GDP can be defined as the total production in an economy in a limited time period. GDP is considered as a reliable quantitative measure of capacity utilization and level of performance of an economy in a year. On the other hand, GDH is defined as the level of happiness, contentment and satisfaction of the people in an economy. It is a qualitative measure of the standard of living of a country’s residents. While GDP measures performance in numbers, GDH measures performance in terms of “psychological impact of those numbers”. GDP and GDH can together form the perfect measure of all round development for the following reasons
GDP alone does not consider the mental and environmental impacts of production. Residents in developed nations like Finland are placed at the top of Happiness index because there are strong regulations on how much they can work every week. India is placed at 139 out of 149 countries because it does not focus on the mental well-being of its people and side-effects of over-work.
GDP does not consider Inequality in growth and total production. Inequality breeds unhappiness. Inequality is also harmful for the overall development of a nation because a certain class of the society is able to accumulate majority of the wealth while the remaining people remain poor. Poverty breeds problems in health, education, skill development and freedom to do as one wants. GDP and GDH together can overcome the problem of Inequality.
GDP does not consider negative impacts of growth on the ecosystem. Humans are a part of the global ecosystem and we cannot stay happy forever by isolating ourselves from it. Pollution, carbon emissions, Greenhouse gases emissions and climate change have a direct impact on the majority of human population, thus affecting their standard of living and quality of life. GDH measures the contribution of a clean environment on human happiness. Thus, a combined GDP and GDH can bring a wholesome measurement of real growth in an economy.
GDP lays complete focus on monetary contribution of every act. By doing so, it promotes Greed and creates a race towards accumulation of wealth. On the other hand, GDH focuses equally or more towards cultural diversity, assimilation and health. All of the wars in the world today are due to cultural isolation of people and hatred towards each-other. If GDP combines with GDH, there can be an end to needless hatred, war and cultural isolation of people. Peace brings happiness and joy to people, contributing towards a higher standard of living.
GDP ignores the impact of vices like Corruption, that have a direct impact on Good Governance. Corruption has a direct effect on future GDP and Growth potential of a country. GDH measures the impact of corruption on quality of life of people in a country. Thus, GDP combined with GDH can be helpful for the people as well as future growth potential of a nation.
GDP alone cannot bring prosperity to the world in the long run. It can increase wealth of a country and make lives of a few better by providing ease of living but the masses cannot be pulled towards prosperity by GDP alone. Bhutan is the only country in the world that measures it’s growth in terms of happiness, Growth brings to the people. India can make it’s idea of development more inclusive by doing the same.