An Alternative Approach to GDP: The Happy Planet Index

The Gross Domestic Product is defined as the monetary provision of goods and services produced by an individual country during the year. GDP is the best-recognised measure of economic performance in the world. Kuznets Simon, who developed the GDP in the early 1930s at the federal government’s request, stated that GDP can't measure welfare, but measure the goods and services produced in a monetary way.

"The welfare of a nation can scarcely be inferred from a measurement of national income as defined by the GDP." 

But this method of calculation has been used for many years as a measure of prosperity.  As countries get closer to the economic level they want with their post-war production, it has become more clear that GDP is not enough to measure welfare. As a result, the search for an alternative index has begun. The prosperity of a country is not achieved by the economic growth of the country. I prefer live in a country where I have middle income as long as I feel safe and peaceful, rather than live in a country where everything is prohibited although I earn a higher salary.

Source: Seth, The New York Times.

In this regard, GDP is an inadequate measurement system that doesn't say much to me. Therefore, it is very important to develop indices that we can have information about the conditions of that country such as Happy Planet Index, Social Progress Index and A Better Life Index.

People live in the present time. They prefer to win right now rather than to win in the future. But if we continue to consume our resources at this speed, there will be no planet we can live in the future. That's why we should use alternative welfare measurement systems. The Happy Planet Index attaches importance to the goal of a sustainable life and a better off planet in its measurements.

When I searched for the Happy Planet Index, I found out how it is calculated:

Well-Being x Life Expectancy: x Inequality of Outcomes:

Ecological Footprint

Data: Happy Planet Index

The common concept in alternative welfare measurement calculations is "well-being." The Well-Being has five criteria in HPI. One of them is to connect: the social connection with people. In the OECD's Better Life index, Work-Social-Life Balance criterion is similar to this criterion. 

Source: OECD A Better Life Index

Turkey is at the bottom of the list of The OECD's Work and Social Life Balance. When I was an intern at a private bank, I realized that the working hours were too long, and I searched for the countries with the most annual working hours. As a result of my research, I found out that working hours in Turkey was a lot longer than Western countries. The fact that hours are so long is not only reduce productivity, but also negatively affect work-social life balance.

The best example we can show in this regard is Germany. The following dataset shows that one of the leading economies in Europe has the least working hours. Germany is a good example of the "working less hours leads to more productivity."

I wouldn't be happy to earn a higher salary, if I do not have any time or energy to socialize with my friends after my long working hours. Moreover, after a while, this might leads to a chronic unhappiness. When we look at the UN's World Happiness Report, we see that Turkey is ranked 74th from 156 countries. All these results shown that the individuals can work longer hours to earn a higher income, but this will not make them happier.

I want to go a step further. I want to compare the per capita incomes of countries and the Happy Planet Index results.

Per Capita Income (USD) (The First 20 Countries)

Asia	5
Europe	9
Middle East	4
North America	1
Oceania	1
Total	20

Regional distribution of countries with the highest per capita income.

According to the report published by the International Monetary Fund World Economic Outlook (October-2016), almost half of the 20 countries with the highest per capita income are in Europe.

Happy Planet Index (The First 20 Countries)

Regions	HPI Rank
America	10
Asia Pacific	6
Europe	3
Post-communist	1
Total	20

Regional distribution of countries (The Happy Planet Index)

Europe, Scandinavia and North America, which are economically strong, are behind the South American countries in the Happy Planet Index. When I examine the first 20 countries, there are 10 countries from South America, and 4 countries from Europe.

I was surprised not to see Scandinavian countries in the first places. The only Scandinavian country in the top 20 is Norway, and it's placed in 12th. When I researched the reason why, I realised they were not in the first place in HPI because of their high ecological footprint.

Ecological Footprints of Norway, Switzerland, Denmark, Findland, Sweden.

When I compare the results of the Per Capita Income and the Happy Planet Index, it is possible to say that the developed countries have grown by damaging the planet while creating the wealth, in spite of their strong economies and technological developments.

AS A RESULT

In this context, it makes sense to consider GDP as a measure of prosperity for many years. When the producing more goods and services became the ultimate goal, how the production took place had to take a backseat. The Second Industrial Revolution has met the world with mass production which encouraged to produce more. Production has accelerated compared to the old days with the developing technology. More production meant more money. Money was the most important thing for many people as well as states.

Remember the basic definiton of economics. Sources are scarce, thusly it is very important how to use these resources. Because we are not the last people to live on this planet, there will be future generations.For a sustainable world, we need to use resources with care and lead to renewable energy sources. For this reason, using alternative calculation methods for countries should be as important as GDP.Emel