"Gross National Happiness is more important than Gross Domestic Product." - Jigme Singye Wangchuck, 4th King of Bhutan

An Enlightened Society is a Prosperous Society
Bhutan, called "Druk Yul" by its residents (a Dzongka phrase meaning Land of the Thunder Dragon), is a predominantly Buddhist country in South Asia. While most of the world relies on economic factors for measuring growth and prosperity, Bhutan has forged a new path by basing growth on national happiness. Bhutan's Gross National Happiness Index measures the overall well being, security and happiness of its residents.

IN PICTURES: Learn To Invest In 10 Steps

Following years of discussion, in 2008, coinciding with the coronation of the 5th King of Bhutan, His Majesty Jigme Khesar Namgyel Wangchuck, the Royal Government of Bhutan, adopted the Gross National Happiness (GNH) Index. The purpose of the GNH Index is to reflect GNH values, set benchmarks and track policies and performances for the country.

King Khesar has stated that the ultimate goal for social, economic and political change in Bhutan is the fulfillment of the GNH, and that a GNH society means the creation of an enlightened society in which happiness and well-being of all people and sentient beings is the ultimate purpose of governance. Happiness of the people was made the guiding goal of development. (Find out how Milton Friedman's monetarist theory helped bring the U.S. out of the economic doldrums, in Stagflation, 1970s Style.)

Money Can't Buy Happiness
The Bhutanese believe that traditional measurements of growth, such as Gross Domestic Product (GDP), are based on rapid material consumption, and are heavily biased towards increased production and use, regardless of the need or desirability of such outputs. They are, therefore, biased against conservation, community cohesion and environmental and cultural preservation.

The GNH Index is calculated using a series of GNH indicators that can be measured as having a positive or negative influence on well-being and happiness. For example, less crime, illness and air pollution have a more positive influence on happiness than more crime, illness and pollution. The GNH metrics include both objective and subjective dimensions of life. An example is crime: Crime statistics provide objective data, whereas a person's perception of their own safety and security supply subjective information.

A Collective Goal
Indeed as a culture, the Bhutanese strive to find inner sources of happiness, rather than relying on superficially derived pleasure, such as materialism and external stimulation. Pleasurable feelings come from shutting down sensory inputs, and the related mental chatter. They believe that meditation may lead the brain's neural pathways to be changed so that calmness and contentment can become a personality trait. In other words, the brain can be trained to be happy.

GNH and the Bhutanese culture encourage individuals to see the interdependence of all things: that all aspects of life depend on fostering healthy relationships, whether it is between the people and the government, or a farmer and his land. In order to achieve collective happiness, the ideals of interdependence need to be sought by everyone. A GNH society seeks to elevate its vision beyond individual self interest to concentrate on the happiness of all – as a collective goal. The government of Bhutan incorporates all aspects of the GNH into public policies and plans with the goal of achieving an enlightened, happy society.

Calculating the Index
The GNH Index is based on the results of survey questionnaires given to randomly selected residents from different districts in Bhutan, including remote, semi-urban and urban areas. The questionnaire covers key areas affecting the values and principles of GNH divided into the following domains:

  • Psychological Well-Being
  • Time Use
  • Community Vitality
  • Culture
  • Health
  • Education
  • Environmental Diversity
  • Living Standard
  • Governance

Happiness occurs when there are sufficient achievements in each of these nine dimensions.

The Gross National Happiness Index is used to reflect the happiness and general well-being of the Bhutanese population more accurately and profoundly than they believe a monetary measure would provide. The Index provides information to the Bhutanese people and the rest of the world about the current levels of human fulfillment in Bhutan.

How Would You Fare?
In a world where prosperity and growth are often measured in economic terms and keeping up with the Joneses, Bhutan stands alone in gauging these factors on happiness. If your prosperity were measured in terms of happiness, rather than in net worth, how would you fare? How would your government's policy change if happiness were the driving force? These are not easy questions to answer, but Bhutan is pioneering this concept through its Gross National Happiness Index.

Still feeling uninformed? Check out last week's Water Cooler Finance to see what's been happening in financial news.

Related Articles
  1. Investing

    Soul Cycle vs. Planet Fitness

    How has the fitness industry's shift from multipurpose health clubs to specialized studios and budget gyms played out for SoulCycle and Planet Fitness?
  2. Retirement

    How to Decide Where to Live in Retirement

    Here's a guide to help you decide where you want to live after retirement.
  3. Investing Basics

    What Does In Specie Mean?

    In specie describes the distribution of an asset in its physical form instead of cash.
  4. Economics

    Calculating Cross Elasticity of Demand

    Cross elasticity of demand measures the quantity demanded of one good in response to a change in price of another.
  5. Fundamental Analysis

    Emerging Markets: Analyzing Colombia's GDP

    With a backdrop of armed rebels and drug cartels, the journey for the Colombian economy has been anything but easy.
  6. Fundamental Analysis

    Emerging Markets: Analyzing Chile's GDP

    Chile has become one of the great economic success stories of Latin America.
  7. Investing

    How Will E-Cigarettes Affect Big Tobacco?

    E-cigarettes have emerged as a threat to cigarette makers. Will they be able to ward off this threat?
  8. Investing

    Watch Your Duration When Rates Rise

    While recent market volatility is leading investors to look for the nearest exit, here are some suggestions for bond exposure in attractive sectors.
  9. Economics

    Explaining Capital Flows

    The movement of money for investing, trade or business production, is commonly referred to as capital flows.
  10. Investing

    Yellow Light Trade Risk Management

    Being in the stock market for so long I tend to look at the world through the eyes of a trader, but how to decide when we are presented with two options?
  1. What is the utility function and how is it calculated?

    In economics, utility function is an important concept that measures preferences over a set of goods and services. Utility ... Read Full Answer >>
  2. How can I use a regression to see the correlation between prices and interest rates?

    In statistics, regression analysis is a widely used technique to uncover relationships among variables and determine whether ... Read Full Answer >>
  3. How do I calculate a modified duration using Matlab?

    The modified duration gauges the sensitivity of the fixed income securities to changes in interest rates. To calculate the ... Read Full Answer >>
  4. How do I calculate the rule of 72 using Matlab?

    In finance, the rule of 72 is a useful shortcut to assess how long it takes an investment to double given its annual growth ... Read Full Answer >>
  5. How do I calculate the standard error using Matlab?

    In statistics, the standard error is the standard deviation of the sampling statistical measure, usually the sample mean. ... Read Full Answer >>
  6. How do I adjust the rule of 72 for higher accuracy?

    The rule of 72 refers to a time value of money formula that investors use to calculate how quickly an investment will double ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Section 1231 Property

    A tax term relating to depreciable business property that has been held for over a year. Section 1231 property includes buildings, ...
  2. Term Deposit

    A deposit held at a financial institution that has a fixed term, and guarantees return of principal.
  3. Zero-Sum Game

    A situation in which one person’s gain is equivalent to another’s loss, so that the net change in wealth or benefit is zero. ...
  4. Capitalization Rate

    The rate of return on a real estate investment property based on the income that the property is expected to generate.
  5. Gross Profit

    A company's total revenue (equivalent to total sales) minus the cost of goods sold. Gross profit is the profit a company ...
  6. Revenue

    The amount of money that a company actually receives during a specific period, including discounts and deductions for returned ...
Trading Center
You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!