that he was referring to the solar panels that covered a substantial part of the roof. I said: ‘I don’t think they look too bad, actually’. ‘It’s not how they look’, he replied. ‘Every time I pass that house it reminds me that the government subsidies that encourage people to put those things on their roofs are an abomination. Solar panels are about the most costly method there is of generating electricity. If governments were really serious about climate change they would be spending taxpayer’s money more wisely so we get bigger bangs for our bucks.’

I observed that Jim’s comment must mean that he was obviously not a fan of Tony Abbott’s winner-picking proposals to reduce CO2 emissions. Jim said: ‘I wouldn’t mind so much if Abbott could actually pick a winner to subsidize. The technologies that he has picked so far are either proven losers or have no track record. If he really wanted to pick a technology that had some hope of competing with fossil fuels without huge subsidies he would advocate the nuclear power option.’

I couldn’t help asking: ‘Does that mean that you would support revival of the proposal to build a nuclear power station at Murray’s beach on Jervis Bay?’ When I glanced across to see how Jim was reacting to the idea of a nuclear power station in his own back yard, he growled: ‘Look where you are going!’

After what seemed like a long silence, Jim asked: ‘What do you think of no regrets policies?’ I replied: ‘What, like the federal government’s home insulation scheme?’ Jim replied: 'I think the government might actually be regretting introducing that scheme with so much haste last year. No, what I meant was a great big new tax on carbon emissions'.

I was dumbfounded. When I asked Jim to explain how this could be a no regrets policy he asked me whether I had supported the introduction of the GST as a broad-based tax to replace less efficient forms of taxation. When I nodded he then asked: ‘Do you think a tax on carbon emissions would be a more efficient way of raising revenue than existing taxes on insurance and stamp duties on property transfers?’ I had to admit that it would probably be more efficient than some other taxes. Jim then said: ‘So wouldn’t it make sense to introduce a great big new tax on carbon emissions to replace other taxes? If we do this we might even be able to have an impact on global emissions by persuading governments in some other countries that this is a good idea’.

While I was pondering how to respond Jim laughed and said: ‘I don’t expect you to see anything about this on your blog. Judging from what you have written there about climate change I expect that the polar ice caps would need to melt before you would support introduction of a tax on carbon emissions as a precautionary measure’.