The Economics of Happiness

Historically, social scientists have considered the pursuit of happiness as the fundamental goal of communities and citizens worldwide. In today’s global development arena, Gross Domestic Product (GDP) is not the only measure of wellbeing; the ‘joy quotient’ of populations is also taken into account.

It began in 1972 with the concept of Gross National Happiness, first coined by the 4th King of Bhutan, King Jigme Singye Wangchuck. The Bhutanese resolution tabled at the United Nations (UN) General Assembly in June 2011, proposing that governments make well-being a focus of public policy, led to the curation of an annual World Happiness Report by the UN since 2012. The 2021 Report dedicates a chapter to ‘Social Connection and Well-Being’, stressing the impact of communication and human connection.

  • Along with psychological factors, social factors and social behaviour—including the quality and quantity of people’s social relationships—have been shown to protect wellbeing: World Happiness Report.
  • The book Ikigai mentions that the connectedness of the residents of Ogimi (the village of longevity) comes from belongingness to a community. 
  • The relative-wealth hypothesis adds that people’s satisfaction does not entirely depend on their absolute wealth but is a function of the people around them. 
  • Even psychologists explain it through the concept of hedonic adaptation, stating that achievements do not guarantee gratification because one eventually gets used to them & reverts to the pre-goal state. 

While happiness is undoubtedly subjective, practises and policies that foster social connections, community cohesion, and civic engagement can elevate it. Happier people live healthier lives and perform better at tasks and, in turn, aid a flourishing economy.

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