The New York Times has a good summary article (and great chart) on the debate that has surrounded the new welfare indicator, Gross National Happiness, since it was first suggested by Bhutan in 1972.
In the early stages of a climb out of poverty, for a household or a country, incomes and contentment grow in lockstep. But various studies show that beyond certain thresholds, roughly as annual per capita income passes $10,000 or $20,000, happiness does not keep up.
Some countries… were happier than they should be… Latin American countries, for example, registered far more subjective happiness than their economic status would suggest. In contrast, countries that had experienced communist rule were unhappier than noncommunist countries with similar household incomes - even long after communism had collapsed…
The article discusses the debates surrounding ‘happiness’ indicators, which seem to be gaining momentum – groups in Canada, Australia and New Zealand are planning indexes, and Princeton and the US Census Bureau have also shown interest.
The article also tells us that beyond a certain threshold people redefine their happiness relative to their position in society, not their material wealth.
Nothing defines this shift better than a 1998 survey of 257 students, faculty and staff members at the Harvard School of Public Health. In the study, the researchers, Sara J. Solnick and David Hemenway, gave the subjects a choice of earning $50,000 a year in a world where the average salary was $25,000 or $100,000 a year where the average was $200,000. About 50 percent of the participants, the researchers found, chose the first option, preferring to be half as prosperous but richer than their neighbors.
For more, see these discussion papers, the 2nd national conference on GNH, or the World Value Surveys.
Update: From the most recent World Bank Research Observer, Carol Graham on Insights on Development from the Economics of Happiness; or her earlier Can Happiness Research Contribute to Development Economics?
Join the Conversation