2012-06-22

Co.Exist

If You Count Happiness, Costa Rica Is The Richest Country On Earth

The Happy Planet Index does away with GDP in favor of a formula that includes happiness and personal well-being. It upends what you think of as successful countries.

What is economic success? For years, the answer has been growth—as much of it as possible. And the yardstick has been Gross Domestic Product, or the sum total of a country’s transactions. Countries are successful when their economic activity increases—even if that activity isn’t strictly desirable. GDP doesn’t discriminate between sales of semi-automatic handguns, say, or haircuts—making it a crude guide.

Equally, critics of GDP say it fails to account for environmental performance, or the sustainability of progress. Countries can appear rich, while at the same time depleting their resources, and polluting themselves. Moreover, countries can grow fast without actually making their citizens happy, which is surely the point of all the striving.

Laura Stoll, a researcher at the New Economics Foundation, a U.K. think tank, says we need new ways of assessing what success is, with more emphasis on sustainability and people’s lived experience. GDP doesn’t tell us how people actually feel about their lives, she argues, or how confident they are in the future.

"GDP is a good measure of transactions. But increasingly GDP and life satisfaction are growing apart in many places. Rising GDP doesn’t, in a lot of cases, translate to rises in well-being."

NEF’s alternative is the Happy Planet Index, which recently appeared in its sixth edition. The HPI takes account of three sets of data: life satisfaction, as measured by the Gallup World Poll, which asks people to rate their lives from 0 to 10; life expectancy, from the UN Human Development report; and ecological footprint (the per capita amount of land needed to maintain a country’s consumption levels).

To rank nations, NEF multiplies the well-being numbers by the life expectancy figures, and then divides that by the ecological footprint. "It tells you how efficient countries are at converting limited environmental resources into long and happy lives for their citizens," Stoll says.

"The reasons we put ecological footprint in there is that we believe that it’s fine to think about well-being now, but we also need to be thinking about well-being in the future. With limited ecological resources, we need to make sure well-being is sustainable, and that’s what this index measures."

When the new criteria are included, the top-10 list of economic champions looks quite different from normal. Costa Rica (which produces 99% of its energy from renewables), Vietnam, and Colombia, come out on top. Caribbean and Latin American countries figure strongly. The first European country (the U.K.) doesn’t appear until 41st place. And the United States comes in only 105th out of 151 countries, mainly because of its high rate of resource use.

Although Stoll admits that GDP is going to be hard to shift as the default measure of economic success, she does see progress in establishing alternatives. The U.K. government[/url ]has started to collect data on well-being, with up to 200,000 people giving survey data so far. The government of Bhutan [url=http://www.fastcoexist.com/1679856/reframing-the-global-economy-to-include-happiness]recently organized a United Nations meeting on well-being. And prominent economists like Jeffrey Sachs have added their voices to those calling for new thinking.

"It’s a slow process, but we think people are starting to recognize the importance of making these measures more official," she says.

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6 Comments

  • Tony

    No, the article headline is misleading: Costa Rica is not the happiest country but the most self-sustainable. These are quite different concepts.

  • Stephen Stanley

    "GDP doesn’t discriminate between sales of semi-automatic handguns, say, or haircuts--making it a crude guide."  It also doesn't take into account losses:  The loss of New Orleans carried no penalty whatsoever to GDP but rebuilding the city inflated GDP.  This essentially makes GDP a one-way yardstick, the downside is not captured, only the upside.

  • Phil

    You
    can also manipulate GDP by borrowing billions or trillions.

    You
    can also manipulate GDP by borrowing billions or trillions.

  • Phil

    Note to Co.Exist. Spell check is not the be all, end all. Reading your story over before hitting send helps but some people need an editor as well.

    The U.K. government has started collected data on wellbeing,

     The government of Bhutan recently organized a United Nations meeting on
    wellbeing. And prominent economics like Jeffrey Sachs
    have added their voices to those calling for new thinking.

    "It’s a slow progress, but we think people are
    starting to recognize the importance of making these more measures more official," she says.