From “the hungry society” to “the angry society.” Koreans use this terminology to describe the evolution of their country over the past three decades. We’re not talking about North Koreans, still oppressed by a blindly tyrannical regime, but South Koreans. Seoul’s GDP has increased sevenfold in real terms, but so have signs of social distress: the birth rate is the lowest in the world and the suicide rate the highest. To track the mood of the country, the South Korean government has introduced a set of “national happiness” indices in an effort to quantify and explain this wave of unhappiness.
South Korea isn’t alone in trying to find new means to quantify the national mood. Economic woes and environmental problems have accentuated the need for solutions. According to Nobel laureate Joseph Stiglitz, one of the causes of the recent economic crisis grew from a tendency among economists to overstate the importance of U.S. GDP, which grew from 2004 to 2007. They failed to calculate that only a select few felt the wealth produced by this boom.
Economists tend to swear by average figures, in this case per capita GPD. But had they chosen instead to probe the median, in essence the extent to which income was actually benefiting middle class Americans, they might have gotten an early picture of the deep weakening that was a precursor to the collapse of the real estate bubble. But median GDP isn’t among the battery of indicators routinely taken into account when it comes to formulating the comprehensive package of statistical data intended to help frame the economic health of nation.
French president Nicholas Sarkozy was among the first national leaders to take note of this grey zone, noting an increasing contradiction between citizen desire to maintain their levels of material wealth while at the same time worrying about the environmental harm caused by the production of the wealth itself. In early 2008, Sarkozy created an expert commission led by Stiglitz, along with fellow economists Jean-Paul Fitoussi and Amartya Sen, to help draft new proposals. The committee presented its findings last September (see the Executive Report on the following pages). The same month also saw the publication of a European Commission paper titled “GDP and Beyond” and the final recommendations of the G20 summit in Pittsburgh, all of which recommended the development of new indicators to comprehensively measure economic progress.
But how to accomplish these goals? The first major global discussion of GDP measurements and its shortcomings was held in Busan, South Korea from October 27 through 30 as part of the World Forum on Statistics, Knowledge and Policy. In all, 1,700 officials from 130 Countries attended the conference, including economists, statisticians, political leaders, and a large contingent of NGO officials. It was the largest event ever sponsored by the Paris-based Organization for Economic Cooperation and Development (OECD), which is charged with analyzing the 30 most industrialized countries. But the success of the meeting (this is its third edition, the first held in Palermo in 2004, the second in Istanbul in 2007; see East No. 16) also meant highlighting the problems at hand, because the objective of “measuring progress” not just GDP terms, creates immense technical, political and even philosophical dilemmas, as Ruth Veenhoven notes in a separate article published in this issue.
Economists, statisticians, psychologists and sociologists have been openly discussing the issue for some three decades, since American academic Richard A. Easterlin showed in 1974 that once a persona’s primary needs are met, happiness doesn’t grow in tandem with income. So what then determines individual contentment? The question prompted the development of “the economics of happiness,” a field that has been consistently enriched by new and interesting contributions. Many Easterlin followers argue, for example, that happiness is mainly contingent on the improvement of personal status within a community (the “keeping up with the Joneses” factor) and supported by other factors mostly related to health and social life social. Others dispute this claim, but the debate on so-called “Easterlin paradox” continues stimulating the search for a bindingly reliable measurement.
Even without getting into considerable substance the issue, the act of directly measuring “happiness” or “wellness,” both on substantiating individual happiness, requires measuring “well-being.” There are two schools of thought, the “North European school,” which focuses on objective indicators, and the more subjective “American School,” which tends to measure self-perception, usually on a scale of one to 10. Both models have serious defects.