In a TED talk, Nic Marks presents a new way of judging the success of countries on a global scale. He and the organization he founded, the New Economics Foundation, believe that GDP is insufficient in the modern world as a measure of which countries are doing well. His system, which he calls the Happy Planet Index, takes two factors into account: the average reported happiness of the people residing in the country, and the average ecological footprint. He believes, based on this data, that an argument could be made that Latin American countries, who tend to have low economic footprints but average to high reported happiness, are perhaps where we should be looking at when looking at the future. He highlights Costa Rica in particular as the model country using this index, as they have the highest reported happiness rate in the world while also using 99% clean energy. He points out that they disbanded their army in 1949, and invested heavily in health and education, which are linked to increased happiness.
The global competitiveness report, however, is perhaps more comprehensive, taking twelve “pillars” into account in its analysis instead of only two. Clearly, GDP alone cannot measure the standard of living for an entire country, although it likely does better with some countries than others. In countries with a large disparity in wealth, such as the United States, it certainly cannot be taken as a measure of the overall standard of living, where the richest earn billions annually and the poorest struggle at or below the poverty line. This is why it is important to take other factors into account when determining overall standard of living, and perhaps the Happiness Index could be incorporated into these. But the Global Competitiveness Index is much better at incorporating a multitude of factors, including infrastructure, health, education, macroeconomic environment, technology, market efficiency, innovation, etc. I think that the happiness index could be a valuable addition to the factors already measured by the GCI, in no small part due to the growing importance of the environment within the economy and a growing understanding that happiness increases productivity. I also think that perhaps some way to measure the disparity between the richest and the poorest in a given country could be a valuable addition.
Source:
Schwab, K., Sala-i-Martin, X., & Greenhill, R. (2011). The global competitiveness report 2011-2012. Geneva: World Economic Forum.
