All for the Happiness Index, Say Yay(1)

By Zou Xiaoming
Published: 2007-02-07

The Chinese media has been in a frenzy this past year over the use of gross domestic product as an index for judging regional development. This is due to widespread suspicion that, as the saying goes, 'officials make the numbers and the numbers make the officials'. Evidence of this can be found in the disparity between the gross domestic product figures released by the provinces and those released by the National Ministry of Statistics. 
   
While it is impossible to tell which is more accurate, one thing is for certain: GDP cannot be used to measure the achievements of officials. So what can be used instead? This isn’t just a problem linked to the promotion of government officials, its linked to the development of a flourishing society as well. This is where the 'Happiness Index' comes into play.     

Although China’s Gini coefficient (a measure of income inequality) has been increasing recently, it is pulling down the world’s Gini coefficient. The quantity and speed with which China has lifted its citizens out of poverty has garnered international praise. These achievements are a result of massive improvements to our technology and productivity.     

In order to understand the Happiness Index one must first understand its formula. Nobel-prize-winning economist Paul Samuelson explains, “Happiness equals satisfaction divided by desire”. This suggests a direct relationship between happiness and contentment and an inverse relationship between happiness and desire. 
    
Our traditional culture oftentimes implicitly accepts this; we are encouraged to reduce our desires, and as a result, feel happier. But economists have stressed the increasing of contentment instead. The link between this second approach and improvements in productivity and technology is strong.   
  
The problem is that despite the aforementioned improvements, due to unemployment, limited resources, and unfair opportunity, people will still not get in income what their capability merits. Those who cannot improve their level of productivity or technology will continue to have a low income and a low consumption capacity, and thus more likely to feel left out of the economic-growth loop. This can only lead them to disappointment and despair, and when officials cite GDP growth, these same people will feel that it has very little to do with them. 
    

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